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Medical marijuana and Chapter 13 bankruptcy

Cannabis has been a difficult topic for companies seeking protection in Texas and across the country. As cannabis is legalized for recreational or medical use in a growing number of states and decriminalized in many more, the number of businesses associated with cannabis has grown. At the same time, some of these companies have failed and sought protection in bankruptcy courts. Overall, these companies have had a difficult time with many courts holding that the continuing federal criminalization of marijuana means that these companies can find no relief in the bankruptcy laws.

One Chapter 13 bankruptcy case involves the issue of medical marijuana but in a personal bankruptcy rather than in a corporate filing. Chapter 13 bankruptcy is an option that can help people to keep their assets while they pay off their debts in a court-approved payment plan. For people who make too much money to be eligible for Chapter 7 bankruptcy but still face crushing debt, Chapter 13 can be an important step toward debt relief. In order to construct the plan, the court will deduct monthly expenses to determine how much disposable income the debtor has.

The couple filing for bankruptcy reported that they had $900 in monthly medical marijuana expenses. Typically, prescription drug expenses may be deducted from a debtor’s disposable income. In this case, the bankruptcy court ruled that because marijuana remains federally illegal, that $900 would still be included in the couple’s disposable income. This leads to a significant conflict between keeping up with their medical cannabis usage or paying their repayment plan.

Many people who make a significant income are also facing unrepayable bills, especially when hefty medical bills or other large debts are involved. A bankruptcy lawyer may provide advice and guidance about Chapter 7 or Chapter 13 bankruptcy as options to provide debt relief.


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