Law.com Subscribers SAVE 30%
Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.
Bankruptcy Court Creates Potential Loophole for Cannabis Businesses Seeking Ch. 7 Protection
In a recent opinion, the U.S. Bankruptcy Court for the Northern District of California (the court) in the matter of In re Callaway, No. 24-30082-DM, 2024 WL 3191673 (Bankr. N.D. Cal. June 26, 2024), created a potential loophole for plant-touching cannabis businesses desiring bankruptcy protection when it denied two separate motions to dismiss an individual's Chapter 7 bankruptcy case. In particular, the court found that the simple administration of certain ownership interests of retail cannabis dispensaries "is not in and of itself necessarily equivalent to administering marijuana assets." And, as such, a Chapter 7 trustee could administer and monetize these ownership interests without violating the law.
Background
In this case, Christopher Michael Callaway (the debtor) owned and operated several retail cannabis dispensaries in San Francisco. One of the dispensaries never opened due to litigation with the M. Dattani Credit Trust (the Dattani Trust), which litigation ultimately led to the debtor filing for bankruptcy relief under Chapter 7 of the Bankruptcy Code (the code).
In addition to the cannabis dispensaries, the debtor also had other noncannabis businesses along with certain intangible property such as domain names. The debtor did not list any tangible assets related to cannabis in his Schedules A/B (the debtor's property) because all of the cannabis assets were owned by the debtor's LLCs "and as such, were not property of the bankruptcy estate." Additionally, the debtor scheduled claims for accrued but unpaid distributions as a minority owner of one of the cannabis dispensaries, which he claimed was valued at several hundred thousand dollars. In his Schedule I (the debtor's income), the debtor reported post-petition monthly income from a cannabis business.
This premium content is locked for Entertainment Law & Finance subscribers only
ENJOY UNLIMITED ACCESS TO THE SINGLE SOURCE OF OBJECTIVE LEGAL ANALYSIS, PRACTICAL INSIGHTS, AND NEWS IN ENTERTAINMENT LAW.
- Stay current on the latest information, rulings, regulations, and trends
- Includes practical, must-have information on copyrights, royalties, AI, and more
- Tap into expert guidance from top entertainment lawyers and experts
Already a have an account? Sign In Now Log In Now
For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.
The Stranger to the Deed Rule
In 1987, a unanimous Court of Appeals reaffirmed the vitality of the "stranger to the deed" rule, which holds that if a grantor executes a deed to a grantee purporting to create an easement in a third party, the easement is invalid. Daniello v. Wagner, decided by the Second Department on November 29th, makes it clear that not all grantors (or their lawyers) have received the Court of Appeals' message, suggesting that the rule needs re-examination.