United States: Up In Smoke: More Cannabis Companies Get Shut Out Of Bankruptcy

United States: Up In Smoke: More Cannabis Companies Get Shut Out Of Bankruptcy

Last Updated: November 19 2019 Article byMark A. Salzberg Squire Patton Boggs LLP Published at: http://www.mondaq.com/article.asp?articleid=862550&email_access=on In another loss for the cannabis industry, a district court recently affirmed the dismissal of chapter 11 petitions filed by companies that sold product used by both state-licensed marijuana growers and non-marijuana growers. The district court’s decision in Way to Grow, Inc. demonstrates that the door that was opened by the Ninth Circuit in Garvin v. Cook Invs. NW, 922 F.3d 1031 (2019) to cannabis companies was at best only partially opened. We have written about the facts underlying the Way to Grow case in prior posts. To summarize, Way to Grow, Inc. and two affiliated companies sold indoor hydroponic and gardening-related supplies. The debtors’ expansion plans were tied to the cannabis industry, although the debtors also had customers using the hydroponic products to grow other crops. A secured creditor moved to dismiss the cases, arguing that the debtors should be barred from bankruptcy relief because their business violated the Controlled Substances Act, 21 U.S.C. § 801, et seq. (the “CSA”). The bankruptcy court found that the debtors were violating section 843(a)(7) of the CSA which makes it a federal crime to “manufacture” or “distribute” any “equipment, chemical, product or material which…

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Source : CANNANNEW REPORT
Link to original : United States: Up In Smoke: More Cannabis Companies Get Shut Out Of Bankruptcy
reposted by Cannabis News World

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