The US Supreme Court is set to rule on a hemp-related case for the first time since the enactment of the 2018 US Farm Bill.
The case, Medical Marijuana, Inc., et al. v. Douglas J. Horn, centers on the application of the Racketeer Influenced and Corrupt Organizations Act (RICO) and whether manufacturers can be held liable for a person’s lost earnings and job benefits under this statute.
The plaintiff, a commercial truck driver, was terminated after failing a random drug test following the consumption of a CBD product marketed as THC-free.
He subsequently filed a RICO claim and state law claims against the companies behind the CBD product, arguing that his lost job earnings and benefits qualify as ‘business or property’ damages recoverable under RICO.
Initially, a federal district court dismissed the plaintiff’s RICO claim, siding with the companies by stating that RICO does not cover personal injury losses.
However, the Second Circuit Court of Appeals overturned this decision and reinstated the RICO claim. The Supreme Court has now agreed to review the case.
Should the Supreme Court uphold the Second Circuit’s decision, the plaintiff could be awarded up to three times his lost earnings, along with attorney’s fees.
RICO, enacted in 1970, is primarily aimed at combatting organized crime by enabling the prosecution of individuals involved in ongoing criminal enterprises.
Under RICO, individuals can be prosecuted for engaging in a pattern of racketeering activity, which includes a variety of criminal offenses such as fraud, bribery, and drug trafficking. The statute allows for severe penalties, including treble damages, which means affected parties can receive triple the amount of their actual damages, along with attorney’s fees.
The 2018 US Farm Bill was a pivotal piece of legislation for the hemp industry, as it legalized the production and sale of hemp and its derivatives, including CBD, on a federal level.
This bill distinguished hemp from marijuana by defining it as cannabis containing less than 0.3% THC, removing it from the list of controlled substances. The legislation opened up significant economic opportunities for farmers and businesses, allowing hemp to become a major agricultural product and leading to a surge in the availability and use of hemp-derived products.
Earlier this week, the US Hemp Roundtable submitted an amicus curiae (friend of the court) brief in support of the defendants, arguing that Congress did not intend for RICO to address personal injury losses. The brief highlights the potential consequences of broadening RICO’s scope, including increased costs that could be transferred to consumers, making hemp products less accessible.
Furthermore, heightened liability might drive manufacturers, distributors, and retailers out of the industry, diminishing economic opportunities for hemp farmers and businesses.
