Weeding Out: Discrimination Complaints Against the Cannabis Industry

By Kayla M. Jacob and Fred Preis

The burgeoning cannabis industry is facing claims of discrimination against minorities. The rapid industry growth is attracting challenges of non-diversity.

Here are a few barriers that activists allege make the cannabis industry a particularly harsh climate for minorities:

Zoning Ordinances: Some localities have enacted zoning ordinances that limit the locations where brick-and-mortar dispensaries may operate. Minorities who cut through the red tape to obtain a license may be priced out or pushed into less desirable, less marketable locations.
Limited Access to Banking Services: It is said that minorities have limited access to capital, due in part to restrictions on banking because marijuana remains federally illegal. Most banks do not work with cannabis businesses, forcing entrepreneurs to rely on cash-only operations or predatory lending. This increases financial risk and makes it harder to secure loans or investment capital. Minority-owned businesses are among those that struggle to grow or compete in an already challenging industry.
Inequities in War on Drug Laws: Activists claim that marijuana prohibition disproportionately targets minority communities, despite similar usage rates, leading to mass incarceration and economic disenfranchisement. Additionally, the consideration of criminal histories in licensing decisions excludes those most affected by such policies.

To address these complaints, 19 states have adopted “social equity programs” aimed at providing qualified minority applicants with support through grants, fee reductions, and priority in licensing. However, the legality of these programs is frequently challenged by investors who view them as a disadvantage, and also as discriminatory if used against themselves. As a result, efforts to promote diversity in the cannabis industry remain mired in legal battles, leaving claims of discrimination unresolved.

These challenges echo those faced by employers attempting to implement diversity, equity, and inclusion (DEI) programs in their workplaces, where similar concerns about fairness and legality often arise. As the cannabis industry illustrates, finding common ground remains a pipe dream for now, as efforts to promote diversity remain caught between legal challenges and resistance from those who see these programs as unfair.

Despite Supreme Court’s Reduction in Agency Authority, Federal Appeals Court Over Louisiana Upholds DOL’s Authority to Regulate Salary Threshold for FLSA Exemptions

By: Philip Giorlando and Fred Preis

Earlier this year, the U.S. Supreme Court overruled longstanding U.S. Supreme Court caselaw that required courts to give special deference to federal agencies’ interpretations of laws when Congress did not address the issue in the law itself. In its decision, the U.S. Supreme Court held that it is not agencies, but instead Congress and, in its absence, the courts, who are responsible for interpreting statutes on specific issues.

Businesses Face Uncertainty Regarding How to Rely on Agency Guidance, Including DOL Wage and Hour Guidance

Agencies, courts, and businesses, used to relying on the interpretations of federal agencies regarding certain laws, are still uncertain about how to proceed with this Supreme Court decision. One example of an agency grappling with this decision is the Department of Labor, responsible for enforcing the Federal Wage and Hour Laws.

Fifth Circuit Upholds DOL’s Authority to Determine Salary Threshold

A September 11, 2024, U.S. Fifth Circuit Court of Appeals decision, the federal appeals court over Texas, Louisiana, and Mississippi, upheld a DOL interpretation of the Federal Wage and Hour law, despite the Supreme Court’s recent decision limiting federal agency authority. A fast-food operator based out of Texas sued the Department of Labor over its 2019 rule to increase the salary threshold to $35,568 for certain exemptions to the federal overtime rules, arguing that the rule was beyond DOL’s authority.

The Federal Appeals Court held that this rule was within the DOL’s authority because the DOL has explicit statutory authority to “define and delimit” the terms of the exemptions to the Federal Wage and Hour law.

Why this Matters? This Decision Supports the DOL’s 2024 Rule Substantially Increasing the Salary Threshold

In 2024, the DOL substantially increased the salary threshold required for an employee to be exempt from overtime requirements. The current threshold, effective July 1, 2024, is $43,888 per year. That means that as of today, employees must be earning a salary of at least $43,888 to be properly classified as exempt. However, this threshold will not last long, as another substantial increase takes effect January 1, 2024, raising the threshold to $58,656 per year.

Currently, this 2024 DOL rule is facing several legal challenges in courts, but the DOL rule is still in effect. It is almost certain that the DOL will rely heavily on the Federal Appeal Court’s recent decision upholding its 2019 salary threshold increase to support its 2024 salary threshold increase.

What Should Employers Do Now?

Employers need to analyze all of the employees that are currently categorized as exempt and determine whether they are still properly exempt. For “exempt” employees earning less than $43,888, employers must act immediately to address this issue or face legal exposure for misclassifying their employees as exempt. For those exempt employees earning less than $56,656, employers need to create a plan to either ensure that they are properly classified as exempt come January 1, 2025, or convert these employees to hourly.

Responding to this increase in the salary threshold is a complicated process that must be carefully reviewed with the help of legal counsel to ensure it is done correctly to reduce legal exposure to claims, charges, and lawsuits.