May 22, 2019 | Law360

Distressed Cannabis Companies See Hope in 9th Circ. Ruling

1 min

On May 22, 2019, Keith Owens published "Distressed Cannabis Companies See Hope in 9th Circ. Ruling" in Law360. The following is an excerpt:

Until now, bankruptcy courts have been quick to dismiss bankruptcy cases filed by state-licensed cannabis growers and dispensaries, concluding that such entities were ineligible for federal bankruptcy relief because they violated the Federal Controlled Substances Act of 1970, or the FCSA.

However, on May 2, 2019, in Garvin v. Cook Investments, the U.S. Court of Appeals for the Ninth Circuit affirmed an order confirming a Chapter 11 plan of reorganization filed by a landlord that leased space to a cannabis grower licensed in Washington, rejecting the U.S. Trustee's argument that the plan should be denied because it violated Section 1129(a)(3) of the Bankruptcy Code which requires that a plan be "proposed in good faith and not by any means forbidden by law."

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