There Will Be a Need in the Next Four to Five Years for Bankruptcy Relief
Video Transcribed: Oklahoma Bankruptcy Attorney Edward Kelley here, answering your bankruptcy questions with oklahomacitybankruptcyattorney.pro. Today, doing a quick video about medical marijuana and bankruptcy.
So this obviously is a brand new issue since we’ve just had legalized marijuana in a very recent past. And so where does that leave them? So the deal is, many States have legalized marijuana, whether medical, recreational, or for various uses.
Oklahoma although still a medical marijuana state, in many ways is one of the freest. It was done on the way out by former governor, Mary Fallin, not much regulation, not a lot of specifics were put in place. However, for all these States, the tension is the federal government has not legalized it. It’s still considered illegal at the federal level.
And that may or may not change anytime in the near future, but while it is federally illegal, one ramification is that medical marijuana businesses are not eligible for bankruptcy relief. So these businesses often with substantial assets, substantial cashflow, don’t have anywhere to turn to for reorganization or restructuring.
And it’s typical in business when a high demand industry goes into effect, particularly one that’s so unregulated, you see shops springing up everywhere, production, retail, et cetera, processing, and then slowly, Darwinian fashion, it’ll weed itself out and you’ll emerge with a few big providers and a lot of people will go under.
So there’s probably going to be a need in the next four to five years for bankruptcy relief, however, not entitled to it right now. So what’s the hypocrisy of that. Well, the government still taxes you if you’re a medical marijuana business, so they don’t have a problem taking taxes from you, they just won’t give you bankruptcy relief. So what can you do?
As of now not much. There is some legislation that your business can be put into a receivership and receivership is like a private bankruptcy. And from there the assets can be sold and distributed, but you’re not going to have the US trustee or the protections of the federal bankruptcy.
So, just wanted to put this out there. So for those of you medical marijuana producers, processors, distributors, if you’re having problems with your business, just contact me directly. I’m staying up, Wirth Law, my firm, we specialize not only in bankruptcy, but in medical marijuana law and representation of businesses. So we are on top of this. So if you have any questions about your options, it’s very case specific.