Federal Discrimination Statutes and the Cannabis Industry: An Illegal Industry Still Subject to Federal Laws

5 Min Read By: Magdalen Blessey Bickford, Chase Stoecker, Heidi Urness

On its face, it appears to be counterintuitive: United States federal courts recognizing and enforcing workplace rights for employees working in an illegal industry. However, this is just the case when it comes to the marijuana industry. In fact, recent federal cases and administrative actions make it clear that, although participants in the marijuana industry may be engaging in conduct deemed illegal under federal law, cannabis companies must still comply with federal anti-discrimination laws.

Federal laws, such as Title VII of the Civil Rights Act of 1964 (Title VII), the Age Discrimination in Employment Act of 1967, and the Americans with Disabilities Act prohibit discrimination, harassment, and retaliation in the workplace. However, because the cannabis industry is still in its infancy, it should come as no surprise that there is a dearth of case law addressing how these laws will apply to the industry currently deemed illegal under federal law. One of the earliest cases to address this issue is Aichele v. Blue Elephant Holdings, LLC.[1] In Aichele, the District Court of Oregon considered retaliation claims filed by an employee who worked at a marijuana dispensary as a part-time “budtender.” After the employee complained about sexual harassment and workplace safety, her employer’s subsequent conduct and treatment of her in the workplace, the District Court ruled, constituted adverse employment actions that were reasonably likely to deter her from complaining in the future, thereby establishing a case for retaliation. Instead of addressing the legality of the workplace in the first place, or the legality of plaintiff’s own conduct by working in Oregon’s (federally prohibited) marijuana industry, the Aichele court instead squarely focused on the factors a plaintiff must necessarily allege in order to set forth a case for retaliation under Title VII, and determined that the employee had successfully done so.

More recently, the Maryland District Court ruled in favor of an African American marijuana dispensary budtender who properly pled claims for race discrimination under Title VII and successfully defeated the defendant dispensary’s motion for summary judgment in Jones v. Blair Wellness Ctr., LLC.[2] The Jones court, similar to the court’s analysis in Aichele, focused on the factual and legal elements necessary to state a claim for discrimination in violation of Title VII and ignored entirely the underlying fact that the conduct both parties were engaged with—participating in Maryland’s regulated marijuana industry—was in violation of federal law.

In addition to courts throughout the country enforcing a private person’s right to be free from workplace discrimination and retaliation, even in the context of the federally illegal marijuana industry, agencies of the federal government, while maintaining that the sale and use of marijuana is illegal, have also demonstrated that they will hold cannabis industry employers accountable for discrimination in the workplace. In EEOC v. AMMA Investment Group, LLC,[3] the U.S. Equal Employment Opportunity Commission (EEOC) filed a complaint in September 2020 against a marijuana dispensary and its parent corporation on behalf of several current and former employees. The employees claimed that a manager, who made inappropriate sexual comments and engaged in inappropriate touching, engaged in sex-based discrimination in violation of Title VII by creating a sexually hostile workplace. The parties settled the claims in the AMMA Investment Group case, with the defendant agreeing, among other things, to pay $175,000 in damages and to provide discrimination and harassment training to its employees.

What these cases demonstrate is that, although marijuana still remains illegal under federal law, both the federal government and the federal courts do not exempt cannabis industry participants from compliance with federal discrimination statutes. Discrimination in the workplace can result in significant monetary penalties, and it is therefore important that cannabis industry employers have both compliant and well-documented policies and procedures in place to address workplace discrimination issues. This is especially important because most states have passed their own workplace discrimination laws that mirror the federal laws, meaning claims could be brought against an employer at both the state and federal level for even a single instance of such misconduct.

The need for sound policies is further underscored by the fact that many states that have legalized the sale and use of marijuana (or are in the process of doing so) have also passed laws either recommending or requiring employers to provide sexual harassment and discrimination training for staff members. While these laws vary from state to state, they commonly require annual or bi-annual interactive training administered by an educator with expertise in preventing harassment, discrimination, and retaliation. Cannabis employers should be cognizant of these laws and ensure they comply with not only federal, but also additional state requirements.

Even if training is not legally required in a particular state, cannabis employers are well advised to take steps to ensure their employees are educated in this evolving area of law. Even mere allegations of workplace misconduct can be reputationally devastating for businesses in any sector. Further, not only does such proactive conduct mitigate the potential for a discrimination lawsuit in both state and federal courts, but cannabis industry participants are wary of whether courts will continue to take such a uniform approach to the application of federal workplace protections to the cannabis industry—that is, whether federal courts will continue to ignore the federal illegality of the defendant employer’s business conduct altogether. No reasonable operator in the space should knowingly provide the court an opportunity to hold their cannabis business to a less forgiving standard.

  1. 292 F. Supp. 3d 1104 (D. Or. Nov. 13, 2017).

  2. 2022 U.S. Dist. LEXIS 66919 (D. Md. Apr. 11, 2022)

  3. Case No. 1:30cv2786 (D. Md. Sept. 24, 2020).


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