Bankrupt Cannabis Company Beats Government in Wind-Down Fight

A former marijuana grower and distributor can wind down its estate in bankruptcy, a judge concluded in a rare decision overruling efforts by the Justice Department to dismiss the proceedings.

The US Trustee, the Justice Department’s bankruptcy monitoring division, argued that The Hacienda Company can’t avail itself of bankruptcy protections because its cannabis-related business dealings and assets are illegal under the Controlled Substances Act. Judge Neil W. Bason of the US Bankruptcy Court for the Central District of California rejected that argument Wednesday.

The judge’s decision marks the second time he denied US Trustee efforts to dismiss Hacienda’s case, punctuating ...