Last month, the United States Supreme Court issued a pivotal 5-4 decision ruling in favor of a commercial trucker suing three CBD companies under the Racketeer Influenced and Corrupt Organizations Act (RICO). The trucker claimed that he failed a random drug screening and was subsequently fired by his employer as a result of ingesting a product falsely marketed by the companies as containing 0% tetrahydrocannabinol (THC), the primary psychoactive compound in cannabis.
The case focused on whether the civil prongs of RICO permit plaintiffs to seek redress for economic harms (e.g., loss of employment, future wages) stemming from personal injuries (e.g., unwanted ingestion of THC). In the lead-up to the decision, Circuit Courts were split on the question.
The 2nd and 9th Circuits had allowed civil RICO claims for economic harms in such cases to proceed while the 6th, 7th and 11th Circuits took the position that RICO excludes economic harms resulting from personal injuries. In its decision, the Supreme Court clarified that economic harms stemming from personal injuries can be actionable under RICO, thereby expanding the types of civil actions that can be brought under the statute.
While the Court did not address the merits of the allegations, the decision could have a significant impact on the cannabis industry. Some industry watchers predict an uptick in civil RICO claims against cannabis-related companies, with plaintiffs' attorneys looking to Horn as a potential blueprint to turn personal injury cases into civil RICO cases.
Read more at Reuters