Cannabis companies lacking bankruptcy protections can explore state options

As the trend to legalize the medical and recreational use of marijuana continues to blaze through the states, federal law, and bankruptcy courts by extension, have not yet followed suit. Bankruptcy courts have historically prevented cannabis - and even cannabis-ancillary companies - from filing for protection under the United States Bankruptcy Code because marijuana remains illegal under the Controlled Substances Act (CSA) at the federal level. Consequently, financially distressed companies in states where marijuana is legal still have limited restructuring options and must rely on state law options.