Pot company’s employment contract raises legal questions

  • FILE - This Sept. 11, 2018, file photo shows blankets of frost known as trichomes on a budding marijuana flower at an artisanal cannabis farm SLOgrown Genetics, the coastal mountain range of San Luis Obispo, Calif. Liberal California became the largest legal U.S. marketplace, while conservative Utah and Oklahoma embraced medical marijuana. (AP Photo/Richard Vogel,File) Richard Vogel

Staff Writer
Published: 5/24/2019 11:36:44 PM
Modified: 5/24/2019 11:36:32 PM

EASTHAMPTON — Marijuana sales are now legal in Massachusetts, but the plant remains illegal under federal law. That discrepancy places the cannabis industry in states like Massachusetts in a legal gray area.

And language in at least one marijuana company’s employment offer appears to be telling its employees that if they are busted by the federal government, the company has no liability or monetary responsibility to them.

The contract, which was leaked to the Gazette, is for a part-time, $13-per-hour position with the company Holistic Industries LLC. Holistic is a national company that operates in Washington, D.C. and five states, including Massachusetts, where it operates as Liberty Cannabis.

In addition to an 80,000-square-foot cultivation facility in Monson, the company operates a medical dispensary in Somerville and is planning to open an adult-use and medical dispensary in Easthampton at 155 Northampton St.

The clause begins by making sure an employee understands and acknowledges that “Holistic is engaging in the business of selling and distributing medical cannabis and medical cannabis products, which is a crime under U.S. federal law.”

“You further agree that Holistic shall not be liable to you for any penalties imposed upon you by U.S. authorities in connection with engaging in selling and/or distributing medical cannabis and medical cannabis products,” the clause continues. “You further hereby release and waive any right to monetary recovery in connection with any proceeding initiative by any state or federal agency, or you, or anyone on your behalf, against Holistic in connection with engaging in selling and/or distributing medical cannabis and medical cannabis products.”

To Harris Freeman, an employment law expert and instructor at Western New England School of Law in Springfield, the clause “seems problematic from a moral and political perspective.”

Freeman said that it is “very appropriate” for marijuana businesses to inform employees that their work may subject them to federal criminal prosecution. However, Freeman took issue with the clause for seemingly not providing employees with legal representation should the federal government crack down on them for doing their jobs. He said that the clause would be “even more problematic” if the company provided high-level supervisors or managers with security against legal liability or with legal representation while denying those protections to employees who might not be able to afford legal representation.

“Given the profits being made in this industry, it is disturbing that marijuana growers would throw their low-wage workers under the bus if they were accused of violations of federal law for simply doing their job,” Freeman wrote in an email to the Gazette.

In response to questions from the Gazette, Holistic’s Vice President David Cohen wrote in a statement that this type of clause is standard in most cannabis industry contracts “in order to make sure that anyone choosing to engage in this industry is fully aware of the inherent risks caused by the disparity between federal and state law.”

Cohen went on to say that Holistic is fully committed to its employees and that the company has a track record of hiring locally and investing in local communities.

“We wouldn’t hesitate to defend our employees in the event of an enforcement action that attempted to supersede Massachusetts law with respect to our lawful and strictly compliant operations within the Commonwealth,” he wrote to the Gazette. “That said, we appreciate you bringing the potential ambiguity in our offer letter to our attention, and we are actively reviewing our hiring materials to make sure that they clearly reflect our total commitment to our employees.”

Cohen did not respond to questions about whether managers and executives are required to sign a similar clause.

Freeman criticized another clause in the employment offer, which requires that “any allegation brought relating to this employment relationship will be resolved without trial by jury.”

“Given that there is no trade-off or separate benefit to an employee for giving up their right to a jury trial, I question the legality — not to mention the morality — of requiring marijuana industry employees to give up their constitutional right to a jury trial in a lawsuit against their employer for harms arising from criminal prosecution by the feds,” he wrote.

Cohen did not respond to Freeman’s criticism of that clause.

A spokesperson for the state’s Cannabis Control Commission declined to comment for this story, saying that “employment contracts fall beyond the jurisdiction of the commission.”

Northampton lawyer Dick Evans is a longtime proponent of marijuana legalization who now advises marijuana license applicants, public officials and others interested in the industry. He said the first clause in question, about the company’s legal liability, “sounds like a simple disclaimer” — something he said is routine in the industry. Concerns over such a disclaimer, he added, are overblown.

“The fact is, an employer is not going to want to be responsible for the consequences of the enforcement of federal law,” he said.

Northampton’s Ezra Parzybok, who operates a consulting firm that helps businesses with the marijuana licensing process, added that the clause seems scarier than it actually is.

He said that the Obama administration’s Department of Justice issued a memo that said they would not enforce federal marijuana prohibition in states where cannabis has been legalized and is well-regulated. The so-called Cole Memorandum was rescinded by Attorney General Jeff Sessions in January 2018, but current Attorney General William Barr said that he does “not intend to go after parties who have complied with state law in reliance on the Cole Memorandum.”

“It’s a very, very unlikely scenario,” Parzybok said of federal sanctions against marijuana industry employees in the state. “And if they’re going to start shutting these businesses down, they’re going to go to the management.”

But Freeman said the possibility of the Justice Department someday changing course is not out of the question. He said the department already “acts in unpredictable ways that threaten civil liberties and the rule of law.”

“Indeed, if the possibility of federal prosecutions were so remote,” he said, “why would marijuana business owners insist on these clauses?”

Dusty Christensen can be reached at dchristensen@gazettenet.com.
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