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Opportunities Abound Despite Legal Uncertainty Surrounding Cannabis Industry

Pressures Continue to Grow in the Ag, Logistics Industries

It is rare that you find a restructuring professional without an opinion (or two) on an insolvency topic, but when we started to plan this month’s issue of the JCR, the reactions were more restrained. Given the continuing struggle between federal and state law, many U.S. practitioners didn’t know what they could say. Reasons varied but some were limited by firm policies on these issues, and others simply thought the law was too unclear to provide useful guidance.

When it became clear that Canada would legalize recreational cannabis three years ago, Canadian professionals of all stripes pivoted to assist this nascent industry. Restructuring professionals were no different, but we had few guideposts for how the regulatory regime would interact with applicable insolvency statutes. As some of the articles in this month’s edition suggest, while U.S. law is still in a place of uncertainty, for innovative thinkers, the opportunities abound.

In this issue, Leah Eisenberg of Mayer Brown LLP reviews some of the recent decisions restricting access to the U.S. Bankruptcy Courts for any participant in a cannabis business. She notes that while some U.S. Bankruptcy Courts are sympathetic to debtors touching the cannabis industry, their hands are largely tied by federal law.

Michael Riela of Tannenbaum Helpern Syracuse & Hirschtritt LLP considers some state law alternatives available to participants in the cannabis industry, including assignments for the benefit of creditors (ABCs), UCC enforcement, and receiverships. He also takes a look at alternative venues available for those excluded from the federal courts.

Michelle Grant of Pricewaterhouse Coopers Inc. and Lance Williams of McCarthy Tétrault LLP explore some of the lessons learned from Canadian cannabis insolvencies, including the types of orders that have been granted to address novel issues and how court officers can work with cannabis regulators to limit disruption to the business during a court proceeding.

Bridging the gap between the U.S. and Canada, Jarett P. Hitchings and Malcolm M. Bates of Duane Morris LLP consider the potential application of Chapter 15 to cannabis companies in the context of a foreign insolvency in a country that permits the legal operation of the debtors’ business. The authors conclude that foreign debtors must proceed with caution until there is more legislative clarity.

Jodi Porepa, Jeffrey Rosenberg, and Elaine Carey of FTI Consulting review the current trends in the cannabis market and where professionals can expect to see new opportunities for investment and activity.

Lastly, Bradley Thomas Giordano and Natalie Rowles of McDermott Will & Emory and Arun Kurichety of Petalfast Inc. and Kurichety Law PC offer some insights to the potential cannabis investor and some warnings for distressed investors who see opportunity in this space.

Natalie Levine

Natalie E. Levine


Natalie Levine is a partner in the Restructuring & Insolvency Group at Cassels. Her strength is working with U.S.-based clients to help them understand the challenges of the Canadian insolvency landscape and developing solutions in complex proceedings. Her practice focuses on corporate restructurings, with an emphasis on debtors, DIP lenders, and committees in cross-border proceedings. Levine’s restructuring matters encompass a variety of industries, including oil and gas, retail, manufacturing, transportation, and entertainment.

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