Marijuana is currently legal in 33 states medicinally and 10 states recreationally. While the cannabis products are becoming more and more accepted, there are significant issues to consider when mixing marijuana and bankruptcy. People that work in or with the cannabis industry may be unable to file for Chapter 7 or Chapter 13 bankruptcy. If you find yourself in that situation, a Lerner and Rowe Law Group bankruptcy attorney may be able to help you.
Federal vs. State Legality
Although marijuana and other cannabis-derived products are becoming legal in more and more states, they are still illegal at the federal level. Current federal law prohibits the use, cultivation, and distribution of marijuana. That conflict can be exercised by the U.S. Trustee Program, the government organization that monitors bankruptcy proceedings. That’s exactly what happened to Washington couple Claude and Kerri Hayes.
The couple were denied bankruptcy because Claude Hayes worked as a “budtender” at a medical marijuana cooperative. For those unfamiliar with the term, a budtender is a sales clerk that advises and sells goods to customers at a medical or recreational marijuana store. They’re the equivalent of a sales clerk you’d encounter at Gap or Macy’s store. Although marijuana is legal in Washington state, the U.S. Trustee Program used its federal illegality to deny Mr. Hayes Chapter 13 bankruptcy.
Indirect Involvement with Marijuana and Bankruptcy
Being denied bankruptcy is also a possibility if you work indirectly with the cannabis industry. Washington’s Cook Investments is a real estate company that was denied Chapter 11 bankruptcy by the U.S. Trustee Program because it leased some of its land to a company that grows cannabis.
Similar to the Hayes family, the reason for Cook Investments’ denial was that cannabis is federally prohibited. The matter is being contested in Garvin v Cook, with the most recent decision by the U.S. Court of Appeals for the Ninth Circuit being in favor of Cook.
Even though this particular matter applies to a company that tried to file Chapter 11, the legal interpretation could apply to an individual seeking debt relief through Chapter 7 or Chapter 13. If that individual worked with a party in the cannabis industry, it’s conceivable that a U.S. Trustee would deny them bankruptcy.
Contact an Arizona Bankruptcy Lawyer
Legal issues with marijuana and bankruptcy are still in their infancy. After all, the State legalization of medical and recreational marijuana is relatively new. In Arizona, medical marijuana is currently legal and many expect recreational marijuana to be legalized in the near future.
As the state legality of cannabis products evolves, expect changes to how marijuana laws are interpreted. This can lead to confusion, especially in complicated matters like bankruptcy. There are also growing issues concerning a medical marijuana patient’s use of marijuana and operation of a motor vehicle.. Arizona law provides little guidance to its medical marijuana community about their use of medical marijuana and driving.
Thankfully, the attorneys at Lerner and Rowe Law Group are keeping track of the latest developments. Our talented and knowledgeable Arizona bankruptcy lawyers are here to provide you with prudent counsel and competent representation.
You can contact the bankruptcy attorneys at the Lerner and Rowe Law Group between the hours of 8:00 a.m. and 5:00 p.m. Monday through Friday. We’re also available 24/7 by phone at 602-667-7777. You can also contact us through the Internet using our convenient online form and LiveChat features.