DOJ Reminder: No Bankruptcy Protection for Marijuana Businesses

DOJ Reminder: No Bankruptcy Protection for Marijuana Businesses

Flickr / Reese Baker / CC BY 2.0

Rep. Jared Polis, D-Colo., co-sponsor of a bill to end federal prohibition of marijuana, is preparing to educate lawmakers on Capitol Hill about marijuana policy, on May 3, 2017, and it seems the event may have another major talking point to address: bankruptcy protection for marijuana businesses.

On April 26, 2017, Clifford White, the Deputy Director/General Counsel of the U.S. Trustees Program within the Department of Justice, sent a letter to 1,100 private trustees who administer bankruptcy cases, reminding them to dismiss bankruptcy cases that involve marijuana assets.

“I know that in the past few years, the United States Trustees have reached out to you to ensure that we are informed about all cases assigned to you that involve marijuana assets, which are proscribed under federal law and may not be administered under the Bankruptcy Code. This directive pertains even in cases in which such assets are not illegal under state law,” White wrote in his letter.

If a trustee is assigned a bankruptcy case and then discovers marijuana assets are involved in it, the trustee is required to notify the USTP, and then move to have the case dismissed because marijuana-related assets can’t be administered under the Bankruptcy Code.

While a lack of bankruptcy protection is nothing new for state-legal marijuana businesses, White’s letter is a reminder that bankruptcy protection can only be resolved at the federal level.

The staff byline designates content that has been written by a staff writer of MJINews.

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