May 29, 2025|Publications
May 29, 2025 | Washington Supreme Court | Published Opinion
Executive Summary
In Dep’t of Labor & Indus. v. Cannabis Green, LLC, 569 P.3d 303 (Wash. 2025), the Washington Supreme Court reversed the dismissal of a wage-and-hour enforcement action brought by the Department of Labor and Industries (DLI) against a multi-unit cannabis retailer. DLI alleged that Cannabis Green failed to pay overtime, provide meal and rest breaks, and comply with paid sick leave laws. The company argued that DLI could not sue because it had not issued a formal order demanding a sum certain. The Court disagreed, holding that while DLI must order payment before filing suit, it need not issue a formal administrative order or specify a fixed dollar amount. The Court further accepted DLI’s joint employer theory across multiple cannabis dispensaries, signaling a significant risk point for cannabis franchises and multi-unit operators.
Relevant Background
Cannabis Green operated three Spokane-area dispensaries under the “Lovely Buds” name, employing between 75 and 100 workers who rotated among locations. In 2019, a former employee filed a complaint under the Wage Payment Act (WPA), ch. 49.48 RCW, alleging unpaid overtime for hours worked across all three stores. DLI investigated and concluded that Cannabis Green “had a joint-employer relationship with respect to its employees at all three stores” and therefore was required to aggregate hours for overtime purposes.
Although Cannabis Green settled the single-employee claim, DLI expanded its inquiry and, in 2020–21, requested payroll and scheduling records. Cannabis Green refused further cooperation, leading DLI to propose a compliance agreement in August 2021. The draft agreement alleged violations of the Minimum Wage Act (MWA), ch. 49.46 RCW, including “overtime pay, unpaid hours worked, sick leave, lunches and break time,” and would have required Cannabis Green to acknowledge violations, conduct self-audits, and pay $25,000 in fees. Cannabis Green rejected the agreement and declined mediation.
In May 2022, DLI filed suit under RCW 49.48.040(1)(b) on behalf of “all current and former non-exempt employees,” alleging overtime, paid sick leave, and meal and rest break violations, and seeking approximately $318,500 in unpaid wages plus double damages, attorney’s fees, and costs. The trial court granted Cannabis Green’s motion for summary judgment, and the Court of Appeals affirmed. The Supreme Court granted review.
Decision
The Court began with statutory interpretation. RCW 49.48.040(1)(b) authorizes DLI to “order the payment of all wages owed the workers and institute actions necessary for the collection of the sums determined owed.” Cannabis Green argued that this language required DLI to issue a formal administrative order specifying a sum certain before initiating litigation. The Court disagreed, holding that “[w]hile L&I must order an employer to pay wages owed prior to filing suit to recover those wages, it need not order payment of a sum certain.” Id. at 310.
The Court emphasized Washington’s tradition of broadly construing wage statutes: “Remedial wage and hour laws must be liberally construed to advance the legislature’s intent to protect employee wages and assure payment” (Schilling v. Radio Holdings, Inc., 136 Wash. 2d 152, 159, 961 P.2d 371 (1998)), and “any doubts must be resolved in favor of the worker.” Dennis v. Dep’t of Lab. & Indus., 109 Wash. 2d 467, 470, 745 P.2d 1295 (1987).
The Court rejected the lower courts’ narrow interpretation, noting that Washington follows notice pleading: “a plaintiff need not calculate and demand a specific, final amount of damages prior to discovery and litigation.” Cannabis Green, 569 P.3d at 310. The Court explained:
“The only things L&I did not do were issue a formal administrative order or state a specific amount owed. But … the statute does not require L&I to take those steps.” Id. at 313.
The Court further clarified that “order” in RCW 49.48.040(1)(b) need not be formal:
“The term ‘order’ should be given its ordinary meaning of a ‘command, direction, or instruction,’ which need not be formal.” Id. at 311 (citing BLACK’S LAW DICTIONARY 1319 (12th ed. 2024)).
Thus, DLI’s proposed compliance agreement and accompanying emails—which identified the alleged violations, time periods, and notice that litigation would follow if Cannabis Green declined to settle—satisfied the statutory prerequisite to filing suit.
The Court also recognized DLI’s joint employer finding. When Cannabis Green required employees to rotate across its three dispensaries, DLI properly aggregated hours for overtime purposes. Id. at 305. This joint employer treatment underscores that formal separation into multiple LLCs does not shield cannabis operators from consolidated wage liability.
Finally, the Court held that if DLI prevails, it may recover attorney’s fees under RCW 49.52.070 and RCW 49.48.030, consistent with Dep’t of Labor & Indus. v. Overnite Transp. Co., 67 Wash. App. 24, 36–40, 834 P.2d 638 (1992). Cannabis Green, by contrast, could not recover fees even if successful. Cannabis Green, 569 P.3d at 315.
Looking Forward
This decision carries significant implications for cannabis franchisors and multi-unit operators. First, it demonstrates that wage enforcement agencies face minimal procedural barriers in bringing lawsuits. Regulators need not issue formal administrative orders or determine precise damages before suing. For cannabis businesses, this means disputes can escalate quickly into litigation.
Second, the joint employer analysis is particularly relevant as cannabis franchising expands. The Court’s willingness to aggregate hours across multiple dispensaries despite separate LLC structures mirrors how joint employer arguments are raised in franchise litigation. For cannabis franchisors, system-wide policies, integrated scheduling, or shared HR functions may expose the brand to liability.
Finally, the Court’s holding reinforces the high stakes of wage-and-hour disputes in Washington. Fee-shifting provisions and exemplary damages increase litigation exposure, and state regulators are increasingly active in the cannabis sector. As the cannabis industry professionalizes and more operators pursue franchising, Cannabis Green highlights the need for robust wage compliance programs across all units of the system.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Shareholder at Buchalter APC and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
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