As long as cannabis is still federally illegal and classified as a dangerous drug, companies that have even a small part in the cannabis business will not be able to seek federal relief such as bankruptcy when they face financial hardships. Until the laws around cannabis do change it is important for these small businesses to know how to properly utilize their financing options under state law.
Until marijuana is legalized at the federal level so that the U.S. Trustee Program (USTP) no longer views the reorganization of such business as their permitting “continued legal activity,” or the Bankruptcy Code is amended to permit cases involving marijuana businesses, the protections offered by the Bankruptcy Code likely will continue to be unavailable to many cannabis and cannabis-ancillary companies.