KALAMAZOO –A Kalamazoo cannabis company’s recent Chapter 11 bankruptcy filing will test some particularly murky legal waters and could potentially set a legal precedent for other cannabis-related businesses facing insolvency.
Master Equity Group LLC on April 20 filed with the U.S. Bankruptcy Court in the Western District of Michigan under subchapter V of the federal bankruptcy code, a relatively new but frequently used measure designed to expedite the bankruptcy process for small to mid-sized companies.
In court filings, Master Equity CEO Adam Tucker described Master Equity as a “holding and management company for several related-entity businesses operating in the cannabis industry.” In this role, Master Equity Group buys or leases property to sublease to cannabis businesses along with providing accounting, payroll and other centralized functions. Kalamazoo-based Cannamazoo Recreational Weed Dispensary is one such brand.
However, the case is far from an ordinary bankruptcy filing. Master Equity Group profits from its involvement — albeit indirectly — in the production, marketing, sale and distribution of marijuana, which is still illegal at the federal level.
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