Firing someone in California is never as simple as “this isn’t working out.” Cannabis operators face some of the most complex employment rules in the state, and a single misstep can turn a routine separation into a six-figure wrongful termination lawsuit.
Here is what you need to know: cannabis wrongful termination claims are almost always preventable. The operator who loses in court is rarely the one who fired an underperforming employee. It is the one who did it without documentation, with suspicious timing, or after ignoring a warning sign that should have triggered a compliance review.
As cannabis consultants in California, we see this pattern across operators of every size. The law is not the problem. The process is.
In this post, we break down exactly what belongs in the file before you fire anyone, which mistakes create liability, and when to get a professional involved before you make the call.
Why Cannabis Wrongful Termination Claims Are More Common Than Operators Expect
California is an at-will state. You can generally end employment at any time, for any legal reason. But “any legal reason” has a long list of exceptions, and cannabis businesses face some that other industries rarely think about.
What Makes a Termination Wrongful in California
A firing becomes wrongful when it is motivated by an illegal reason, even if you had other valid ones too.
The most common cannabis wrongful termination claims in California include:
- Discrimination based on a protected characteristic such as disability, pregnancy, race, or age over 40
- Retaliation for reporting wage theft, safety violations, or METRC discrepancies
- Firing shortly after an employee requested protected leave or filed a workers’ comp claim
- Breach of an implied contract created by handbook language or oral promises
California courts look at whether an unlawful motive was a “substantial motivating factor” in the decision. You do not have to act with bad intent. You just need thin documentation for a claim to gain traction.
How AB 2188 Changed the Rules for Cannabis Employers
This is where cannabis wrongful termination gets industry-specific.
Since January 1, 2024, California law prohibits employers from firing or refusing to hire someone based on off-duty cannabis use or a positive test for nonpsychoactive cannabis metabolites. Standard urine and hair tests detect metabolites that can linger weeks after any impairment has passed.
Terminating someone based on a positive result alone, without evidence of on-the-job impairment, now exposes you to a claim under Government Code § 12954.
The irony is real: cannabis businesses must be especially careful about using cannabis drug tests as a basis for discipline.
If your drug policy still treats cannabis the same as other controlled substances, it is likely out of compliance.
What You Need in the File Before You Fire Anyone
The best time to build your termination defense is long before you plan to let anyone go. Every personnel file should be complete from day one of employment.
A thin or disorganized file is often a plaintiff attorney’s first signal that a case is worth pursuing.
The Documents That Protect You in Every Termination
A strong personnel file includes:
- Signed offer letter with clear at-will language
- Signed acknowledgment of the current employee handbook
- Wage Theft Prevention Act notice (required at hire under Labor Code § 2810.5)
- Dated and specific disciplinary records tied to the stated reason for termination
- Performance reviews showing a consistent, documented history
| Document | Why It Matters |
|---|---|
| Signed at-will acknowledgment | Prevents implied contract claims |
| Handbook acknowledgment | Shows the employee knew the rules |
| Wage Theft Prevention Act notice | Missing it compounds any existing claim |
| Written warnings with dates and specifics | Establishes a documented pattern |
| Incident reports | Contemporaneous records carry far more weight than memory |
| Final pay records | Proves compliance with Labor Code §§ 201-203 timing rules |
Under Labor Code § 1198.5, any current or former employee can request their personnel file within 30 days. What you hand over will shape whether a claim gets filed or dropped.
How Progressive Discipline Creates Your Legal Defense
Courts do not require progressive discipline before termination. But juries expect it.
A termination with no prior written warnings after years of neutral reviews creates the impression that the real reason was something else. That is exactly how discrimination claims gain traction.
Your employee handbook should outline a clear discipline process and include an explicit reservation of the right to deviate from it for serious misconduct. Without that clause, a written policy can be treated as a contractual commitment.
The most defensible terminations follow a documented sequence: verbal counseling noted in writing, specific written warning, final warning or performance improvement plan with measurable benchmarks, then separation.
A solid cannabis onboarding process builds the documentation foundation that makes every future termination easier to defend.
Common Mistakes Cannabis Operators Make When Terminating Employees
Most wrongful termination claims do not happen because an operator acted maliciously. They happen because the paperwork did not match the story told in court.
Firing Without a Paper Trail
The most common mistake is terminating for reasons that were never put in writing. Performance issues, attendance problems, and policy violations must be recorded at the time they occur, not reconstructed after the decision has already been made.
Retroactive documentation is one of the most damaging things you can hand to opposing counsel.
Be specific. “Late on March 3 at 8:23 AM, in violation of the written attendance policy” is defensible. “Attitude issues over the past few months” is not.
The Timing Problem That Gets Operators Sued
Firing someone shortly after a protected event is one of the clearest patterns courts recognize as retaliation.
If an employee filed a safety complaint, requested medical leave, raised a wage concern, or reported what they believed was a compliance issue, and you terminated them within 90 days, you are likely facing a rebuttable presumption of retaliation under California law.
That presumption shifts the burden to you. You must show with clear and convincing evidence that you would have made the same decision regardless of the protected activity.
Before any termination involving a recent complaint, leave request, or accommodation discussion, have a compliance professional review the file. That review is far cheaper than the alternative.
How Drivon Consulting Helps Cannabis Operators Terminate Safely
At Drivon Consulting, we work with California cannabis operators on the compliance structures that prevent employment claims from arising in the first place. That includes reviewing your documentation systems, discipline policies, and termination procedures before they are ever tested.
We see the same gaps across operators of every size: incomplete personnel files, outdated handbook language, drug policies that still conflict with AB 2188, and no pre-termination review process. These are all fixable before a claim is filed.
If you have a termination on the table and the documentation is thin, or there has been any recent protected activity by that employee, reach out before you move forward. Contact our team at Drivon Consulting to talk through your options and build a defensible process from the ground up.