No Bankruptcy Protection for Cannabis Companies, Judges Rule

Marijuana businesses across the country, take heed: If your venture doesn’t pan out, don’t count on bankruptcy laws to help you out.

According to a report in The Denver Post, at least four marijuana companies have had their bankruptcy claims thrown out by judges who have ruled that the entrepreneurs aren’t entitled to federal bankruptcy protections.

The latest came just last month, when Denver Judge Howard Tallman tossed a claim filed by Frank Anthony Arenas, a wholesale marijuana producer and distributor. Arenas owes more than half a million dollars to creditors and was attempting to liquidate his assets, including roughly 25 marijuana plants, in order to settle his debt.

Tallman wrote in his decision that he realized the dismissal was “devastating” for Arenas. But the judge said his hands are tied by federal law.

“Violations of federal law create significant impediments to the debtors’ ability to seek relief from their debts under federal bankruptcy laws in a federal bankruptcy court,” Tallman wrote.

Tallman issued a similar ruling in 2012, and The Post noted that at least two other marijuana-related businesses were also rejected in California when they tried to file for bankruptcy.

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