Cannabis Dispensaries and Federal EMPLOYMENT Law
*For clarity, the word “cannabis” will reference any product with a THC percentage above 0.3%*
Congratulations on opening up a dispensary in Oklahoma! This state has the most liberal cannabis laws in the nation, which will allow businesses and clients less restrictions managing care for patients.
Now that your storefront is operational, it’s time to start work. Your employees show up on time and provide great service to all clients. Clients are satisfied with your product and business continues to grow wonderfully.
Wait, what employment laws are you supposed to follow? If cannabis is currently a Schedule I substance, does that mean the FEDERAL Department of Labor considers my business NOT legitimate? Does that mean this industry is NOT bound by any Federal laws?
Okay, now what…
On September 22, 2019 the 10th Circuit Court of Appeals issued a ruling on this issue in Colorado. This is particularly important since Oklahoma and Colorado fall into the same circuit.
It was determined in a case (Robert Kenney v. Helix TCS, INC) that cannabis dispensaries are NOT exempt from the FLSA (Fair Labor and Standards Act) as enforced by the DOL (Department of Labor). What is most important to highlight is that the DOL is a FEDERAL entity. The DOL is also responsible for enforcing:
FLSA (Fair Labor and Standards Act)
FLMA (Family Medical Leave Act)
OSHA (Occupational Safety and Health Administration)
EPPA (Employee Polygraph Protection Act)
Now, for the paradox
As a Schedule I substance, Federal law considers cannabis SUPER DANGEROUS and possessing ANY amount is totally illegal.
At the same time, Federal law now explicitly REQUIRES all cannabis dispensaries to “toe the line” with the FLSA. This is an issue that was previously unanswered. Only now can we say for certain that the FLSA applies to state-approved cannabis dispensaries. This is actually a good thing!
First, it lends credibility and legitimacy to the cannabis industry as a whole.
Second, it ensures workers in this industry are protected from any predatory employment practices (bogus timecards, overtime ignored, harassment, etc.).
Third, it ensures that proper tax withholdings are calculated for workers in the industry for each employees’ FICA (Social Security and Medicare tax).
This decision was/should be a no-brainer. It would be completely unfair for a certain industry (cannabis for example) to receive special consideration and exempt status from Federal law requirements based solely on the product it sells. Change the industry to anything else and see if that passes the “smell test”! Lawyers on both sides of the argument agree that businesses should play by the same set of basic rules when it comes to employment law. It’s actually stunning we’ve waited this long in Oklahoma for clarification. Remember that Colorado legalized medical cannabis back in November of 2000. Those poor souls have gone 19 years with legal ambiguity! The common sense answer during that time of uncertainty in Colorado and Oklahoma was “just do it the right way and you’ll be better off”.
Did all dispensaries behave? What do you think… yeah.
The “safe bet” in the past was to hide behind Sate employment law. If the Feds showed up at your dispensary, they typically weren’t asking to see your employees’ timecards!
In all likelihood, this issue will be moot after some promises are made by presidential candidates that eventually lead to congress amending the Controlled Substance Act of 1970 to move cannabis out of Schedule I and into a more appropriate scheduling. If you know how quickly government can work, we’ll need a calendar rather than an egg timer.
Now that we know what laws are in place, what’s next?
For now, cannabis dispensaries need to double-check their employment practices now that we have a clear ruling from the 10th Circuit. Any legal issues that arise from cannabis industry employees will be viewed through the ruling we just received on 9/22/19 out of the 10th Circuit Court. That simply means that dispensaries will “toe the line” just like any other business in how it treats, pays, and schedules its employees.
Cannabis is still Federally illegal just like Heroin and LSD (cue eye roll)
Federal authorities can still “bust” a legally operating dispensary in a medical cannabis state
Department of Labor has clear authority to ensure compliance with FLSA, FLMA, OSHA and EPPA.
If your dispensary is operating above board, great! Keep it up.
If you aren’t quite sure what laws apply or how they work, give us a call!
If you plan on “flying under the radar” for a while, understand you are now clearly at risk for nasty penalties. (see my other article for how bad this can get).
