Oklahoma Bankruptcy on a Cannabis Dispensary is controlled by Federal Law. Businesses have been hit particularly hard due to Covid-19. This problem is particularly painful for Oklahoma medical cannabis dispensaries because they are not able to take advantage of federal assistance since marijuana is illegal under federal law. Even worse, medical marijuana dispensaries likely cannot file bankruptcy protection in Oklahoma. Here’s more on the conundrum.
What Are Medical Marijuana Dispensaries?
On June 26, 2018, Oklahoma voters approved Oklahoma State Question 788 (SQ 788), known as the Medical Marijuana Legalization Initiative. Essentially, Oklahomans supported the measure to legalize the use, possession and cultivation of marijuana for medical purposes. As of August 24, 2018, people have been allowed to apply for licenses with Oklahoma Medical Marijuana Authority (OMMA). Notably, OMMA has issued thousands of medical marijuana dispensary licenses which enable Oklahoma businesses to sell flower, concentrates, edibles and more to patients and caregivers in the state. As of year-end 2020, Oklahoma boasts one of the largest medical marijuana dispensary markets.
Oklahoma Bankruptcy on a Cannabis Dispensary Not Yet Available
Particularly, while Oklahoma has made medical marijuana legal, the federal government has not. Critically, federal law controls bankruptcies in the United States. When a business experiences unmanageable debts, they often file for bankruptcy protection as a last resort. This enables them to potentially eliminate debts through a discharge in bankruptcy. So, because the federal government has not made marijuana legal, Oklahoma bankruptcy on a cannabis dispensary is not eligible for bankruptcy.
Fortunately, the U.S. House of Representatives just passed the Marijuana Opportunity Reinvestment and Expungement Act (MORE Act) which removes marijuana from the list of federally prohibited controlled substances. This landmark legislation, which has been received in the Senate on December 7, 2020, could change the protections that are available to medical marijuana dispensaries. Authored by Congressman Jerry Nadler (D-NY), this bill seeks to accomplish federal legalization through a few specific means including:
- Decriminalizing marijuana at the federal level by removing the substance from the list of scheduled substances under the Controlled Substances Act
- Allowing states to set their own policy on marijuana
- Requiring federal courts to expunge prior convictions
Available Options To A Financially Burdened Cannabis Dispensary
If you own a medical marijuana dispensary, then although bankruptcy is not a current option, other alternatives to it might still be on the table. First and foremost, assuming the debt is valid, you could privately arrange or workout unresolved debts with creditors before they file suit. If you arrange a workout, then you might be able to avoid a lawsuit, and you could negotiate a resolution that works for everyone.
Also, you could enter into an assignment for the benefit of creditors which is where you assign assets to a third party before winding up. A more invasive and controversial measure is a receivership which is where a creditor petitions the court for a third party to take control of your dispensary. In those cases, while you lose managerial control – you still might be permitted by the court to effect sales of the company’s assets. If you are able to control that process, you might ultimately owe less debts.
Hiring An Attorney To Help Resolve Your Financial Dilemma
The attorneys at South Tulsa Bankruptcy Law Office have extensive experience with bankruptcy and bankruptcy alternatives for individuals and businesses. We will carefully review your situation, risk exposure and goals. We are well versed on crafting strategies to fit your financial needs, taking into account all viable options. For a free consultation, reach out to South Tulsa Bankruptcy Law Office today by calling (918) 739-8984 or by contacting us online.
