Faculty Scholarship

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"Twenty-three states and the District of Columbia authorize the use of marijuana in some form for medical purposes.1 The fact that almost half of all U.S. states now permit medical marijuana use is significant, particularly in light of the fact that close to half of these jurisdictions have legalized the use of marijuana in the last five years.2 In addition, in the past three years, four states and the District of Columbia have legalized marijuana for recreational use.3 Despite the fact that many states have legalized the cultivation, sale and use of marijuana, these actions remain illegal under the federal Controlled Substances Act of 1970 (CSA).4 Moreover, it is also illegal under the CSA to “rent, lease, profit from or make available for use” a location for the manufacture, storing or distribution of a controlled substance.5 In addition, federal criminal law criminalizes actions to aid and abet the manufacture, distribution or dispensing of marijuana.6 Not surprisingly, the legalization of marijuana for medical and recreational uses has resulted in the development of a multi-billion-dollar industry consisting of producers, developers and distributors, and the landlords, vendors and others who do business with these new entrepreneurs.7 Inevitably, some of these burgeoning marijuana businesses and the companies that service them will fail. Given that the marijuana business is illegal under federal law, what happens if these failing businesses seek relief under federal bankruptcy laws? This article examines two cases that have recently addressed this question." [excerpt]