Michigan Dispensary Agrees to $205K Settlement Over Withheld Tip Dispute

LOS ANGELES- A Michigan-based cannabis dispensary chain, Timber Cannabis, has agreed to pay $205,000 to resolve a lawsuit filed by employees claiming management withheld customer tips. While the company did not admit to any wrongdoing, U.S. District Judge Matthew Leitman described the settlement as “fair and appropriate” during a hearing earlier this month.

Lead plaintiff Chad Underwood, a budtender, argued that employees were earning as much as $150 in tips per shift before, in early 2024, management began collecting funds from tips left in jars or baskets. Underwood and his attorneys contend that the tips should have belonged to employees and that federal wage laws were violated.

Timber Cannabis formally denied any violation of federal wage standards in its court response, but opted for the settlement. The company operates seven locations across Michigan, and more than 60 employees are eligible for settlement payments. Around one-third of the total fund will cover legal fees.

This dispute highlights evolving legal considerations within the emerging recreational cannabis industry. While marijuana has been legal for adult recreational use in Michigan since 2018, frameworks for employee compensation, particularly tip distribution, are still developing. The case signals the importance of clear labor policies as the sector matures.