A Denver based pot grower recently filed for bankruptcy protection raising questions about the legality selling off $130,000 of assets in the form of marijuana leaves.
CGO Enterprises grows medical marijuana and filed for bankruptcy protection on May 1st. In an effort to pay off creditors, bankruptcy attorneys will sell off assets, but in this particular case they may hit a roadblock.
CGO filed for Chapter 11 debt protection, owing over $80,000 to their landlord who has moved to evict.
Even though Colorado allows the cultivation of marijuana for medical purposes, the laws state that failed growers must seize their stashes to authorities.
This puts the Denver U.S. bankruptcy judge in a tough position and raises the question if they would be comfortable making decision about a reorganization plan that would entail an activity that is illegal, in this case selling drugs.
CGO may be unable to obtain additional financing to continue operations since banks are reluctant to make loans to an industry that are under the watchful eye of the Drug Enforcement Agents.
While this is a very complicated bankruptcy that will likely set precedents in the state, most bankruptcies are less complicated for a bankruptcy lawyer.
Bankruptcy is a way for a business or an individual to get debt relief and make a fresh financial start. A consultation with a bankruptcy attorney can help the debtor decide whether a Chapter 7 or Chapter 13 debt protection structure will be in their best interest.