Appeal: Pot-Derived Assets Should Be Protected In Bankruptcy

COLORADO:  The federal government cannot passively allow a billion-dollar marijuana industry to flourish by not prosecuting certain crimes and then later deny its participants bankruptcy protection, a new court filing says.

By refusing to allow marijuana-derived assets to be protected in bankruptcy in the same way other assets are, the government is passively prosecuting the crimes it had earlier said it would not, “a Catch-22” of the U.S. Department of Justice’s own making, according to an appeal filed by a Denver couple whose bankruptcy was dismissed because much of their income was derived from a medical marijuana business.

Attorneys for Frank and Sarah Arenas of Denver argue in a 43-page brief that a bankruptcy judge erred when he dismissed their petition in August because their assets were derived from activity that is illegal under federal law.

“The (Arenases) should not be faulted, or more importantly lose the right to a discharge of their debts, for playing by rules created by the same agency that seeks to dismiss their bankruptcy case for breaking those rules,” attorney Daniel Garfield wrote, arguing the court could simply refuse certain assets and allow the case to continue.

Read full article @ Denver Post

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