BANKRUPTCY BLITZ: HOW COURTS PENALIZE DEBTORS DESPITE LACK OF CAUSE AND JURISDICTION UNDER THE APPROPRIATIONS ACT

Authors

Emily Levesque

Abstract

Suppose you currently reside in one of the many states that have legalized the use of marijuana. In that case, you have the right to confidently walk into a dispensary and purchase marijuana products—you would not be arrested the second you hand cash to the teller. You could legally take the product back home to do with it as you please within the bounds of state law. If you were ever a cannabis connoisseur, you could decide to purchase a percentage of that dispensary. At the highest level, if you felt particularly entrepreneurial, you could legally apply for and open your very own dispensary.

Despite your freedom to utilize the marijuana industry in select states, marijuana remains an illegal Schedule I substance under the federal Controlled Substances Act. Unbeknownst to many individuals who are excited to join the up-and-coming industry, many Debtors in need of bankruptcy relief may have their cases dismissed, despite never acting illegally under state law. Yet, bankruptcy courts across the country are uncertain if there’s a standard to dismiss a case based solely on an individual’s involvement in the marijuana industry.

This Note will analyze the United States Bankruptcy Code’s patterns of dismissal, including the “for cause” standard and “means forbidden by law” standard. Ultimately, this Note will argue that the United States Trustee does not have jurisdiction under the Appropriations Act to dismiss a Debtor’s bankruptcy solely for participation in the medical marijuana industry. Lastly, this Note will propose practical solutions that could prevent ongoing harm to Debtors invested in the marijuana industry without the knowledge that they may not receive federal bankruptcy relief if they are not successful in the emerging market.

Recommended Citation

Emily Levesque, BANKRUPTCY BLITZ: HOW COURTS PENALIZE DEBTORS DESPITE LACK OF CAUSE AND JURISDICTION UNDER THE APPROPRIATIONS ACT, 47 W. New Eng. L. Rev. 276 (2025), https://digitalcommons.law.wne.edu/lawreview/vol47/iss2/6