Marijuana businesses aren’t allowed to go up in smoke, even when they aren’t making any money in Colorado. So what are they going to do?
The burgeoning marijuana industry in Colorado has run into yet another legal snafu, as inconsistencies between state and federal laws are preventing businesses and owners from filing for protection under the bankruptcy law.
Photo courtesy of Rick Proctor (Unsplash.com)
Attorneys for Sarah and Frank Arenas of Denver filed a 43-page appeal stating that a judge dismissed their August bankruptcy petition in error because their assets were derived primarily from the medical marijuana industry, The Denver Post reported. By refusing to protect such assets in bankruptcy in the same way that other assets are, the appeal argues, the federal government is passively prosecuting crimes that it earlier said it would not.
The Obama administration said in late August that it would not challenge state laws legalizing marijuana as long as strict regulations on the sale and distribution of the drug are enforced, according to The Washington Post.
“The [Arenases] should not be faulted, or more importantly lose the right to a discharge of their debts, for playing by rules created by the same agency that seeks to dismiss their bankruptcy case for breaking those rules,” attorney Daniel Garfield wrote, as cited by The Denver Post. “The federal government has deliberately and actively allowed a legal marijuana industry to flourish in Colorado and not to prosecute participants in that industry. The federal government has made a conscious decision to allow [the Arenases’] otherwise illegal business to operate.”
The U.S. Bankruptcy Appellate Panel of the 10th Circuit Court will decide whether to overturn or uphold the lower court’s ruling.
Either decision is likely to be used as an important precedent going forward. Should the ruling be upheld, it will create more uncertainty in the already somewhat shaky business climate that exists in the Colorado marijuana industry. If the ruling is overturned, businesses in this sector may take it as a sign that the federal government is ready to recognize their legitimacy, perhaps motivating them to fight for other, similar, business rights.
What Business Owners Get Wrong Before Meeting a Litigation Attorney
What should you expect when meeting a litigation attorney about a business dispute? You should expect to describe the dispute in your own words, hand over the most important documents, flag any deadlines or immediate threats, and leave with a clearer picture of the problem, what information is still needed, and the likely next steps. […]
Arbitration vs. Litigation vs. Mediation: What New Jersey Businesses Should Know Before Signing a Contract
Arbitration resolves disputes privately before an arbitrator whose decision is usually final, while litigation resolves them in court with full rights of appeal. Whether a business ends up in arbitration or litigation is often decided when it signs the contract, long before any dispute arises. Key Takeaways When facing a contract dispute, carefully consider your […]
Can You Own Part of a New Jersey Business Without a Written Agreement?
Can you own part of a business in New Jersey without a written agreement? Yes, it is possible. Under New Jersey’s Uniform Partnership Act, a partnership can arise when two or more people carry on a business as co-owners for profit, whether or not they ever intended to form one. Ownership doesn’t necessarily depend on […]
Crisis-Proofing Your New Jersey Business: Building a Crisis Response Plan Before You Need One
For New Jersey businesses, crisis preparedness should be viewed as a legal and operational function, not simply an emergency-management exercise. A well-designed crisis response plan can help preserve evidence, protect confidential communications, meet reporting obligations, limit unnecessary exposure, and prevent an already difficult situation from becoming a larger legal problem. Key Takeaways A serious crisis […]
Monmouth County's Next Development Wave: What Developers and Investors Need to Know
Monmouth County is entering a significant new phase of development. For those looking to acquire property or undertake a new project, understanding the market opportunity is only the beginning. The more important question is whether a particular property can actually be developed as contemplated and what approvals, agreements, and other conditions will be required to […]
Are Your Conversations with AI Shielded from Discovery? Courts Are Split
Whether a client’s prompts to a generative AI tool and the documents it produces are protected from disclosure depends on the case type, who claims protection, and whether counsel was involved. In United States v. Heppner, a New York federal judge ruled that a criminal defendant’s communications with an AI platform were protected by neither […]
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!
