In Medical Marijuana, Inc. et al v. Horn, 604 U.S. ___ (2025), the Supreme Court of the United States (SCOTUS) engaged in a lively statutory interpretation debate over the reach of the civil provisions of the Racketeer Influenced and Corrupt Organizations Act (RICO). Although rarely confronted with fact patterns concerning the nation's burgeoning cannabis industry, this case proved to be an exception for SCOTUS. Though this case will likely have minimal impact on employers, it does provide some important reminders for businesses engaged in the production of cannabis products.
Here, plaintiff truck driver Douglas Horn, whose work was regulated by the Department of Transportation (DOT), sought medical relief through use of an over the counter CBD tincture called "Dixie X" in order to treat chronic pain from an earlier auto accident. Like THC, CBD is a chemical compound found in the cannabis plant. But CBD is not generally considered to have the same psychoactive or mind-altering properties as THC. Concerned that a positive drug screen for THC would result in termination of his employment, Horn claims to have conducted research to confirm that Dixie X contains no THC. Horn maintained that before use he even called the company's customer service line to ensure that Dixie X was "THC-free" as it had been advertised, and the company represented that the product contained no THC, only CBD.
However, shortly after he began using the product, Horn's employer selected him for a random drug test, which is common for many DOT-regulated truck drivers. Unfortunately, Horn tested positive for THC. After refusing to go to a drug treatment program, which he argued would be an admission that he uses illegal drugs, Horn's employer fired him. Horn subsequently ordered another bottle of Dixie X and sent it to a lab for testing. Horn alleged that, contrary to the product's advertising, Dixie X tested positive for THC.
Horn sued Medical Marijuana, Inc., Red Dice Holdings, LLC, and Dixie Holdings, LLC – three entities responsibly for the production and sale of "Dixie X." Horn alleged that they conspired to damage him by causing him to wrongfully lose his job due to the positive THC test. RICO creates a civil action for "[a]ny person injured in his business or property" by reason of a criminal RICO violation." The District Court dismissed Horn's claim, holding that RICO forecloses recovery for personal injury and for business or property harm that results from personal injury (in this case, presumably, the unwanted ingestion of THC). The Second Circuit reversed, holding that civil RICO does not foreclose an action to recover business or property loss when the loss stems from a personal injury. This extended a circuit split on the issue.
SCOTUS granted certiorari to resolve the circuit split and answer the narrow question of whether civil RICO categorically bars recovery for business or property losses that derive from a personal injury. SCOTUS answered in the negative and affirmed the Second Circuit's decision in favor of Horn. Specifically, SCOTUS held that, under civil RICO, §1964(c), a plaintiff may pursue an action and seek treble damages for business or property loss even if the loss resulted from a personal injury. Stated differently, SCOTUS held that "[t]he phrase 'injured in his business or property' does not preclude recovery for all economic harms that result from personal injuries." Justices Thomas, Kavanaugh, Alito, and Chief Justice Roberts dissented, arguing that Horn was not "injured in his business" when he lost his job, but instead suffered a personal injury that is not compensable under RICO.
Horn offers insights for cannabis producers/sellers. For businesses that produce and sell products derived from cannabis, the decision serves as a warning relating to marketing, advertising, and quality control. Caution is warranted before touting a CBD product as THC-free. Failure in this regard could result in a civil RICO action by an individual who experiences business or property loss stemming from unknowing consumption of THC via a product sold as THC-free. Horn is just one of a string of cases that have recently popped up premised on a theory of liability whereby users of purchased cannabis products attempt to sue the producers of such products based on unexpected positive drug tests for THC, the psychoactive cannabinoid found in the cannabis plant.
As for employers, insight from Horn may be drawn, potentially, from what the decision lacks. The decision offers no indication that Horn's employer violated any law through its drug testing program or decision to end Horn's employment. Horn's status as a DOT-regulated truck driver, however, is material. In a non-DOT regulated setting, terminating an employee who tests positive for THC could result in viable employment claims, depending on the circumstances. Also, the issue that SCOTUS addressed in Horn was narrow. The majority opinion does not resolve any issues regarding the employment relationship.
Originally published 21 April 2025
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