Oregon, Bankruptcy and Marijuana

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Oregon, Bankruptcy and Marijuana

So you were in the marijuana business or worked in it and things didn’t work out. Now you are thinking about filing bankruptcy and wonder what effect, if any, your former business or employer is going to have on you.  As bizarre as it might sound to anyone living in Portland or Salem where dispensaries have become about as ubiquitous as gas stations, this can be a real problem. 

It is the policy of the United States Trustee Program that United States Trustees shall

move to dismiss or object in all cases involving marijuana assets on grounds that such assets may not be administered under the Bankruptcy Code even if trustees or other parties object on the same or different grounds. There is no distinction made between states where marijuana is legal and less evolved states where it is not. 

With respect to Chapter 13 bankruptcy, it seems pretty clear that no debtor is going to be able to fund a Chapter 13 Plan with any income that is even tangentially related to marijuana. After all, in one Oregon bankruptcy case, a debtor who owned a medical marijuana business filed for chapter 13 protection, but the plan was denied when the U.S. trustee objected to his case due to the fact that income received from the debtor to support the plan payments was partially derived from Federally illegal activity. 

In a recent Colorado case, the U.S. Trustee successfully objected where a debtor derived 25% of his income from renting out space to a grower. The debtors bankruptcy was dismissed as the debtor was found to have “unclean hands.” 

With respect to Chapter 7 bankruptcy, it seems pretty clear that the U.S. Trustee is going to take a hard line with respect to debtors with any assets that stem(pun intended) from the marijuana business. For our part, we would encourage any debtor currently employed in any marijuana related business to find work elsewhere prior to filing. Moreover, debtors in possession(pun intended) of grow equipment or any other property used in the marijuana business would do well to eliminate that property prior to filing.

If you are or were in the marijuana business or somehow profited from it even tangentially, it’s  critical that you consult with a Portland or Salem bankruptcy attorney about how to put yourself in a position to seek relief under the bankruptcy code. 

2017-10-23T20:17:05+00:00
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