In yet another set back to the emerging medical and commercial cannabis market, a federal judge in Denver, Colorado has denied bankruptcy protection to the business concerns of Frank Anthony Arenas.
While stating that he recognized that the denial of such protection to a debtor is “devastating,” Judge Howard Tallman nonetheless felt compelled to do so because marijuana remains a Schedule I drug under the federal Controlled Substances Law which trumps any state statute that otherwise legalized Mr. Arenas’ business.
Rationalizing his decision, Judge Tallman stated that “[v]iolations of federal law create significant impediments to the debtors’ ability to seek relief under federal bankruptcy law in a federal bankruptcy court.”
This is a crushing blow the blossoming cannabis trade, but it will pass as other illicit businesses and services such as pornography and legalized prostitution have historically overcome similar hurdles to gain federal protection under the bankruptcy laws.
