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ARTICLE · 25 APRIL 2024

Budtender Bankruptcy Blindside

Seyfarth Shaw LLP
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In a recent legal development that underscores the intricate interplay between federal bankruptcy law and the cannabis industry, a court case has emerged involving a bankruptcy filing by an employee of a cannabis company.

United StatesInsolvency/Bankruptcy/Re-Structuring
Demetria Hamilton
Demetria Hamilton
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In a recent legal development that underscores the intricate interplay between federal bankruptcy law and the cannabis industry, a court case has emerged involving a bankruptcy filing by an employee of a cannabis company. It's well established that, because cannabis is generally considered a controlled substance under the federal Controlled Substances Act (CSA), certain cannabis related companies are precluded from obtaining debt relief through bankruptcy. Now individuals employed by cannabis companies might find themselves in the same boat. In Blumsack v. Harrington, 2024 Bankr. LEXIS 560* (March 2024), the United States Bankruptcy Appellate Panel for the First Circuit (the "Bankruptcy Appeals Court") upheld, albeit on different grounds, the United States Bankruptcy Court for the District of Massachusetts' dismissal of the Chapter 13 bankruptcy filing of an individual employed by a cannabis company, because of the source of the individual's income.

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