A new report warns the Cannabis growers don’t have access to federal bankruptcy protection, “undermining” the potential of the industry. This is because marijuana is still classified as an illegal substance under federal law.
According to the Cannabis Law Journalthe fact that cannabis remains a Schedule 1 drug allows the Controlled Substance Act (CSA) to block bankruptcy relief for companies selling the product and acts as a “boogeyman of bankruptcy jurisdiction,” the explained Report written by Travis Stewarta law student at the University of NevadaLas Vegas.
As long as the facility remains illegal at the federal level, Cannabis-related debtors (CDRs) cannot obtain bankruptcy relief, resulting in vastly different treatment of them.
However, the beginnings legal “weed” industry has become one strong economic engine in many countries. Since August 2022have almost 20 states and DC enacted laws allowing it personal belongings and use of marijuana.
Cannabis-related debtors should be protected by law like others
Creditors and debtors have vastly different terms of their agreements because creditors’ ability to negotiate is constrained by a federal prohibition, noted The Crime Report, which argues that this violates the constitutional protections enshrined in Article I, Section 8, Clause 4 of the Constitution, which grants Congress has the power to “make uniform laws in the United States relating to bankruptcy.”
Additionally the report specified that the CSA’s ban on debtors filing for bankruptcy relief changes the relationship between them and their creditors. “[Cannabis debtors] and their creditors would be better served if both the US Trustee and the bankruptcy courts were dealt with [them] like any other company that goes bankrupt.”
The simplest solution, but unlikely given the political hurdlestarget Remove cannabis as a Schedule 1 substance. Still, the author said, it should be considered an economic priority.
“From 2022…
