He Who Comes into Court Must Not Come with Green Hands: The Marijuana Industry’s Ongoing Struggle with The Illegality and Unclean Hands Doctrines

Imagine a hardworking marijuana dispensary owner, Mary Jane. Mary operates her marijuana business legally under the laws of her state. Mary contracts with James Chong for ten pounds of marijuana and pays the amount due, $45,000, in full and up front. Upon the scheduled delivery time, Chong tells Mary it will take about six more months than expected to make the delivery, clearly breaching the contract. Mary is devastated, as she was counting on that delivery to fill several orders. The solution seems clear—Mary should bring a lawsuit against Chong for breach of contract and collect consequential damages or rescind the contract and seek restitution. As this Note explains, the court Mary turns to might recognize no remedy and “wash its hands” of the contract because it is in direct violation of federal law banning the sale and consumption of marijuana, regardless of her state’s laws legalizing marijuana. Further, should this breach be so egregious or cause such a great degree of harm that Mary has no choice but to seek relief from the bankruptcy courts, it is likely she will be turned away. This Note explores this problem facing the marijuana industry today and proposes solutions for the courts, as well as the parties, to avoid an unfair situation for plaintiffs or debtors like Mary.

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