ILLEGALITY OF MARIJUANA GROWING
legislatures enacted laws allowing
medical marijuana to be grown state
licensed nurserymen. And, in certain
states, it is legal to grow marijuana for
recreational use. The legality on a state
level and illegality on a federal level
created confusion when interpreted
under the federal bankruptcy clause
“not by any means forbidden by
law.”
The confusion ended when
the courts determined that violation
of CSA is “by any means forbidden
by law” for bankruptcy purposes.
What Is Not To Be Forbidden?
All of the clauses may at first
glance appear to be simple and state
that the plan is not to be proposed in
a manner, which would be forbidden
by law. One debtor argued, because
the plan’s proposal (as opposed to
the growing) was not “by any means
forbidden by law”8, the plan should
be confirmed. This argument was
rejected by the First Circuit’s BAP as
well as by the Colorado’s Bankruptcy
Court.9 The “prohibited by law”
clause includes the plan’s business
operations. If such are prohibited by
law, the plan could not be confirmed.
Is This An Issue Concerning The
Supremacy Clause?
It’s not so much an argument
of the Supremacy Clause, as opposed
to the plan being prohibited by a law. In
short, since there are federal statutes
that forbid the growing of marijuana, the
growing of marijuana is forbidden by a
law. “The issue does not need address
whether or not the federal law overrides
the state law. When addressing this
argument, one court concluded that the
debtor, “. . . does not suggest that state
legislation somehow nullifies federal
law and prevents federal enforcement
of the CSA [Control Substances
Act] within state borders.”0 From
such, the Colorado bankruptcy court
concluded the CSA violations constitute
something forbidden by law.1
Can A Law That Is Not To Be Enforced
Still Be Deemed Illegal?
In the Colorado case of
2
Arenas,
the debtor argued that the
United States Attorney’s choice not to
enforce the law made the CSA a law on
paper, and not “forbidden.” The court’s
answer to this argument was quite
simply in the negative. As stated by
the Colorado bankruptcy court, “Under
our federal system of government, a
state is perfectly free to, as Professor
Mikos3 puts it, ‘continue to look the
other way when citizens defy federal
laws.’ By the same token, the states
have no power to require any branch of
federal government to do the same.”4
Is There Any Implication That The
Federal Law Will Be Enforced In
Bankruptcy?
The simple truth is that
the bankruptcy court is a federal
court, and bankruptcy courts do not
embrace debtors who seek refuge
under the federal automatic stay while
simultaneously defying federal law
to implement and fund a plan. More
importantly, the federal court does not
want to be involved in administering
the fruits and instrumentalities of
the
federal
criminal
activity.5
National Association of Consumer Bankruptcy Attorneys