Chapter 11: A New Strategy for Medical Cannabis Businesses to Postpone Eviction by Feds?

Now here’s a novel method in the medical cannabis industry for staving off federal pressure to close: File for bankruptcy protection.

Mother Earth Alternative Healing, a marijuana dispensary in San Diego County, used this strategy to successfully turn away local deputies who arrived at the door armed with an eviction notice.

The cannabis center has been battling the feds in court for the better part of a year after the Obama administration went after the dispensary’s landlord as part of its effort to force MMJ businesses to close. After losing in the courts, the owners of the dispensary decided to file for Chapter 11 bankruptcy protection. When the police showed up to carry out the federal government’s wishes, Mother Earth workers handed them the bankruptcy filing. Surprisingly, the strategy worked, and the deputies left.

A spokesman for San Diego County Sheriff’s Department told San Diego CityBeat via email that “this is a civil matter between the business and the landlord. If/when their doors open, their permit – issued by the Sheriff’s Department – is valid.”

The big question now is will the same strategy work for dispensaries in other areas? It’s a gamble, for sure. It likely depends not only on state laws but also local MMJ regulations and could even come down to the discretion of local officers. But when faced with the other alternative – shut down entirely – this strategy might be worth pursuing (after talking to a lawyer, of course).