As more and more states pass laws allowing the sale of marijuana, whether for medicinal or recreational purposes, investors will try to claim their share of what is certainly going to be a lucrative market. However, even in a growing market, private enterprises fail or need restructuring. This raises the question of whether distressed marijuana businesses, and those doing business with marijuana businesses, can seek relief under the Bankruptcy Code.
Since the George W. Bush Administration, the Office of the United States Trustee (the “UST”) has taken the position that marijuana businesses cannot seek bankruptcy relief. This position was reaffirmed in Congressional testimony given in June 2017 by Clifford White, the Director of the Executive Office for U.S. Trustees, and more recently in an article written by Mr. White and John Sheahan, a trial attorney for the UST, which was published in the December 2017 edition of the American Bankruptcy Institute Journal. Continue Reading