The New Mexico federal court preliminarily approved a class action settlement for $525,000 in a wage claim asserted by a group of hourly employees from two cannabis dispensary chains, Medicine Man Technologies, Inc. (which does business in New Mexico as Schwazze) and R. Greenleaf Organics, Inc.

The “budtenders,” as the employees are classified, typically earn more than $30 per month in tips in addition to an hourly rate of $15.75. The lawsuit alleges that it is company-wide policy for cash tips to be pooled and distributed to employees at the end of each workday in proportion to the total hours worked by each employee that day. On the other hand, debit tips – tips left by a customer paying with a debit card through the store’s electronic payment system – are pooled and divided in the same manner but distributed biweekly through the employees’ paychecks.

The budtenders’ complaint alleges that the stores supervisors, who make $3 per hour more, receive larger portions of the tips than the budtenders despite the latter performing more customer-related work. The class action lawsuit claims that the dispensaries violated Federal and New Mexico wage laws by not paying the budtenders all the tips paid to them by customers.

Following mediation, the parties agreed to settle the claims for $525,000, of which $322,813.67 will be allocated for the defined class of 250 budtenders with the named Plaintiff receiving $10,000. The remaining amount will be divided between administration costs and litigation expenses, with the bulk going to the budtenders’ attorneys’ fees. An additional amount will be added to the settlement fund to cover the employees’ payroll taxes. Per the federal rule governing class actions, the New Mexico court preliminarily approved the settlement on April 1, 2024.