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Supreme Court Upholds Civil RICO Lawsuit Against Medical Marijuana, Inc. On April 2, 2025, the U.S. Supreme Court issued a 5-4 ruling against Medical Marijuana, Inc. (MJNA.PK), the parent company of Kannaway, the first CBD company in Network Marketing. This ruling permits a civil lawsuit to proceed under the Racketeer Influenced and Corrupt Organizations Act (RICO). The case, titled Medical Marijuana, Inc. v. Horn, centers on Douglas Horn, a commercial truck driver terminated after he failed a drug test from using a CBD product, Dixie X. This product was marketed by the San Diego-based company as free of tetrahydrocannabinol (THC), the psychoactive substance found in marijuana. Justice Amy Coney Barrett, representing the majority opinion, upheld the Second Circuit's decision allowing Horn to move forward with his RICO claim. Established in 1970 to fight organized crime, RICO's civil provisions permit plaintiffs to pursue triple damages for harm to their “business or property” caused by the racketeering actions of a defendant. The central question was whether Horn's job loss qualified as a compensable business injury under RICO, even though it arose from a personal injury (THC ingestion). Barrett wrote, “Medical Marijuana cannot overcome the plain meaning of ‘injured’ as ‘harmed,’ offering no viable alternative interpretation.” The ruling rejected the company' s argument that RICO excludes economic losses tied to personal injuries, clarifying that such losses can qualify as injuries to “business or property.” Horn, who has suffered from chronic pain since a trucking accident in 2012, purchased Dixie X products, believing Medical Marijuana's claim that they were THC-free. However, a random drug test indicated the presence of THC, leading to his termination from a long-held position, even though he does not use marijuana. Subsequent independent lab tests confirmed that THC was indeed in the product. In 2015, Horn and his wife, Cindy, filed a federal lawsuit in New York, alleging that Medical Marijuana and its affiliates operated a “pattern of racketeering activity,” which comprised mail and wire fraud and violations of the Controlled Substances Act, causing Horn economic damages due to his job loss. A district court first dismissed Horn's RICO claim, but the Second Circuit reversed this decision, leading to Medical Marijuana's appeal. The Supreme Court's ruling now returns the case for further proceedings, with the majority emphasizing that Horn must demonstrate a direct connection between the company's misrepresentations and his termination. Conclusion The Supreme Court’s decision in Medical Marijuana, Inc. v. Horn marks a pivotal moment for civil RICO litigation, affirming that economic harms from personal injuries can qualify as injuries to “business or property.” While this ruling expands opportunities for plaintiffs, it also underscores the rigorous hurdles, particularly causation, that they must overcome. For MLM companies selling CDB-based products, the decision signals increased litigation risks, necessitating robust risk management strategies. As Horn’s case returns to the lower courts and new RICO claims emerge, the Direct selling legal community will closely watch how courts define “business,” “property,” and “direct causation” in this evolving landscape. Ultimately, the Horn ruling reinforces RICO’s broad remedial purpose while leaving critical questions for future resolution, ensuring that civil RICO remains a dynamic and contentious area of law. Sources: Medical Marijuana, Inc. v. Horn, 604 U.S. ___ (2025) Reuters, “US Supreme Court rejects medical marijuana firm’s bid to avoid racketeering suit” (Apr. 2, 2025) Dooly's online content, including articles, videos, and radio shows, are highly regarded and widely referenced. Dooly is an internationally recognized expert in communication, leadership, marketing, culture development, regulatory affairs within the gig economy, direct sales, small businesses, network marketing, MLM, and public companies. Dooly acknowledges that we are in a Post-Trust Era, where consumers value facts over spin when engaging with businesses and individuals. http://troydooly.com/disclosures/
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