Coats informed his employer that he was a registered medical marijuana patient and planned to continue using medical marijuana. On June 7, 2010, Dish fired Coats for violating the company's drug policy.

Wrongful termination claim

Coats sued Dish for wrongful termination under the Colorado statute that generally prohibits employers from discharging an employee based on his engagement in “lawful activities” off the employer’s premises during non-work hours. According to Coats, Dish violated the statute by terminating him based on his use of medical marijuana outside of work, which he claimed was "lawful" under the Colorado Medical Marijuana Amendment and its implementing legislation.

Dish argued that Coats’ medical marijuana use was not "lawful" for purposes of the statute under either federal or state law.

The trial court dismissed Coats’ claim, finding that the Amendment provided registered patients an affirmative defense to state criminal prosecution without making their use of medical marijuana a lawful activity within the meaning of the law. The trial court concluded that Coats wasn’t protected by the statute and dismissed the claim without considering the federal law issue.

Next stop: Colorado Court of Appeals

On appeal, Coats repeated his argument that Dish wrongfully terminated him under state law because his use of medical marijuana was “lawful.” Dish also reiterated that it didn’t violate state law because medical marijuana use remains prohibited under federal law.

In a split decision, the Colorado appeals court affirmed the trial court's decision, based on the prohibition of marijuana use under the federal Controlled Substances Act (CSA). The majority found that the term "lawful" means that which is permitted by law. Therefore, the majority reasoned, to be lawful, the activity had to be permitted by both state and federal law. Given that the CSA prohibits all marijuana use, the majority concluded that Coats’ conduct wasn’t a lawful activity protected by Colorado state law.

The dissenting opinion agreed with Coatss position that the term "lawful" should be interpreted to mean only under state law, not federal law. Had this opinion been adopted, it would have protected Coats' use of medical marijuana.

On to the Colorado Supreme Court

The Colorado Supreme Court reviewed the lawful activities statute and found that nothing in the law's language limits the term "lawful" to state law. Instead, the court said, the term is used in it general, unrestricted sense, indicating that a lawful activity must comply with both state and federal law.

"There is no exception for marijuana use for medicinal purposes, or for marijuana use conducted in accordance with state law" under the CSA, the Supreme Court said. Thus, Coats' use of medical marijuana was unlawful under federal law and not protected by Colorado state law.

Dish Network—and other Colorado employers—appear free to continue their drug use policies in Colorado and to terminate employees who use illegal substances, including medical marijuana, in violation of those policies. The case, and the law, may still have repercussions for employees who have filed workers' compensation claims or who have disabilities relating to the use of marijuana—medical or otherwise. All employers should review the results of this case with their employment counsel to determine what the effect is on their organization and its drug use policy.

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