United Cannabis’ Bankruptcy Threatened by Marijuana’s Illegality

United Cannabis Corp. is facing potential dismissal of its Chapter 11 bankruptcy case because marijuana is illegal under federal law.

“Despite being legal under state law, activities associated with the marijuana industry are illegal under federal law and cannot be condoned by the bankruptcy courts,” Judge Joseph G. Rosania of the U.S. Bankruptcy Court for the District of Colorado said Wednesday.

United Cannabis and the Office of the U.S. Trustee, the Justice Department’s bankruptcy watchdog, have until May 4 to explain why the case shouldn’t be thrown out, Rosania said in an order.

United Cannabis filed for Chapter 11 bankruptcy ...