The cannabis industry has experienced explosive growth in recent years as more states legalize both medical and recreational marijuana. In Georgia, some medical use is allowed and several of the state’s largest cities, including Atlanta, have passed decriminalization measures. However, this burgeoning sector faces unique challenges, including limited access to traditional banking services and the ongoing federal prohibition. One of the most significant hurdles for cannabis businesses is the lack of bankruptcy protection.
Currently, cannabis-related businesses are ineligible for bankruptcy relief due to the fact that federal law still considers marijuana to be an illegal controlled substance. This has meant that if a cannabis company encounters financial difficulties, it has limited options for restructuring its debts or liquidating assets in an orderly manner. The consequences can be devastating, leading to job losses, economic instability and a ripple effect throughout the industry.
Recognizing the critical need for bankruptcy protection, lawmakers are beginning to introduce legislation aimed at addressing this issue. These efforts seek to create a legal framework that would allow cannabis businesses to access the bankruptcy system while still complying with federal law. Supporters of the change are hoping that the planned move of marijuana from Schedule I to Schedule III in the federal classification of controlled substances will be pivotal in their efforts. However, rescheduling will not automatically trigger a shift in bankruptcy law, and many states, including Georgia, have no plan to reclassify marijuana into the category with less dangerous drugs.
Georgia has not legalized recreational cannabis but does grant licenses for businesses to sell low-THC oil for medical use, and it seems likely that laws pertaining to marijuana cultivation and sale will continue to evolve. Cannabis businesses must continue to navigate the legal landscape with caution. It is essential to consult with experienced legal counsel to understand the risks and potential opportunities associated with operating in this industry. By staying informed and proactive, companies can increase their chances of weathering financial storms and achieving long-term success.
At Jeff Field & Associates, we provide skillful bankruptcy counsel to Georgia small businesses. Whether your company operates in the cannabis industry or not, If you have questions or concerns about bankruptcy protection for your cannabis business, please call 404-381-1278 or contact us online for a consultation. Our offices are in Athens, Douglasville, Gainesville, Lawrenceville, Marietta and Scottdale.