Mgrutman / shutterstock Use of the Bankruptcy Code Remains Elusive for Marijuana Businesses
Federal bankruptcy courts have been unavailable to marijuana businesses due to the Schedule I status of marijuana. To fill the void, marijuana businesses will need to avail themselves of state law bankruptcy alternatives to provide financial relief.
May 04, 2022 at 10:00 AM
8 minute read
Bankruptcy
In 2020, New Jersey passed a ballot referendum to legalize recreational marijuana use. At present 24 other states, including the District of Columbia, have legalized marijuana. While the number of states and territories with laws and policies allowing for the cultivation, sale, distribution and possession of marijuana for recreational or medicinal purposes has grown over the last decade, marijuana continues to be classified as a Schedule I controlled substance, in the same category as heroin and ecstasy, under the federal Controlled Substance Act (CSA). The growing disconnect between federal and state marijuana laws and policies creates legal risks for not only those engaged in the cultivation and sale of marijuana, but also for suppliers, landlords, investors and financial institutions directly or indirectly related to marijuana businesses.
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