Business

Supreme Court Passes on Cannabis Labor Case

By Willis Jacobson Oct 9, 2020
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Willis Jacobson is an award-winning journalist whose career has spanned both coasts. Now based on the Central Coast of California, he has covered cannabis news and issues since 2015.
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Willis Jacobson is an award-winning journalist whose career has spanned both coasts. Now based on the Central Coast of California, he has covered cannabis news and issues since 2015.
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The U.S. Supreme Court has decided not to hear a case involving cannabis industry labor protections, sidestepping the question of whether federal laws protect those who work in federally illegal enterprises.

The high court rejected a petition for Writ of Certiorari, or further review, that had been filed by Helix Technologies, a firm that provides security services to cannabis businesses. Former employee Robert Kenney is suing the company, claiming it did not pay him or other employees their proper overtime wages.

Helix defended itself in lower courts by arguing that Kenney, who provided armed security in compliance with Colorado state law, was not subject to the protections provided by the federal Fair Labor Standards Act (FLSA) because his job itself was federally illegal. That argument was rejected by two lower courts, leading Helix to appeal to the U.S. Supreme Court.

But on Monday, the justices declined to take up Helix’s appeal. That means the case will be able to proceed back in U.S. District Court in Colorado.

The case has been followed around the industry over its potential implications for labor rights. Although the Supreme Court will not provide any clarity on the issue, that could be a good thing for those who work in cannabis, according to at least one prominent attorney.

Griffen Thorne, a lawyer with the Harris Bricken firm, wrote about the case this spring after a federal judge rejected Helix’s argument and held that the FLSA does in fact apply to cannabis companies. Although Thorne acknowledged he didn’t expect the Supreme Court to take up the case, he pointed out that a Supreme Court review could carry “drastically unintended consequences” for cannabis workers in state-legal markets.

“If the Court takes the case up, it may reaffirm federal illegality in a manner that is very detrimental to states that have legalized cannabis and operators within those states,” Thorne wrote on Harris Bricken’s Canna Law Blog.

By declining the case, the Supreme Court effectively punted on a chance to provide regulatory clarity for cannabis companies and workers who are caught in a legal gray area between their state’s guidelines and the federal government’s prohibition.

In its petition for review, Helix argued that the Tenth Circuit broke with prior precedent by not granting its motion to dismiss Kenney’s suit, initially filed in 2017. The Tenth Circuit decision “deepens the confusion, conflict, and lack of uniformity” between state and federal laws regarding federal protections, Helix argued.

“In the absence of congressional action, which is not anticipated any time soon, this Court should rule that an individual perpetrating a federal drug crime is not entitled to federally mandated compensation for their efforts,” the petition read.

The petition went further by claiming the Tenth Circuit decision “confers the same rights on a mule trafficking methamphetamine for a cartel in Oklahoma as it does on a driver ferrying marijuana through the streets of Denver.”

Further complicating the legal questions is that Helix does not have the state licensing generally required of cannabis businesses that are explicitly breaking federal law. Rather, Helix supports those businesses.

In his lawsuit, Kenney accuses Helix of improperly classifying security guards as exempt employees and failing to pay out proper overtime.

Thorne, with Harris Bricken, wrote in May that it was difficult for him to envision a scenario in which the Supreme Court would disagree with the Tenth Circuit decision.

“It’s settled law at this point that tax laws apply to cannabis businesses, for example,” he said. “Even though those laws are admittedly very different, we just do not think the Court would give cannabis companies carte blanche to not comply with federal wage laws.”

Kenney is represented in the case by attorneys with labor law firm Josephson Dunlap, and Helix is represented by attorneys with Colorado-based Allen Vellone Wolf Helfrich & Factor. Neither firm immediately responded to messages for comment.

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