Colorado-based United Cannabis Corporation (“UCANN”) filed for Chapter 11 bankruptcy protection on April 22. Regular readers may recall that UCANN is the plaintiff in the first ever cannabis patent protection case which generally concerned liquid cannabinol formulations of a purified CBD and/or THC greater than 95%. That litigation is now stayed (paused) as a result of the bankruptcy filing. Although stories of struggling cannabis businesses—whether marijuana or hemp—are becoming all too commonplace, that UCANN even filed for federal bankruptcy protection is worth some attention.
Not that long ago, the notion of a cannabis company filing for bankruptcy was a nonstarter. We’ve been tracking this issue since 2014 when the odds of a cannabis company obtaining bankruptcy protections were “none to none.” (“Slim” was far too generous.) But as cannabis acquires legal legitimacy—whether that’s for getting high or for industrial hemp or the medicinal qualities of marijuana and CBD—bankruptcy courts have begun to take a look “under the hood” of matters that have some connection to cannabis, rather than toss them outright.
In 2019, the Ninth Circuit Court of Appeals—the federal appellate court that hears appeals from the trial courts of the west coast as well and nearby western states—upheld