University of Miami Law Review


Caitlyn Cullen


A new marijuana industry has emerged in the United States in the wake of state-by-state legalization of marijuana, and entrepreneurs, investors, and other advisory services are increasingly viewing the marijuana industry as an area of legitimate business opportunity. However, potential investors have been hesitant to establish formal relationships with marijuana businesses that operate legitimately in the eyes of the state but in a cloud of legal uncertainty at the federal level because the Controlled Substances Act criminalizes marijuana. This Note identifies two economic consequences of the conflicts of state and federal law and suggests a temporary solution that would allow states to capture the financial benefits of this industry while the federal government works towards a more permanent, nation-wide solution.

The first economic consequence that this Note identifies is that foreign marijuana companies have strategic advantages over U.S. marijuana companies. Investors prefer foreign marijuana companies, particularly those in Canada, instead of the U.S. companies operating in a similar manner. Further, some of these foreign marijuana companies have successfully listed on public U.S. stock exchanges while their domestic counterparts have not been able to, giving foreign competitors greater access to U.S. capital markets than U.S marijuana companies.

The second economic consequence this Note discusses is that marijuana companies have been precluded from seeking the protections of bankruptcy law. This Note also suggests that federal bankruptcy courts are equipped to address some of the financial consequences created by this legal disparity. In doing so, they could provide a greater level of comfort to investors and encourage legitimate business development, thus allowing states that have chosen to legalize marijuana to realize the economic benefits of the industry while the federal government navigates the broader issue of federal policy on marijuana.