DOJ: Marijuana businesses can’t seek bankruptcy protection

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Cannabis business owners cannot turn to federal bankruptcy courts when they land in financial hot water, a U.S. Department of Justice official reaffirmed.

Cliff White, director of the DOJ’s U.S. Trustee Program, sent a letter to trustees who deal with consumer bankruptcy cases reminding them that cannabis is illegal under federal law. He noted they shouldn’t handle money from the sale of cannabis-related property, Dow Jones NewsWires reported.

According to White’s letter, his division has seen a spike in the amount of bankryutcy cases in which “marijuana assets” have been disclosed. A spokeswoman wouldn’t disclose a number, according to Dow Jones NewsWires.

White’s letter comes as the Trump administration has sent mixed messages about its marijuana policy.

“Our goal is to ensure that trustees are not placed in the untenable position of violating federal law by liquidating, receiving proceeds from, or in any way administering marijuana assets,” White said.

Under federal bankruptcy law, any person or company declaring insolvency must list all valuables and agree to try to sell some of them to pay off financial obligations. Meanwhile, some marijuana business owners have been kicked out of federal court for trying to use marijuana assets to pay their debts, Dow Jones NewsWires reported.

Struggling cannabis business would get some relief under a bill introduced by U.S. Sen. Ron Wyden, D-Oregon. The Responsibly Addressing the Marijuana Policy Gap Act would grant bankruptcy protection for MJ companies and more.