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 Every Real Estate Investor Should Know Before Buying a Rental Property
Before buying a New Jersey rental property, an investor should verify realistic operating numbers, the property’s legal and regulatory status, lead-based paint and flood compliance, the existing leases and tenant protections, and the right ownership structure. A rental property is more than a piece of real estate; it is an operating business subject to legal, […]
Can You Change an Irrevocable Trust in New Jersey?
In New Jersey, an irrevocable trust can sometimes be modified even though its name suggests otherwise, and one of the primary tools for doing so is a process called decanting. Whether decanting is available depends on the specific terms of the trust and the discretion given to the trustee. Key takeaways: New Jersey has no […]
How Intellectual Property Valuation Will Impact Business Transactions
Intellectual property valuation determines the monetary value of a business’s IP assets, and it drives outcomes in licensing deals, joint ventures, mergers and acquisitions, financing, and ownership disputes. The most valuable assets of a business are often the things that cannot be seen or touched: a proprietary process, a copyrighted work, brand recognition, or the […]
Data Center, Dark Fiber, and Lit Services Agreements in New Jersey: Key Terms and Legal Pitfalls
For New Jersey data center owners and operators, a service agreement may look routine when it is signed. The network is functioning, the vendor is meeting its installation schedule, and the parties have agreed on pricing and performance specifications. The provisions that seem most important at that stage are often the technical ones. That changes […]
Fort Monmouth Redevelopment and the Transformation of Monmouth County Real Estate
The Fort Monmouth redevelopment has entered its execution phase, and it is repositioning the broader Monmouth County real estate market. When Netflix and the Fort Monmouth Economic Revitalization Authority closed on the 292-acre Mega Parcel in December 2025, the transaction did more than hand over a deed. It marked the moment Fort Monmouth stopped being […]
Local Zoning and Land Use Rules Every New Jersey Rental Property Owner Should Understand
Owning a residential rental property in New Jersey involves more than finding tenants and collecting rent. Property owners must comply with a combination of state laws, municipal ordinances, building and housing codes, and zoning and land use regulations. These requirements can affect everything from the number of dwelling units permitted at a property to whether […]
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!
