Limited Options for Cannabis-Related Company Liquidations

Overview

Companies in the cannabis industry and individuals working in cannabis-related businesses have sought to turn to the federal bankruptcy courts for relief when they became insolvent. While federal bankruptcy courts have taken jurisdiction for bankruptcies of companies focused on federally legal, industrial hemp, the United States Trustee Program has repeatedly challenged the ability of companies focused on medical or adult use cannabis. Because bankruptcy is not available, such enterprises must look for state law options to wind down or reorganize their businesses.

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