The U.S. Supreme Court has agreed to hear a case with potentially significant financial repercussions for the CBD industry. The case centers around a truck driver who claims he was fired after failing a drug test due to THC present in a CBD product he used, despite its advertised lack of the psychoactive compound.
The driver, Douglas Horn, sued the product’s manufacturers, Medical Marijuana Inc., Dixie Holdings LLC, and Red Dice Holdings LLC, under the Racketeer Influenced and Corrupt Organizations Act (RICO). Originally designed to combat organized crime, RICO allows for civil lawsuits against alleged fraudulent schemes, with the potential for triple damages if successful.
The companies are related under Medical Marijuana Inc., based in Vista, California.
A THC surprise
Horn said he took the product to help with chronic shoulder and back pain after suffering a serious accident. The makers said it contained CBD but no THC, according to court documents.
With many employers maintaining zero-tolerance policies for THC, even trace amounts found in legal hemp-derived CBD products could lead to similar legal battles and potential financial ruin for companies involved.
Horn originally filed a personal injury claim filed in 2015. It failed in U.S. District court but was revived by the Second Circuit Court of Appeals, which ruled that his claim could proceed under RICO.
Legal divide
The decision highlights a legal divide among federal circuit courts on whether personal injury claims fall under RICO, and raises the question of whether RICO claims can be used for personal legal injury that results in lost wages and benefits.
The Ninth Circuit Court of Appeals shares the Second Circuit’s position, while the Sixth, Seventh, and Eleventh circuits disagree, arguing RICO doesn’t cover such economic harms.
“Only this court can resolve that split, and this case is the ideal vehicle for doing so,” the defendant companies said in their petition to the Supreme Court stated.
