Despite growing public acceptance of marijuana and the wide-spread passage of state laws legalizing marijuana for medicinal and even recreational purposes, marijuana remains a criminal offense under federal law which presents profound implications for those involved in the marijuana industry who seek the protections of the Bankruptcy Code. Even in a growth industry, there remains a need — by debtors and creditors alike — for an orderly process for liquidation or restructuring of failing businesses. To date, twenty-nine states and the District of Columbia have enacted medical marijuana legislation, with eight of those states also permitting its recreational use. However, federal law is clear in treating marijuana as an illegal substance and no change is in sight on the federal level. In fact, there are current indications that the Department of Justice may be reversing the laissez-faire federal response to state-sanctioned marijuana adopted under the Obama administration. What effect then does engaging in business activities legal under state but not under federal law have on access to the bankruptcy process?

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