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Bankruptcy court rejects medical marijuana expenses

On Behalf of | Sep 17, 2019 | Chapter 13 Bankruptcy

People who use medical marijuana in Texas may run into problems in bankruptcy court when it comes time to set up a court-ordered repayment plan. Businesses in the marijuana industry have had trouble seeking bankruptcy protection, even in fully legal states, due to the continuing federal criminalization of cannabis under the Controlled Substances Act. Bankruptcy courts have ruled that they cannot provide relief from debts to companies whose businesses violate federal law despite state legality. While these cases dealt with companies directly involved in the cannabis business, medical marijuana has arisen as an issue in some personal bankruptcy cases.

When filing for Chapter 13 bankruptcy, individuals can retain many of their assets without liquidating them. However, they must make a plan to pay off their debts over the years to come. Many individuals who earn too much to file for Chapter 7 bankruptcy but still face unrepayable debts opt for Chapter 13 bankruptcy. The repayment plan takes into account monthly expenses that are deducted from the debtor’s disposable income. One bankruptcy court has rejected an attempt to deduct expenses for prescribed medical marijuana. The people filing for bankruptcy said that they spent $900 each month on prescribed cannabis.

However, the Office of the United States Trustee objected to the debtors including this amount as part of the payment plan. The bankruptcy court agreed with that objection, ruling that marijuana expenses could not be deducted. Many people have raised concerns about this outcome given the growing acceptance of medical marijuana as a prescribed treatment for serious conditions.

Chapter 13 bankruptcy can be an option for people who cannot pay their bills but still earn too much income to qualify for Chapter 7. A bankruptcy lawyer can provide advice and guidance on specific issues for people to keep in mind when seeking debt relief.