Medical Marijuana can Complicate Bankruptcy

A recent decision from Colorado's chief bankruptcy judge has made it more difficult for a debtor involved in Colorado's legal marijuana industry from obtaining relief in bankruptcy court.

Marijuana use and possession has been legalized under Colorado state law, but remains illegal under federal law. Bankruptcy is a federal law which is overseen by federal bankruptcy judges. Several bankruptcy cases have been dismissed by these judges on the basis that federal courts cannot be involved in administering cases which violate federal laws. Clients who are working or have worked in the marijuana industry and who are in financial distress need to carefully consider their options before filing for bankruptcy.

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