DOJ: Cannabis Businesses Not Entitled to Bankruptcy Protections


Although cannabis businesses (including businesses selling CBD oil with no THC and businesses engaging in the legal sale of medicinal or recreational marijuana) are legal in many states, marijuana is still illegal at the federal level. The DEA continues to list marijuana as a Schedule I drug. Jeff Sessions stated early in 2017 that he planned to enforce federal laws related to marijuana in an “appropriate way.”

The legal use of marijuana and cannabis based products isn’t the only place where state and federal laws clash. Recently, the U.S. Department of Justice issued a statement to inform legal business owners and the public that marijuana-based businesses (that operate within the laws of their state) are not entitled to bankruptcy protections.

Trustees Encouraged to Report Violations of Federal Marijuana Laws

Earlier in 2017, Clifford J. White, III, Director of the Justice Department’s Executive Office for the U.S. Trustees, released a memo that encouraged bankruptcy Trustees to report violations of federal marijuana laws if they noticed marijuana-based business practices or activities.