A bankruptcy court case has been thrown out of court in Colorado, not helping the complicated and rocky relationship between medical marijuana and banking. Well-run businesses need banking services, but many banks have been hesitant to offer services to the operators of medical marijuana businesses, claiming marijuana’s federal legal status would put them in the position of racketeering, money laundering, or some other drug crime activities.
A Denver medical marijuana farm, CGP Enterprises LLC, has filed chapter 11. They had put their complicated financial problems along with their assets, about $130,000 of unharvested marijuana plants, at the mercy of the Bankruptcy Courts in Denver. Any company that is seeking Chapter 11 protection from its creditors is required to submit a reorganization plan to a federal bankruptcy judge.
In this case, the May 1st bankruptcy petition caught the eye of US trustee, Richard Wieland whose job it is to patrol bankruptcy cases for the Justice Department. He noticed that the primary asset of the troubled company was the $130,000 of unharvested marijuana. To settle the case, the company would have to make a plan of harvesting and distributing the remaining marijuana, an issue that would be part of the bankruptcy asset ruling. Wieland urged the Colorado State court to keep their hands clean by dismissing the case. Wieland sent some advice to the judge; a company should have the hopes of proposing a “legally and economically feasible plan of reorganization” – one he felt could not include criminal activity and a plan to allow the company to continue to profit from criminal activity.
CGP Enterprises had fallen short of the State of Colorado’s requirements and was denied a license to grow medical marijuana in November. The company sought protection to stop an eviction from a Denver warehouse where it grows the plants. In the court filings, the company said that they owe the landlords about $800,000.
External Links:
http://blogs.wsj.com/bankruptcy/2012/05/18/watchdog-asks-to-stub-pot-growers-bankruptcy/
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