Muddying the waters even further is the fact that that federal courts will likely require cannabis businesses to be in compliance with Title III of the ADA, which is a separate provision of the ADA that prohibits discrimination in public accommodations on the basis of disabilities. For example, in Smith v. 116 S Market LLC, the U.S. Court of Appeals for the Ninth Circuit affirmed a district court’s ruling that the defendant had violated Title III of the ADA by failing to provide ADA-compliant parking spaces and routes to its property, which was leased to a marijuana dispensary. The Ninth Circuit distinguished its Smith opinion from that of James v. City of Costa Mesa (“James”), in which it ruled that Title II of the ADA did not prohibit discrimination on the basis of medicinal marijuana use, because (1) the two cases arose under different provisions of the ADA; (2) James was limited in its holding to medical marijuana users who claim to face discrimination on the basis of their marijuana use; and (3) the district court’s ruling was silent as to marijuana use and only required compliance with the ADA. These are hardly compelling distinguishing factors; at a minimum, the Ninth Circuit, on its face, appears to be treating cannabis use differently within the same federal statute.
The federal judiciary’s inconsistent opinions extend beyond employment law statutes. Recently, the U.S. Court of Appeals for the Sixth Circuit ruled in Great Lakes Cultivation, LLC v. Vara (In re Great Lakes Cultivation, LLC) that federal bankruptcy protections and processes are not available for assets that are used for, or generated by, a business prohibited under the CSA. However, this reasoning begs the question: if a cannabis business cannot file for federal bankruptcy protections because its business practices are prohibited under the CSA, and an employee cannot maintain a claim for disability discrimination under Titles I and II of the ADA because marijuana is an illegal substance under the CSA, why do those same business practices trigger federal protections for employees who are subject to discrimination under Title VII and wage protection under the FLSA? The status of marijuana as illegal under the CSA appears to apply to prohibit individuals and businesses from seeking protection under the law in some instances, while it is wholly ignored in others.
When read independently, each opinion makes logical sense. However, when read together, it is clear that the federal judiciary has not been able to commit to a consistent position with respect to applying federal statutes to the cannabis industry. This is concerning for both cannabis businesses and the legal professionals who advise them because not only are inconsistent rulings unfair and unpredictable, but they also can have tangible “chilling effects” on the industry, stymieing growth for an industry otherwise poised for rapid expansion in the future.
Given the uncertainties inherent in the cannabis industry, as well as the numerous and demanding state regulations with which most marijuana businesses must contend, well-advised cannabis businesses must be aware of the federal statutes that apply to the industry and, perhaps even more importantly, how federal courts are interpreting these statutes. Depending on, apparently, the specific subdivision of the law being applied to a particular set of facts (e.g., Title III versus Titles I and II of the ADA), federal courts will treat even the most upstanding and reputable marijuana business either the same as any other legitimate business, or as a miscreant without permission to enter through the courthouse gates.