Selling to Pot Growers Bars Equipment Retailers From Bankruptcy

Sellers of hydroponic equipment used by marijuana growers can’t turn for help to the bankruptcy code, which doesn’t afford protection to stores offering gear used to make illegal drugs.

A Colorado federal judge ruled Jan. 18 the debtors knew that their customers cultivated marijuana, so the sale of related equipment was in violation of a federal law.

Several courts have previously ruled that marijuana growers or distributors—even in states where it is legal—can’t be protected by federal bankruptcy laws because the production and sale of pot is illegal under federal law. The decision by William J. Martinez, U.S. District Judge ...