Permitting the Highs Without Addressing the Lows: Options for Struggling State-Legal Marijuana Businesses Barred from Bankruptcy

Authors

Rachel Owings

Abstract

An increasing number of states are permitting marijuana sales, and an increasing number of individuals are seizing the opportunity to start businesses in an exciting new industry. Though exciting, it is also an industry with an abundance of headwinds: complicated regulatory schemes, high tax rates, and the oversupply of marijuana products as many rush into the industry has led to some firms struggling financially. This Article will summarize the law that prevents such firms from accessing the federal bankruptcy system, analyze some relevant cases pointing at potential routes to bankruptcy for unique situations, and then address state law alternatives to bankruptcy. It will argue that the states that created the environment for these firms’ existence should take steps to ensure the firm and its creditors have access to the debtor-creditor law processes that other legal firms of the state enjoy. While federal government action to permit access to bankruptcy would be a more robust protection of debtors and creditors, most states have room to improve their laws such that their bankruptcy alternatives are available to marijuana businesses.

First Page

298

Recommended Citation

Rachel Owings, Permitting the Highs Without Addressing the Lows: Options for Struggling State-Legal Marijuana Businesses Barred from Bankruptcy, 7 Bus. Entrepreneurship & Tax L. Rev. 298 (2024).
Available at: https://scholarship.law.missouri.edu/betr/vol7/iss2/9