On September 20, 2023, the U.S. Bankruptcy Court for the Central District of California (“Court”) confirmed a plan for a cannabis-related business (“Debtor”) to sell its equity interests in a Canadian cannabis company, Lowell Farms, and distribute the proceeds to its creditors.  In contrast with bankruptcy courts that routinely dismiss cannabis-related business filings primarily due to alleged Controlled Substance Act (“CSA”) violations, the court found that any CSA violations occurred before the bankruptcy, and that the “Debtor’s orderly liquidation of its stock in Lowell Farms, and distribution of the proceeds to creditors is entirely consistent with the objectives and purposes of the Code.” (In re The Hacienda Company, LLC, __ B.R. __, 2023 WL 6143216 (Bankr. C.D.Cal., September 20, 2023))  The court’s ruling may open a new path for  cannabis-related businesses to utilize the U.S. Bankruptcy Courts. Continue Reading Bankruptcy Court Approves Cannabis Debtor’s Chapter 11 Plan

As the cannabis industry matures, there will be winners and losers.  Losers lack access to the U.S. Bankruptcy Code.  Marijuana related assets cannot be sold free and clear of liens and encumbrances via the tried and true bankruptcy section 363 sale, which leaves the loser’s creditors without the best tool to maximize the value of the loser’s assets, and deprives acquirers of a federal court order conveying assets.  What’s the state of play, and what’s the alternative for the losers, their creditors, and the companies that would acquire them?Continue Reading Budding Woes: Navigating the Weedy Waters of Cannabis Companies in Financial Distress