Judge Montali US Bankruptcy CourtNorthern District of California issues opinion denying UST’s motion to dismiss an individual’s chapter 7 case where primary asset of the individual was an ownership interest in several plant-touching operating cannabis companies.

Jason Rosell Corporate Restructuring Attorney at Pachulski Stang Ziehl & Jones LLP  (Header Image)

Posted this interesting ruling on Linked in 29 June 2024

He writes

#Bankruptcy court doors for hashtag#cannabis companies continue to budge open in California. Judge Montali in the US Bankruptcy Court for the Northern District of California recently issued an opinion denying the UST’s motion to dismiss an individual’s chapter 7 case where the primary asset of the individual was an ownership interest in several plant-touching operating cannabis companies. The court made several key findings, including:

(1) the CSA does not prohibit owning or disposing of an interest in an entity that is engaged in a cannabis business;

(2) the only arm of the executive branch with an explicit mission to enforce the CSA is the UST in seeking to dismiss bankruptcies linked to the cannabis industry;

and (3) if a chapter 7 trustee is uncomfortable administering such assets, such trustee can be replaced. The court also acknowledged that abandonment of cannabis assets under section 544 is also available.