There have been a number of reports as of late of cannabis companies cutting costs and scaling back in response to the current financial and capital markets challenges in the industry. Companies that are considering layoffs need to take federal and state labor laws into account.

The federal Worker Adjustment and Retraining Notification Act (also known as the WARN Act) generally requires that employers with 100 or more employees provide at least 60 calendar days’ advance written notice of a mass layoff or plant closing (although there are exceptions and specifics to these general rules). The notice itself has specific requirements, both for contents and recipients. The general idea behind requiring a WARN Act notice is to give workers and communities sufficient notice of significant layoffs. A handful of states, including California, Illinois, and New York, have their own notice requirements for mass layoffs and similar actions that employers must comply with in addition to the federal WARN Act.

It is worth noting these requirements in light of the recent federal appellate court decision affirming that state-licensed cannabis businesses need to comply with overtime requirements set forth in the federal Fair Labor Standards Act, another federal employee protection law (discussed in a recent Reed Smith Client Alert - link). Compliance cuts a broad stroke and is not just limited to following cannabis permitting laws – other federal, state, and local laws apply to cannabis businesses just the same.