`
`No. _________
`================================================================================================================
`
`In The
`Supreme Court of the United States
`--------------------------------- ♦ ---------------------------------
`
`HELIX TCS, INC.,
`
`v.
`
`ROBERT KENNEY,
`
`Petitioner,
`
`Respondent.
`
`--------------------------------- ♦ ---------------------------------
`
`On Petition For Writ Of Certiorari
`To The United States Court Of Appeals
`For The Tenth Circuit
`
`--------------------------------- ♦ ---------------------------------
`
`PETITION FOR WRIT OF CERTIORARI
`
`--------------------------------- ♦ ---------------------------------
`
`JORDAN FACTOR
` Counsel of Record
`JEREMY T. JONSEN
`ALLEN VELLONE WOLF
` HELFRICH & FACTOR P.C.
`1600 Stout Street
`Suite 1900
`Denver, CO 80202
`(303) 534-4499
`jfactor@allen-vellone.com
`
`================================================================================================================
`COCKLE LEGAL BRIEFS (800) 225-6964
`WWW.COCKLELEGALBRIEFS.COM
`
`
`
`
`
`i
`
`QUESTION PRESENTED
`
`
` Marijuana is a Schedule 1 controlled substance
`under the Controlled Substance Act (“CSA”). 21 U.S.C.
`§ 812. Consequently, the federal government, as a mat-
`ter of course, does not extend federal benefits to those
`associated with the marijuana industry. However, in
`the case at bar, the Tenth Circuit held that an individ-
`ual trafficking marijuana within Colorado’s legal ma-
`rijuana industry may bring a private action under the
`Fair Labor Standards Act (“FLSA”), 29 U.S.C. § 201, et
`seq., to recover federally mandated overtime pay for
`conduct that violates the CSA. In reaching this conclu-
`sion, the Tenth Circuit ruled that individuals have a
`private property interest in the proceeds of federal
`drug crimes and that a federal court may award them
`compensation out of those proceeds for their efforts in
`trafficking Schedule 1 drugs.
`
`The Tenth Circuit’s decision deepens the confu-
`
`sion, conflict, and lack of uniformity between state and
`federal law regarding federal rights and protections
`accorded to those participating in the marijuana in-
`dustry. In the absence of congressional action, which is
`not anticipated any time soon, this Court should rule
`that an individual perpetrating a federal drug crime is
`not entitled to federally mandated compensation for
`their efforts.
`
`The question presented is:
`
`Whether the Fair Labor Standards Act, 29 U.S.C.
`§ 201, et seq., confers a private right of action to
`recover minimum wages for conduct that violates
`the Controlled Substances Act, 21 U.S.C. § 812.
`
`
`
`ii
`
`PARTIES TO THE PROCEEDINGS
`
`
`Petitioner Helix TCS, Inc. was Defendant-Appellant
`
`below.
`
`Robert Kenney was Plaintiff-Appellee below.
`
`
`
`
`
`RELATED CASES
`• Kenney v. Helix TCS, Inc., No. 1:17-cv-01755, U.S.
`District Court for the District of Colorado. Order
`denying Helix’s Motion to Dismiss entered on Jan-
`uary 5, 2018.
`
`• Kenney v. Helix TCS, Inc., No. 18-1105, U.S. Court
`of Appeals for the Tenth Circuit. Judgment en-
`tered on September 20, 2019.
`
`
`
`RULE 29.6 DISCLOSURE
`The following entities own ten percent (10%) or
`
`more of Helix TCS, Inc. stock:
`
`Helix Opportunities LLC
`RSF4, LLC
`
`
`
`
`
`iii
`
`TABLE OF CONTENTS
`
`Page
`QUESTION PRESENTED...................................
`i
`PARTIES TO THE PROCEEDINGS ...................
`ii
`RELATED CASES ...............................................
`ii
`RULE 29.6 DISCLOSURE ...................................
`ii
`PETITION FOR A WRIT OF CERTIORARI .......
`1
`OPINIONS BELOW .............................................
`1
`JURISDICTION ...................................................
`1
`STATUTORY PROVISIONS ................................
`1
`STATEMENT OF THE CASE..............................
`2
`REASONS FOR GRANTING THE PETITION .....
`3
`
`I. The Question Presented is of Nationwide
`Importance Given the Growing Marijuana
`Industry and Confusion Surrounding the
`Applicability of Federal Law .....................
`a. The booming marijuana industry ........
`b. Federal benefits and protections are
`not, as a matter of course, extended to
`the marijuana industry .......................
`c. Confusion relating to federal law and
`policy applicable to the marijuana in-
`dustry .................................................. 14
`d. The marijuana industry is barred from
`federal relief during the COVID-19 ep-
`idemic despite being deemed “essen-
`tial” by states ....................................... 20
`
`6
`7
`
`9
`
`
`
`
`
`iv
`
`TABLE OF CONTENTS—Continued
`
`Page
`e. By addressing the question presented,
`the Court will be able to provide much
`needed clarity and relief from uncer-
`tainty ................................................... 22
` II. The Court Should Correct the Unintended
`Consequences of the Tenth Circuit’s Opin-
`ion .............................................................. 22
`a. The Tenth Circuit’s opinion vests in
`criminals a personal property right to
`the proceeds of their illicit conduct in
`conflict with decisions of this Court .... 23
`b. The Tenth Circuit’s order requires dif-
`ferent results in different states and
`precludes the uniform application of
`federal law to different states in the
`country ................................................. 24
`CONCLUSION ..................................................... 26
`
`APPENDIX
`Tenth Circuit Appeal; Helix TCS, Inc. v. Kenney;
`18-701 .......................................................... App. 1-13
`Tenth Circuit Order; Helix TCS, Inc. v. Kenney;
`18-701 ........................................................ App. 14-15
`Order Granting Defendant’s Motion for Certifi-
`cation of Appeal of the Court’s Order Denying
`Defendant’s Motion to Dismiss; Kenney v. He-
`lix TCS, Inc.; 17-cv-01755-CMA-KMT ...... App. 16-21
`
`
`
`v
`
`TABLE OF CONTENTS—Continued
`
`Page
`
`Order Denying Defendant’s Motion to Dismiss;
`Kenney v. Helix TCS, Inc.; 17-cv-01755-CMA-
`KMT ........................................................... App. 22-30
`Order; Kenney v. Helix, Inc.; 18-1105 ........... App. 31-32
`29 U.S.C. § 203 .............................................. App. 33-36
`29 U.S.C. § 207 .............................................. App. 37-38
`29 U.S.C. § 213 .............................................. App. 39-48
`21 U.S.C. § 812 ................................................... App. 49
`21 U.S.C. § 841 ................................................... App. 50
`18 U.S.C. § 2 ....................................................... App. 51
`13 C.F.R. § 120.110 ....................................... App. 52-54
`
`
`
`
`
`
`vi
`
`TABLE OF AUTHORITIES
`
`Page
`
`CASES
`Alpenglow Botanicals, LLC v. United States, 894
`F.3d 1187 (10th Cir. 2018) ....................................... 10
`Assenberg v. Anacortes Housing Authority, 268
`F. Appx. 643 (9th Cir. 2008) ..................................... 10
`Barrios v. County of Tulare, 2014 WL 2174746
`(E.D. Cal. May 23, 2014) ......................................... 12
`Braunfeld v. Brown, 366 U.S. 599 (1961) ..................... 5
`Burton v. Maney (In re Burton), 610 B.R. 633
`(9th Cir. BAP 2020) ................................................. 14
`Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682
`(2014) ......................................................................... 5
`Canna Care, Inc. v. Comm’r of Internal Revenue,
`110 T.C.M. (CCH) 408, 2015 WL 6389130 .............. 11
`Caplin & Drysdale, Chartered v. United States,
`491 U.S. 617 (1989) ............................................. 4, 24
`Dice v. Akron, C. & Y. R. Co., 342 U.S. 359 (1952) ... 5, 25
`EEOC v. Pines of Clarkston, 2015 WL 1951945
`(E.D. Mich. 2015) ..................................................... 11
`Feinberg v. Comm’r of Internal Revenue, 916
`F.3d 1330 (10th Cir. 2019) ....................................... 10
`Forest City Residential Mgmt., Inc. ex rel. Plym-
`outh Square Ltd. Dividend Hous. Ass’n v.
`Beasley, 71 F. Supp. 3d 715 (E.D. Mich. 2017) ......... 9
`Fourth Corner Credit Union v. Federal Reserve
`Bank of Kansas, 861 F.3d 1052 (10th Cir.
`2017) ........................................................................ 10
`
`
`
`vii
`
`TABLE OF AUTHORITIES—Continued
`
`Page
`
`Futurevision, Ltd. v. United States, No. 17-mc-
`00041-RBJ, 2017 WL 2799931 (D. Colo. 2017) ....... 11
`Garrett v. Moore-McCormack Co., 317 U.S. 239
`(1942) ................................................................... 5, 25
`Gonzales v. Raich, 545 U.S. 1 (2005) ............................ 9
`Green Solution Retail, Inc. v. U.S., 855 F.3d 1111
`(10th Cir. 2017) ........................................................ 11
`Greenwood v. Green Leaf Lab LLC, 2017 WL
`3391671 (D. Or. July 13, 2017) .............................. 3, 4
`Hernandez v. Commissioner, 490 U.S. 680 (1989) ......... 5
`Hobby Lobby Stores, Inc. v. Sebelius, 723 F.3d
`1114 (10th Cir. 2013) ................................................. 5
`In re Arenas, 535 B.R. 845 (B.A.P. 10th Cir. 2015) ........ 13
`In re JJ206, LLC, 120 U.S.P.Q.2d 1568, 2016 WL
`7010624 ................................................................... 11
`In re Morgan Brown, 119 U.S.P.Q.2d 1350, 2016
`WL 4140917 ............................................................ 11
`In re Rent-Rite Super Kegs West Ltd., 484 B.R.
`799 (Bankr. D. Colo. 2012) ...................................... 13
`In re Sandra C. Malul, Debtor, 11-21140 MER,
`2020 WL 1486775 (Bankr. D. Colo. Mar. 24,
`2020) ........................................................................ 18
`In re Way to Grow, Inc., 597 B.R. 111 (Bankr. D.
`Colo. 2018) ............................................................... 13
`James v. City of Costa Mesa, 700 F.3d 394 (9th
`Cir. 2012) ........................................................... 11, 12
`
`
`
`viii
`
`TABLE OF AUTHORITIES—Continued
`
`Page
`Luis v. United States, 136 S. Ct. 1083 (2016) ......... 4, 24
`Olive v. Comm’r of Internal Revenue, 792 F.3d
`1146 (9th Cir. 2015) ................................................. 11
`Reynolds v. United States, 98 U.S. 145 (1878) ............. 5
`River N. Properties, LLC v. City & Cty. of Denver,
`2014 WL 7437048 (D. Colo. Dec. 30, 2014) ....... 12, 13
`Staffin v. County of Shasta, 2013 WL 1896812
`(E.D. Cal. 2013) ....................................................... 13
`Steele v. Stallion Rockies Ltd., 106 F. Supp. 3d
`1205 (D. Colo. 2015) ................................................ 12
`United States v. Gordon, 710 F.3d 1124 (10th Cir.
`2013) ........................................................................ 24
`United States v. Guess, 216 F. Supp. 3d 689 (E.D.
`Va. 2016) .................................................................. 18
`United States v. Lee, 455 U.S. 252 (1982) ..................... 5
`United States v. Oakland Cannabis Buyers’ Coop.,
`532 U.S. 483 (2001) ................................................... 9
`Wilson v. Lynch, 835 F.3d 1083 (9th Cir. 2016) .......... 14
`Young v. Larimer County Sheriff ’s Office, 356
`P.3d 939 (Colo. App. 2014) ....................................... 12
`
`
`STATUTES
`18 U.S.C. § 2 .............................................................. 1, 2
`21 U.S.C. § 801 .............................................................. 7
`21 U.S.C. § 812 .............................................................. 1
`
`
`
`ix
`
`TABLE OF AUTHORITIES—Continued
`
`Page
`21 U.S.C. § 841 .............................................................. 1
`28 U.S.C. § 1292 ............................................................ 3
`28 U.S.C. § 1254 ............................................................ 1
`29 U.S.C. §§ 201 et seq. ............................................. 1, 7
`Cal. Health & Safety Code § 11362.5 ........................... 7
`
`OTHER AUTHORITIES
`Alice Kwak, Medical Marijuana and Child Cus-
`tody: The Need to Protect Patients and Their
`Families from Discrimination, 28 Hastings
`Women’s L.J. 119 (2017) ......................................... 19
`CBS/Associated Press, California Treasurer Asks
`Trump For Guidance On Pot, Banking, Decem-
`ber 2, 2016, available at https://sanfrancisco.
`cbslocal.com/2016/12/02/california-treasurer-
`asks-trump-for-guidance-on-pot-banking/ ............. 17
`German Lopez, The Trump Administration’s
`New War on Marijuana, Explained, January
`5, 2018, available at https://www.vox.com/policy-
`and-politics/2018/1/4/16849866/marijuana-
`legalization-trump-sessions-cole-memo ................. 15
`Ira P. Robbins, Guns N’ Ganja: How Federalism
`Criminalizes the Lawful Use of Marijuana, 51
`U.C. Davis L. Rev. 1783 (2018) ................................ 17
`James M. Cole, Deputy Attorney General, MEM-
`ORANDUM FOR ALL UNITED STATES
`ATTORNEYS: GUIDANCE REGARDING
`MARIJUANA ENFORCEMENT (Aug. 29, 2013) ....... 15
`
`
`
`x
`
`TABLE OF AUTHORITIES—Continued
`
`Page
`
`Jeffrey B. Sessions, Attorney General, MEMO-
`RANDUM FOR ALL UNITED STATES AT-
`TORNEYS: MARIJUANA ENFORCEMENT
`(Jan. 4, 2018) ........................................................... 15
`John Schroyer, U.S. Markets That Have Allowed
`Marijuana Businesses to Remain Open During
`Coronavirus Pandemic Stay-at-Home Orders,
`April 2, 2020, available at https://mjbiz
`daily.com/states-that-have-allowed-marijuana-
`businesses-to-remain-open-during-coronavirus-
`pandemic/ ................................................................ 21
`Leafly, Leafly Jobs Report 2020, accessed April
`19, 2020, available at https://d3atagt0rnqk7k.
`cloudfront.net/wp-content/uploads/2020/02/
`06145710/Leafly-2020-Jobs-Report.pdf. ................... 8
`Linda E. McMahon, SBA Policy Notice, April 3,
`2018, available at https://www.sba.gov/sites/
`default/files/resource_files/SBA_Policy_Notice_
`5000-17057_Revised_Guidance_on_Credit_
`Elsewhere_and_Other_Provisions.pdf ) ................. 20
`National Conference of State Legislatures, State
`Medical Marijuana Laws, March 10, 2020,
`available at https://www.ncsl.org/research/
`health/state-medical-marijuana-laws.aspx .............. 8
`New Frontier Data, U.S. Legal Cannabis Market
`Growth, September 8, 2019, available at https://
`newfrontierdata.com/cannabis-insights/u-s-
`legal-cannabis-market-growth/ ................................ 8
`Office of the Attorney General Opinion Letter,
`2019 WL 1144402 (W.Va. A.G. Jan. 11, 2019) ........ 16
`
`
`
`xi
`
`TABLE OF AUTHORITIES—Continued
`
`Page
`
`Rosalie Winn, Hazy Future: The Impact of Fed-
`eral and State Legal Dissonance on Mari-
`juana Businesses, 53 Am. Crim. L. Rev. 215
`(2016) ....................................................................... 17
`SBA Pacific NW Twitter Feed, accessed April 17,
`2020, available at https://twitter.com/SBA
`PacificNW/status/1242227023302373377?ref_
`src=twsrc%5Etfw. .................................................... 21
`Silvia Irimescu, Marijuana Legalization: How
`Government Stagnation Hinders Legal Evolu-
`tion and Harms A Nation, 50 Gonz. L. Rev. 241
`(2015) ....................................................................... 18
`W. Michael Schuster & Jack Wroldsen, Entre-
`preneurship and Legal Uncertainty: Unex-
`pected Federal Trademark Registrations for
`Marijuana Derivatives, 55 Am. Bus. L.J. 117
`(2018) ....................................................................... 17
`
`
`
`1
`
`PETITION FOR A WRIT OF CERTIORARI
`Helix TCS, Inc. (“Helix”) respectfully petitions for
`
`a writ of certiorari to review the judgment of the
`United States Court of Appeals for the Tenth Circuit in
`this matter.
`
`--------------------------------- ♦ ---------------------------------
`
`OPINIONS BELOW
`The decision of the Tenth Circuit, reported at 939
`
`F.3d 1106, is reprinted in the Appendix (“App.”) at 1-
`13. The Tenth Circuit’s denial of Helix’s motion for re-
`hearing en banc is unreported and reprinted at App.
`31-32. The decision of the district court, reported at 284
`F. Supp. 3d 1186, is reprinted at App. 22-30. The dis-
`trict court’s order granting Helix’s motion for certifica-
`tion of appeal is reprinted at App. 16-21.
`
`--------------------------------- ♦ ---------------------------------
`
`JURISDICTION
`The court of appeals entered its order on Septem-
`
`ber 20, 2019. The court of appeals denied Helix’s peti-
`tion for rehearing en banc on January 31, 2020. This
`Court has jurisdiction pursuant to 28 U.S.C. § 1254(1).
`
`--------------------------------- ♦ ---------------------------------
`
`STATUTORY PROVISIONS
`Pertinent provisions of 29 U.S.C. §§ 203, 207, 213,
`
`21 U.S.C. § 812, 841, 18 U.S.C. § 2, and 13 C.F.R.
`
`
`
`2
`
`§ 120.110 are reproduced in the appendix at App. 33-
`54.
`
`--------------------------------- ♦ ---------------------------------
`
`STATEMENT OF THE CASE
`Helix provides armed security and transport ser-
`
`vices to the legal marijuana industry in Colorado.
`(App. 2-3). Helix’s business complies with Colorado
`state law legalizing and regulating the cultivation, dis-
`tribution, possession and consumption of marijuana
`for both medical and recreational use. (Id.). Plaintiff-
`Appellee Robert Kenney (“Kenney”) was employed by
`Helix for Helix’s security division. (App. 2). Pursuant
`to an employment agreement with Helix, Kenney’s du-
`ties include providing armed security for cannabis pro-
`duction and distribution locations. (App. 3). In other
`words, Kenney uses a firearm to aid and abet the dis-
`tribution of marijuana—a federal crime. See, e.g., 21
`U.S.C. § 841(a)(1); 18 U.S.C. § 2.
`
`On July 20, 2017, Kenney filed an Original Collec-
`
`tive Action Complaint (the “Complaint”) against Helix
`alleging that Helix failed to pay him, and other simi-
`larly situated drug traffickers, overtime wages. (App.
`2). In the Complaint, Kenney sought to recover feder-
`ally mandated wages for his federal crimes. (Id.). On
`September 13, 2017, Helix filed a Motion to Dismiss
`Plaintiff ’s Claims (the “Motion to Dismiss”) under Fed-
`eral Rules of Civil Procedure 12(b)(1) and 12(b)(6) on
`the grounds that the district court does not have juris-
`diction to provide Kenney relief under the FLSA
`
`
`
`3
`
`because Kenney’s claims, arising from his federally il-
`legal conduct, do not involve a federally protected in-
`terest and also that Kenney failed to state a claim for
`which relief can be granted. (App. 2). On January 5,
`2018, the district court denied the Motion to Dismiss.
`(Id.). The district court then certified Helix’s interlocu-
`tory appeal of its order on the Motion to Dismiss. (App.
`16-21).
`
`Exercising jurisdiction under 28 U.S.C. § 1292(b),
`
`a panel of the Tenth Circuit affirmed the district
`court’s order denying the Motion to Dismiss. (Id.). The
`Tenth Circuit held that “Mr. Kenney and similarly sit-
`uated individuals are not categorically excluded from
`FLSA protections.” (App. 12). Central to the court’s
`holding was the determination that “the FLSA is fo-
`cused on regulating the activity of businesses, in part
`on behalf of the individual workers’ wellbeing, rather
`than regulating the legality of individual workers’ ac-
`tivities.” (App. 12). The Tenth Circuit denied Helix’s Pe-
`tition for Rehearing En Banc. (App. 31).
`
`
`
`REASONS FOR GRANTING THE PETITION
`Before the Tenth Circuit’s opinion, lower courts
`
`have held uniformly that those trafficking marijuana
`are not entitled to federal rights and protections
`granted to legitimate businesses.1 Breaking with that
`
`1 To be clear, one case from the United States District Court
`
`for the District of Oregon held that any possible violations of the
`CSA are irrelevant to whether FLSA protections apply. See
`Greenwood v. Green Leaf Lab LLC, 2017 WL 3391671 (D. Or. July
`13, 2017). The court explained that it “presume[d] that the FLSA
`
`
`
`
`4
`
`precedent, the Tenth Circuit held that individuals have
`a private property interest in the proceeds of federal
`drug crimes and that a federal court may award them
`compensation out of those proceeds for their efforts in
`trafficking Schedule 1 drugs. Although arising out of
`Colorado’s recreational marijuana industry, the Tenth
`Circuit’s decision confers the same rights on a mule
`trafficking methamphetamine for a cartel in Okla-
`homa as it does on a driver ferrying marijuana through
`the streets of Denver.
`
`In the face of increasing conflict between state and
`
`federal law in regard to marijuana, the Tenth Circuit’s
`opinion departs from virtually every other federal
`court declining to extend federal rights and protections
`to those in the marijuana industry, imposes an un-
`workable standard on courts throughout this country,
`decimates the uniform application of the Controlled
`Substances Act and FLSA, undermines Congress’ con-
`sistently expressed policy of inhibiting commercial
`transactions in Schedule 1 drugs, and contradicts this
`Court’s decisions in, e.g., Caplin & Drysdale, Chartered
`v. United States, 491 U.S. 617, 627 (1989); Luis v.
`United States, 136 S. Ct. 1083, 1091-92 (2016), which
`
`
`covers a worker unless specifically exempted.” Id. at *3. The
`Tenth Circuit relied heavily on Greenwood in rejecting Helix’s ap-
`peal. (App. 13). But, as discussed herein, Congress cannot have
`intended to confer FLSA rights and protections on anyone not spe-
`cifically exempted. Other than Greenwood and the case at bar, it
`appears that federal courts unanimously refuse to extend federal
`rights and protections to those in the marijuana industry.
`
`
`
`5
`
`hold that individuals have no right to enjoy the fruits
`of their drug-trafficking activity.
`
`Any effort to cabin the Tenth Circuit’s opinion to
`
`only those trafficking marijuana in Colorado—which
`limitation cannot be found in the opinion itself—would
`lead to unequal application and enforcement of federal
`employment law based solely on the drug policy
`choices of the several states and contravene decisions
`of this Court requiring that federally declared stand-
`ards are not to be defeated by giving the states a final
`say as to their applicability. See, e.g., Dice v. Akron, C.
`& Y. R. Co., 342 U.S. 359, 361 (1952) (uniform applica-
`tion of Federal Employers’ Liability Act); Garrett v.
`Moore-McCormack Co., 317 U.S. 239, 245-46 (1942)
`(uniform application of the Jones Act); Hernandez v.
`Commissioner, 490 U.S. 680 (1989) (uniform applica-
`tion of the tax laws); United States v. Lee, 455 U.S. 252
`(1982) (uniform application of Social Security Act);
`Braunfeld v. Brown, 366 U.S. 599 (1961) (uniform Sun-
`day closing laws); Reynolds v. United States, 98 U.S.
`145, 166-167 (1878) (uniform criminal prohibition on
`polygamy); Hobby Lobby Stores, Inc. v. Sebelius, 723
`F.3d 1114, 1141 (10th Cir. 2013) (uniform application
`of labor laws), aff ’d sub nom. Burwell v. Hobby Lobby
`Stores, Inc., 573 U.S. 682 (2014). The only way to ensure
`uniform application of federal law that comports with
`clearly expressed congressional intent is for this Court
`to hold that FLSA does not guarantee minimum com-
`pensation for those whose employment conduct consti-
`tutes a federal drug crime.
`
`
`
`6
`
`This Court has consistently interpreted federal
`
`forfeiture statutes to preclude property rights in pro-
`ceeds from activities prohibited by the CSA. This Court
`also requires the uniform application of federal law,
`which application must not depend on the decisions of
`state legislatures as they act in contravention of fed-
`eral statutes. Given the spate of states legalizing ma-
`rijuana, the conflict, confusion, and lack of uniformity
`between federal and state law is only getting worse.
`The issues presented in this case are critical because a
`decision from this Court will—unless and until Con-
`gress lifts the prohibition on marijuana trafficking—
`define the relationship and increasing conflict between
`federal law and the growing number of state statutes
`legalizing and regulating marijuana.
`
`
`I. The Question Presented is of Nationwide
`Importance Given the Growing Marijuana
`Industry and Confusion Surrounding the
`Applicability of Federal Law
`The question presented here is of exceptional na-
`
`tionwide importance, affecting most state govern-
`ments and hundreds of thousands of people working in
`a multi-billion-dollar industry. Although this Court
`has decided that those who are engaged in federally
`illegal activities are not entitled to federal benefits,
`this Court has never decided whether those who par-
`ticipate in state-legal marijuana enterprises enjoy a
`private right of action under FLSA. This question (and
`the larger issue of the extent to which conduct that vi-
`olates the CSA is cosseted by the protection of federal
`
`
`
`7
`
`law) is of critical and increasing importance. Specifi-
`cally, the exceptionally important issues in this matter
`include the following:
`
`1) whether an individual engaged in trafficking
`
`a Schedule 1 drug may avail himself of federal benefits
`for such trafficking in contravention of forfeiture by
`federal statute;
`
`2) whether the FLSA, 29 U.S.C. §§ 201-219, and
`
`the CSA, 21 U.S.C. § 801 et seq., must be uniformly ap-
`plied regardless of the legal status of marijuana in the
`state in which they are applied; and
`
`3) whether drug traffickers in any state are “em-
`
`ployees” within the meaning of the FLSA.
`
`By addressing the question presented in the con-
`
`text of FLSA, this Court will have the opportunity to
`confront the increasing conflict between state and fed-
`eral law in a rapidly expanding industry.
`
`
`
`a. The booming marijuana industry.
`Congress has designated marijuana as a Schedule
`
`1 drug (21 U.S.C. § 812(b)(1)) with “no currently ac-
`cepted medical use in treatment.” Id. at § 812(b)(1)(B)-
`(c). The states disagree. California became the first
`state to legalize medical marijuana in 1996. See Cal.
`Health & Safety Code § 11362.5. Since then, legali-
`zation momentum has been steady and unstoppable.
`For instance, when Helix filed the underlying Motion
`to Dismiss on September 13, 2017, 28 states had en-
`acted legislation permitting in various degrees the
`
`
`
`8
`
`manufacture and possession of marijuana for medical
`and/or recreational purposes. Less than three years
`later, five more states, the District of Columbia, Guam,
`Puerto Rico, and the U.S. Virgin Islands have joined
`their ranks. See, e.g., National Conference of State Leg-
`islatures, State Medical Marijuana Laws, March 10,
`2020, available at https://www.ncsl.org/research/health/
`state-medical-marijuana-laws.aspx. An additional
`thirteen states “allow use of ‘low THC, high canna-
`bidiol (CBD)’ products for medical reasons in limited
`situations or as a legal defense.” Id. As such, fifty states
`and territories permit to some extent the production,
`transportation, sale, and consumption of marijuana.
`
`The marijuana industry accounts for approxi-
`
`mately 243,000 jobs and is the fastest growing occupa-
`tion in the United States. See Leafly, Leafly Jobs Report
`2020, accessed April 19, 2020, available at https://d3atagt
`0rnqk7k.cloudfront.net/wp-content/uploads/2020/02/
`06145710/Leafly-2020-Jobs-Report.pdf. In 2019, the
`marijuana industry reached $13.6 billion in sales, a
`31.7% increase from 2018. See New Frontier Data, U.S.
`Legal Cannabis Market Growth, September 8, 2019,
`available at https://newfrontierdata.com/cannabis-
`insights/u-s-legal-cannabis-market-growth/.
`
`
`
`
`
`
`
`
`9
`
`b. Federal benefits and protections are
`not, as a matter of course, extended to
`the marijuana industry.
`Despite the ubiquity of marijuana trafficking, fed-
`
`eral courts hold routinely that the CSA preempts state
`marijuana law
`
`There have been only two cases in this Court ex-
`
`ploring the consequences of legalized marijuana:
`United States v. Oakland Cannabis Buyers’ Coop., 532
`U.S. 483 (2001) and Gonzales v. Raich, 545 U.S. 1 (2005).
`In Oakland Cannabis, the Court answered whether
`“medical necessity is a legally cognizable defense to vi-
`olations of the Controlled Substances Act.” Oakland
`Cannabis, 532 U.S. at 489. In Raich, the issue was
`“whether Congress’ power to regulate interstate mar-
`kets for medicinal substances encompasses the por-
`tions of those markets that are supplied with drugs
`produced and consumed locally.” Raich, 545 U.S. at 9.
`The Court there held that Congress’ authority under
`the Commerce Clause includes the power to prohibit
`intrastate cultivation and use of marijuana, even if it
`is in compliance with California law. Id.
`
`Other federal courts tasked with managing the
`
`conflict between state and federal law have declined to
`provide federal statutory protections to persons en-
`gaged in state-sanctioned marijuana activities. For in-
`stance, medical marijuana users may not seek
`protection under the federal Fair Housing Act (“FHA”).
`See, e.g., Forest City Residential Mgmt., Inc. ex rel.
`Plymouth Square Ltd. Dividend Hous. Ass’n v. Beasley,
`
`
`
`10
`
`71 F. Supp. 3d 715, 719 (E.D. Mich. 2017) (landlord not
`required to permit Multiple Sclerosis patient to use
`doctor-prescribed marijuana because “a reasonable ac-
`commodation to use marijuana would be to require
`[landlord] to violate federal law”); Assenberg v. Ana-
`cortes Housing Authority, 268 F. Appx. 643, 644 (9th
`Cir. 2008) (no duty to allow marijuana use for federally
`subsidized housing recipient as a “reasonable accom-
`modation” for disability pursuant to FHA).
`
`Nor will courts facilitate or legitimize the mariju-
`
`ana industry in the business context. See Fourth Cor-
`ner Credit Union v. Federal Reserve Bank of Kansas,
`861 F.3d 1052, 1054-55 (10th Cir. 2017) (where bankers
`attempted to form a credit union to serve marijuana-
`related businesses, the court declined to facilitate ille-
`gal activity by giving marijuana businesses access to
`banking that they lacked).
`
` Marijuana businesses are not entitled to take fed-
`eral tax deductions afforded to legitimate businesses.2
`Feinberg, 916 F.3d at 1338 (“The Taxpayers have not
`pointed to any evidence showing the IRS erred in de-
`termining they were engaged in unlawfully trafficking
`a controlled substance. Therefore, the Taxpayers failed
`to meet their burden of proving the IRS’s determina-
`tion that the deductions should be disallowed under
`§ 280E was erroneous, and we affirm the tax court on
`this alternative ground.”); Alpenglow Botanicals, LLC
`
`2 That the federal government is willing to collect taxes from
`
`the marijuana industry only indicates a willingness to exercise its
`right to title in illicit gains, not to provide reciprocal protection
`and/or relief to criminals.
`
`
`
`11
`
`v. United States, 894 F.3d 1187, 1197 (10th Cir. 2018),
`cert. denied, 139 S. Ct. 2745, 204 L. Ed. 2d 1134 (2019)
`(“It is within the IRS’s statutory authority to deter-
`mine, as a matter of civil tax law, whether taxpayers
`have trafficked in controlled substances. Thus, the IRS
`did not exceed its authority in denying Alpenglow’s
`business deductions under § 280E.”); see also Futurevi-
`sion, Ltd. v. United States, No. 17-mc-00041-RBJ, 2017
`WL 2799931 (D. Colo. 2017); Green Solution Retail, Inc.
`v. U.S., 855 F.3d 1111 (10th Cir. 2017); Canna Care, Inc.
`v. Comm’r of Internal Revenue, 110 T.C.M. (CCH) 408,
`2015 WL 6389130, at *13 (2015); Olive v. Comm’r of In-
`ternal Revenue, 792 F.3d 1146 (9th Cir. 2015).
`
`Likewise, federal law will not protect any trade-
`
`mark used to promote a marijuana enterprise. In re
`JJ206, LLC, 120 U.S.P.Q.2d 1568, 2016 WL 7010624,
`at *2, *5 (T.T.A.B. Oct. 27, 2016) (“It logically follows
`that if the goods on which a mark is intended to be
`used are unlawful, there can be no bona fide intent to
`use the mark in lawful commerce.”); In re Morgan
`Brown, 119 U.S.P.Q.2d 1350, 2016 WL 4140917, at *4-
`5 (T.T.A.B. Jul. 14, 2016) (mark may not be registered
`if it is being used in connection with sales of mariju-
`ana).
`
`Employees who violate the CSA by using doctor-
`
`prescribed marijuana in compliance with state law, or
`selling marijuana in compliance with state law, are not
`protected by the Americans with Disabilities Act
`(“ADA”). See EEOC v. Pines of Clarkston, 2015 WL
`1951945, *6 (E.D. Mich. 2015) citing James v. City of
`Costa Mesa, 700 F.3d 394, 397-98 (9th Cir. 2012) (ADA
`
`
`
`12
`
`definition of “individual with disability” does not in-
`clude “an individual that is currently engaging in the
`illegal use of drugs, when the covered entity acts on the
`basis of such use” even if used to treat a medical con-
`dition); Steele v. Stallion Rockies Ltd., 106 F. Supp. 3d
`1205, 1218-19 (D. Colo. 2015) (ADA claim dismissed for
`failure to state a claim where employee claimed dis-
`crimination based upon medical marijuana use);
`James v. City of Costa Mesa, 700 F.
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