Friends – the fact that US cannabis companies can’t file for bankruptcy has created a really interesting dynamic over the past few years. For background, the US federal courts made it clear in 2019 that plant-touching companies may not file and take advantage of the bankruptcy code’s protections such as staying litigation, a process to restructure and resolve claims, and the ability to wipe out debt. State laws (remedies) such as receivership and assignment for the benefit of creditors don’t offer much in the way of relief – they’re at heart just mechanisms to pay off creditors. Bankruptcy is a luxury that cannabis can’t enjoy right now.
Cannabis Musings - January 17, 2023
Cannabis Musings - January 17, 2023
Cannabis Musings - January 17, 2023
Friends – the fact that US cannabis companies can’t file for bankruptcy has created a really interesting dynamic over the past few years. For background, the US federal courts made it clear in 2019 that plant-touching companies may not file and take advantage of the bankruptcy code’s protections such as staying litigation, a process to restructure and resolve claims, and the ability to wipe out debt. State laws (remedies) such as receivership and assignment for the benefit of creditors don’t offer much in the way of relief – they’re at heart just mechanisms to pay off creditors. Bankruptcy is a luxury that cannabis can’t enjoy right now.