Luther G. Wright and Lyndy E. Wright

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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re
LUTHER AND LYNDY WRIGHT, No. 07-10375
Debtor(s).
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Memorandum re Marijuana Cultivation and Chapter 13
_________________
Debtors Luther and Lyndy Wright cultivate marijuana for sale to medical clinics. Their business is
perfectly legal under California law and the debtors obey all state laws and pay taxes just like any other
business owners. They have proposed a Chapter 13 plan which relies upon income from their cultivation.
Unfortunately for them, marijuana cultivation is still a federal crime. The U.S. Trustee and the Chapter 13
trustee have objected to their plan. The U.S. Trustee also seeks dismissal, arguing that the debtors are not
eligible for Chapter 7.
In order to have a plan confirmed, the debtors must show, pursuant to § 1326(a)(3) of the
Bankruptcy Code, that their plan is proposed in good faith and not by any means forbidden by law. While the
court has no problem finding that the Wrights have filed their plan in good faith, the court interprets the section
as barring confirmation of a plan which relies on an activity forbidden by any law. Since federal law makes
their business a crime, it is no saving grace that the business is lawful under state law.
The court finds the U.S. Trustee’s arguments regarding the unavailability of Chapter 7 to be both
flawed and premature. The mere fact that a trustee cannot liquidate the debtor’s assets does not make the
debtor ineligible for Chapter 7 relief. In a non-individual case, inability to liquidate an estate may well render a
Chapter 7 case pointless and subject to dismissal. However, in an individual Chapter 7 case there are two
purposes: liquidation of an estate and discharge of a debtor. The ability to liquidate an estate is not a
Entered on Docket
August 03, 2007
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 07-10375 Doc# 32 Filed: 08/03/07 Entered: 08/03/07 15:05:58 Page 1 of 2

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prerequisite to a discharge. In any event, this discussion is moot until and unless the debtors seek relief in
Chapter 7.
For the foregoing reasons, confirmation will be denied. The case will be dismissed on the tenth day
after entry of an appropriate order unless the debtors have converted the case to Chapter 7 or proposed a
plan which does not rely on illegal activity. The motion of the U.S. Trustee will be denied without prejudice.
The Chapter 13 trustee shall submit an appropriate form of order.
Dated: August 3, 2007
SAlan Jaroslovsky
U.S. Bankruptcy Judge
Case: 07-10375 Doc# 32 Filed: 08/03/07 Entered: 08/03/07 15:05:58 Page 2 of 2