Supreme Court Rules CBD Remedy Maker Must Face Racketeering Lawsuit

The U.S. Supreme Court sided 5–4 on April 2 with a truck driver who was fired after failing a drug test following consumption of a pain-relief product marketed as drug-free.

The new decision affirms an appeals court ruling that permitted Douglas Horn to sue the product’s manufacturer, Medical Marijuana Inc., under a federal law that prosecutors use against organized crime. Horn will now be allowed to move forward with his lawsuit.

Justice Amy Coney Barrett wrote the majority opinion in Medical Marijuana Inc. v. Horn. It was joined by Justices Neil Gorsuch, Sonia Sotomayor, Elena Kagan, and Ketanji Brown Jackson.

Chief Justice John Roberts, along with Justices Clarence Thomas, Brett Kavanaugh, and Samuel Alito, dissented.

Respondent Douglas Horn was let go from his job as a commercial truck driver because he tested positive for tetrahydrocannabinol (THC)—the psychoactive compound in marijuana that produces a high—after consuming a hemp-based product that was advertised as THC-free. The hemp plant is a relative of marijuana, also known as cannabis.

Horn said he unknowingly consumed THC when he used the “Dixie X” pain-alleviation elixir made by Medical Marijuana Inc. The elixir contains cannabidiol, also known as CBD. Both THC and CBD occur naturally in the cannabis plant but only THC contains mind-altering properties. Horn said he had never used marijuana or any THC-based products.

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The company said in its petition that Horn allegedly purchased the product in September 2012 and was given a routine drug test at work the following month. The test showed the presence of THC and Horn’s employer fired him.

Horn sued in federal district court in New York in 2015, claiming injury under the Racketeer Influence and Corrupt Organizations (RICO) Act. He alleged that other companies in the product’s supply chain violated the Controlled Substances Act and committed mail and wire fraud.

The RICO Act targets organized criminal activity. The law imposes criminal penalties and creates civil causes of action for activities done as part of an organized criminal enterprise. A cause of action is a set of facts that provides a legal basis for suing someone.

RICO’s civil provisions allow a private individual claiming injury to recover triple damages.

The legal issue was whether Horn may sue the product’s manufacturers under RICO. He has to show that he was injured in his “business or property,” but Sotomayor said during oral arguments in October 2024 that “there’s a whole lot more to RICO than simply damages,” as many other conditions have to be met.

The federal district court found in January 2022 that Horn lacked RICO standing because he litigated over economic injuries stemming from a loss of earnings related to THC exposure. Standing refers to the right of someone to sue in court. The parties must show a strong enough connection to the claim to justify their participation in a lawsuit.

The U.S. Court of Appeals for the Second Circuit reversed the decision in August 2023, finding that even though RICO allows lawsuits only by a plaintiff “injured in his business or property” by racketeering activity, an economic injury resulting from a personal injury was enough to bring a case under the RICO statute.

“Because the term ‘business’ encompasses ‘employment,’ Horn has suffered an injury ‘in his business,’ as contemplated by the RICO statute,” a three-judge panel of the Second Circuit ruled. Being fired cost the driver “current and future wages and his insurance and pension benefits—all of which were tied to his employment.”

In the majority opinion, Barrett wrote that RICO “creates a cause of action for ‘any person injured in his business or property.’”

The Supreme Court here “must decide whether the statute, by implicitly denying a remedy for personal injuries, also denies a remedy for business and property loss that derives from a personal injury. It does not,” she wrote. “The phrase ‘injured in his business or property’ does not preclude recovery for all economic harms that result from personal injuries.”

Although Medical Marijuana tried “valiantly to engineer a rule that yields its preferred outcomes,” the word “‘injured’ does not give it enough to go on,” she wrote.

“When all is said and done, Medical Marijuana is left fighting the most natural interpretation of the text—that ‘injured’ means ‘harmed’—with no plausible alternative in hand. That is a battle it cannot win.”

The Supreme Court upheld the judgment of the Second Circuit and remanded the case “for further proceedings consistent with this opinion.”

Kavanaugh filed a dissenting opinion, which was joined by Roberts and Alito.

“The fundamental question here is whether business or property losses from a personal injury transform a traditional personal-injury suit into a business-injury or property-injury suit that can be brought in federal court for [triple] damages under RICO,” Kavanaugh wrote.

Horn and the Second Circuit “say that the answer is yes,” while the company, along with the Sixth, Seventh, and Eleventh Circuits “contend that the answer is no—that RICO does not authorize suits for personal injuries regardless of what losses or damages a victim sustains from a personal injury,” the justice wrote.

“I agree with defendant Medical Marijuana and the Sixth, Seventh, and Eleventh Circuits,” he added.

Thomas filed a dissenting opinion. No other justices joined the opinion.

The case “proved ill suited for deciding the question presented,” which is “whether the plaintiff here suffered a personal injury in the first place.”

Thomas wrote that he “would dismiss the writ of certiorari as improvidently granted.”

A writ of certiorari is a court order that allows the justices to move forward with hearing an appeal. A court may dismiss a case as “improvidently granted” when it later decides that it should not have agreed in the first place to hear the case at all.

It is unclear when the Second Circuit will reconsider the case.