Michigan’s marijuana industry continues to advance. Despite the prevalence of these businesses within the State, marijuana remains illegal under Federal law. As a result, federal bankruptcy remains unavailable for entities or individuals in the cannabis industry. This tension has created difficult conditions for marijuana businesses that require bankruptcy or reorganization services. Although the range of federal insolvency options are limited for Michigan marijuana entities, one option that remains open is a State Court Receivership. In a Receivership, the State Court appoints a Receiver to act as an agent of the court to hold and maximize the value of the business assets for those who have an interest in the property including creditors and equity stakeholders.
Receivership is similar to the bankruptcy process in that the ultimate goal is to maximize the value of the business assets. It remains a viable option for businesses, or creditors, to use as a means of realizing an organized and court approved means of ensuring the assets of a business are preserved, and that their interests are protected. Receiverships for marijuana businesses is specifically made part of the Michigan Regulation and Taxation of Marihuana Act (MRTMA) and the Medical Marijuana Facilities Licensing Act (MMFLA). Those statutes authorize the Marijuana Regulatory Agency (MRA) to approve a Receiver to take control of a financially troubled marijuana entity.
Cannabis related businesses continue to face mounting competition within the marketplace. All parties that operate in the marijuana industry would benefit from better understanding of Michigan’s receivership laws. If you have questions about this issue, or any Receiver related matters, please contact Michael Almassian.
