Bloomberg Law’s® Bankruptcy Law News publishes case summaries of the most recent important bankruptcy law decisions, tracks major commercial bankruptcies, and reports on developments in bankruptcy...
By Stephanie Cumings
Aug. 26 — If your income is derived from marijuana sales then you might not be entitled to bankruptcy protection, even in states where the sale of marijuana has been legalized (Arenas v. U.S. Tr. (In re Arenas), 2015 BL 270646, B.A.P. 10th Cir., No. CO-14-046, 8/21/15).
The U.S. Bankruptcy Appellate Panel for the Tenth Circuit has now become the highest court to weigh in on this issue, according to research conducted by Bloomberg BNA. The court said that debtors whose income stems from marijuana sales can't fund a bankruptcy plan without breaking federal law.
“In this case, the debtors are unfortunately caught between pursuing a business that the people of Colorado have declared to be legal and beneficial, but which the laws of the United States—laws that every United States Judge swears to uphold—proscribe and subject to criminal sanction,” the court said.
“Mr. and Mrs. Arenas operate and own marijuana-assets within the bounds of Colorado law, and the Department of Justice has determined that there is no reason to prosecute them under federal law,” Daniel J. Garfield of Foster Graham Milstein & Calisher, LLP, Denver, who represented the debtors, told Bloomberg BNA Aug. 25. “Yet, the DOJ, through the [U.S. Trustee], sees fit to oppose allowing the Arenas the protections of the Bankruptcy Code that any other person or business operating within the bounds of the law would unquestionably have.”
“We don't use notions of ‘justice' and ‘fairness' very often in the bankruptcy bar, but those notions are clearly lacking when people such as the Arenas cannot obtain the fresh start that anyone else would be entitled to,” Garfield added. “When it comes to marijuana, the War on Drugs continues in insidious ways.”
The Executive Office for U.S. Trustees declined to comment on this case.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)