Voters in eight states, including California and Florida, recently approved ballot initiatives to legalize the recreational and medical use of marijuana. Presently, 28 states permit the use of marijuana to different extents.

Even before the entry of these states to the market, the multi-billion dollar marijuana industry was growing quickly. As the industry has grown, so has the number and variety of individuals and businesses, including sophisticated investors, who have jockeyed to profit from its growth. However, despite its growth in recent years, the industry faces a host of challenges stemming from the reality that using or profiting from marijuana in any fashion, even if it is legal under state law, remains a federal crime under the Controlled Substances Act of 1970 (the CSA).1 This article examines one of these challenges: the ability to take advantage of the Bankruptcy Code.

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