Until federal law allows dispensaries to use banks, these companies can only pay their employees in cash. A lawyer explains why that’s legal minefield in states like California
As the nascent marijuana industry finds its feet, it’s also facing a rather peculiar challenge: how do you follow wage-and-hour law when you can’t use a bank?
Under current federal law, it’s technically illegal for banks to take money that’s been generated from the sales of Schedule 1 substances, such as heroin, LSD, and marijuana. While Obama has vowed that his agencies will not actively enforce laws against activities that are legal in particular states, banks remain hesitant to step outside the letter of the law. And that means that companies involved with the production and sale of marijuana simply can’t open bank accounts.
Because these companies are forced to pay employees in cash, they literally can’t follow wage-and-hour law in states like California, where employers must follow very particular rules about how employees are paid and the wage records that are kept. Lawyer Steven Waisbren is representing a dispensary employee suing his company for various alleged labor law violations, including failure to pay overtime, denial of breaks, and misclassification.
“I can’t say that I blame them, because that’s unfortunately the nature of the business,” he said, “But at the same token, at least in California, employers have very specific rules they have to follow when they pay employees, and if they aren’t depositing money into an account, and outlining how much they’re being paid, that’s a violation of California law.”
It’s not the first time marijuana companies have waded into labor law violation allegations. In February, the National Labor Relations Board was involved in the case of Maine’s largest marijuana company, Wellness Connection of Maine. The United Food and Commercial Workers union (UFCW) accused the company of unfair labor practices, including retaliation against employees who were pro-union. The case resulted in a settlement between the NLRB and Wellness Connection toward the end of the month.
UFCW did not respond to requests for comment, but last year, the union told Reuters there were three dispensaries in Los Angeles that were unionized, and 49 more with intentions to begin labor agreements with UFCW. At the time, there were 3,000 UFCW members who worked in the cannabis industry – and that was before recreational marijuana was available anywhere in the US. However, UFCW officials estimated that in California alone, about 100,000 workers were eligible to join in the marijuana industry.
Under current federal law, it’s technically illegal for banks to take money that’s been generated from the sales of Schedule 1 substances, such as heroin, LSD, and marijuana. While Obama has vowed that his agencies will not actively enforce laws against activities that are legal in particular states, banks remain hesitant to step outside the letter of the law. And that means that companies involved with the production and sale of marijuana simply can’t open bank accounts.
Because these companies are forced to pay employees in cash, they literally can’t follow wage-and-hour law in states like California, where employers must follow very particular rules about how employees are paid and the wage records that are kept. Lawyer Steven Waisbren is representing a dispensary employee suing his company for various alleged labor law violations, including failure to pay overtime, denial of breaks, and misclassification.
“I can’t say that I blame them, because that’s unfortunately the nature of the business,” he said, “But at the same token, at least in California, employers have very specific rules they have to follow when they pay employees, and if they aren’t depositing money into an account, and outlining how much they’re being paid, that’s a violation of California law.”
It’s not the first time marijuana companies have waded into labor law violation allegations. In February, the National Labor Relations Board was involved in the case of Maine’s largest marijuana company, Wellness Connection of Maine. The United Food and Commercial Workers union (UFCW) accused the company of unfair labor practices, including retaliation against employees who were pro-union. The case resulted in a settlement between the NLRB and Wellness Connection toward the end of the month.
UFCW did not respond to requests for comment, but last year, the union told Reuters there were three dispensaries in Los Angeles that were unionized, and 49 more with intentions to begin labor agreements with UFCW. At the time, there were 3,000 UFCW members who worked in the cannabis industry – and that was before recreational marijuana was available anywhere in the US. However, UFCW officials estimated that in California alone, about 100,000 workers were eligible to join in the marijuana industry.