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Selling Cannabis? Don’t Hope for Bankruptcy Protection

Because marijuana is still under the Controlled Substances Act, federal courts have generally refused to allow marijuana businesses to file bankruptcy, even in states where the sale of cannabis is legal.

Without bankruptcy protections, marijuana entrepreneurs may be denied access to debt restructuring, which could expose them to personal liability to creditors of their business.  These businesses must treat their debt portfolio with great caution or consider getting out of the business altogether until federal laws change.