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DOJ Reminds Marijuana Businesses – You Don’t Have Access To Bankruptcy Aid

The U.S. Department of Justice is issuing another reminder that marijuana businesses don’t have a right to bankruptcy proceedings.

“Marijuana continues to be regulated by Congress as a dangerous drug, and as the Supreme Court has recognized, the federal prohibition of marijuana takes precedence over state laws to the contrary,” Clifford J. White III, director of the Justice Department’s Executive Office for U.S. Trustees, and John Sheahan, a trial attorney for the agency, wrote in an article published on Friday.

The United States Trustee Program’s position, they say, is that the bankruptcy system cannot aid in liquidating or restructuring any assets associated with cannabis.

“The USTP’s response to marijuana-related bankruptcy filings is guided by two straightforward and uncontroversial principles,” the two Justice Department officials wrote in the ABI Journal. “First, the bankruptcy system may not be used as an instrument in the ongoing commission of a crime and reorganization plans that permit or require continued illegal activity may not be confirmed. Second, bankruptcy trustees and other estate fiduciaries should not be required to administer assets if doing so would cause them to violate federal criminal law.”

White and Sheahan, who are career Justice Department officials, not Trump administration political appointees, say the prohibition on handling cannabis assets goes beyond activities that directly touch the plant and also extends to real estate leases and investments. [Read more at Forbes]

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