Frank Arenas operates a marijuana wholesaler — legal under Colorado law — and is fighting the dismissal of his and his wife's chapter 7 filing in the U.S. Bankruptcy Court for the District of Colorado, TheStreet.com reported on Monday. It is a result that even Judge Howard R. Tallman has called "devastating" for the couple in his order throwing it out. Since bankruptcy is a federal process, judges have ruled that the violation of the federal Controlled Substances Act by distributing marijuana makes cannabis-related companies ineligible for bankruptcy. In the Arenases' case, a trio of bankruptcy justices have underscored the point, asserting in an Aug. 21 opinion that "possessing, growing and dispensing marijuana and assisting others to do that are federal offenses…. Can a debtor in the marijuana business obtain relief in the federal bankruptcy court? No." Last month, the appellate panel judges agreed to stay the dismissal of the Arenases' case while the couple appeals the decision to the Tenth Circuit Court of Appeals, making it the first time that this debate will be considered at so high of a judicial level.
In related news, in ABI's latest podcast, ABI Executive Director Sam Gerdano talks with Prof. Michael Sousa of the University of Denver Sturm College of Law about the intersection of the pot business and federal law. Sousa examines cases and circumstances surrounding a financially distressed marijuana business in light of pot being an illegal substance under the Controlled Substances Act of 1970. Click here to listen.
Also, this year's Winter Leadership Conference (Dec. 3-5, 2015, at the Arizona Biltmore in Phoenix) features a session titled "Selling Unusual Assets in Bankruptcy and Their Tax Aspects (Pot, Porn and Puppies)." Click here for more info and to register.
