Cannabis Companies Still Cannot Seek Chapter 11 Bankruptcy Protection

DENVER–A bankruptcy court in Colorado last week threw out United Cannabis Corp.’s Chapter 11 case, finding “good cause” to grant a Justice Department motion to dismiss based on the company’s ties to cannabis.  Judge Joseph G. Rosania Jr. of the U.S. Bankruptcy Court for the District of Colorado on Wednesday sided with the U.S. Trustee in a one-page order. The DOJ’s bankruptcy watchdog had pointed out that the drug

United Cannabis Corporation and subsidiaries, UC Colorado Corporation, filed for Chapter 11 in Colorado back in April 2020.

Federal bankruptcy protection was denied because, as the United Cannabis court has already noted in an order to show cause issued this week, “activities associated with the marijuana industry are illegal under federal law and cannot be condoned by the bankruptcy courts.”

Thus, the filing has garnered significant attention throughout the cannabis industry, and everyone will be disappointed to find out that the federal law still stands until the new Congress, hopefully, passes full legalization of cannabis.