A License to Foreclose Obtaining a Security Interest in a Government-Issued License

The issue arises not merely with respect to cannabis licenses, but also with respect to liquor licenses, gaming licenses, broadcast licenses, and many other government-issued licenses and permits. Because the results vary, secured lenders relying on a license as collateral need to do careful diligence. [...]for an asset to be collateral subject to an Article 9 security interest, the asset must be personal property, and the debtor must have rights in the property or the power to transfer rights in the property. A few weeks later, the California Court of Appeals ruled that a California statute that restricts the assignment of lottery winnings trumped 9-406(f), because the specific rules in the Lottery Act controlled over the more general rules in Article 9, even though Article 9 was enacted more recently. [...]when 9-406(f) or 9-408(c) conflicts with another state statute, it ¡soften impossible to know for sure which will control. [...]for 9-408(c) to apply to an asset, that asset must, in the first instance, be personal property.