Though it appeared the smoke might blow in a more favorable direction, the hopes of marijuana-adjacent businesses using the Bankruptcy Code were snuffed out once again by the Bankruptcy Court in Colorado. The Controlled Substances Act (the CSA) makes it illegal to rent, lease, or make available for use or profit from a location for the manufacture, storing, or distribution of controlled substances. Federal law generally imposes criminal liability for aiding and abetting the unauthorized manufacture, distribution, or dispensing of marijuana, which is a Schedule 1 controlled substance. A number of courts have ruled that businesses whose operations constitute federal crimes cannot take advantage of the federal bankruptcy system.[1] Bankruptcy courts have even dismissed cases where the debtor does not operate a cannabis business, but operates ancillary businesses such as the manufacture or sale of equipment that may be used to cultivate marijuana (discussed below), or leasing real estate to marijuana growers.
Continue Reading Another Blow to Bankruptcy Relief for Marijuana-Adjacent Debtors