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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
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
“}]] 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… Read More
