The Justice Department is preventing struggling cannabis businesses and their workers from accessing bankruptcy to weather the coronavirus-related downturn, even in states that determine medical marijuana is an essential industry during the pandemic, WSJ Pro Bankruptcy reported. The department’s policy means the financial safety net that bankruptcy provides consumers who fall behind on their mortgages or car payments is likely out of reach for those who work in the marijuana industry or businesses supporting state-regulated dispensaries or growers. Cannabis remains illegal under federal law, which includes the U.S. Bankruptcy Code, though Congress is considering legislation to decriminalize it nationwide. In 2017, Justice Department officials who oversee the nation’s bankruptcy courts ramped up enforcement of the federal marijuana ban on individuals with income from the cannabis industry. Lawyers have attempted to get around the prohibition by segregating marijuana wages or rent collected from cannabis growers from bankruptcy repayment plans, leaving it up to judges to decide what is allowed. Courts have mostly sided with the Justice Department, though some individuals have voluntarily given up on their pending bankruptcy cases after the government argued against them in court.
