DETROIT, MICHIGAN – A Michigan-based cannabis dispensary chain, Timber Cannabis, has agreed to pay $205,000 to resolve a lawsuit brought by employees who alleged the company improperly withheld tips. The settlement agreement, which brings an end to the legal dispute, received final approval from a federal judge on Friday, June 6, 2025.
The ruling was handed down by U.S. District Judge Matthew Leitman, who presides over cases in the Eastern District of Michigan. Judge Leitman reviewed the terms of the proposed settlement and deemed them “fair and appropriate” for the class of employees involved.
Background of the Dispute
The lawsuit centered on allegations from employees, including budtenders, that management at Timber Cannabis locations had engaged in practices that prevented them from receiving the full amount of tips left by customers. Tips are often a significant component of income for service industry workers, including those in retail cannabis dispensaries.
The lead plaintiff in the case was Chad Underwood, identified in court documents as a budtender who worked for the company. According to the lawsuit, Underwood claimed that prior to the alleged change in company practice, he was personally earning up to $150 in tips during a single shift.
The complaint further alleged that the company began diverting or withholding employee tip money starting in 2024. The lawsuit contended that this practice violated federal wage and hour laws designed to protect employee compensation, including tips.
Timber Cannabis operates a chain of seven dispensary locations throughout Michigan. The lawsuit was filed on behalf of a group of employees who claimed to have been affected by the alleged tip withholding.
Terms of the Settlement Agreement
Under the terms of the settlement approved by Judge Leitman, Timber Cannabis will pay a total of $205,000. This sum is intended to compensate the employees who are eligible to receive a portion of the settlement fund.
Court documents indicate that more than 60 current and former employees are expected to qualify for a distribution from the $205,000 settlement pool. The exact amount each employee receives will depend on factors such as their length of employment during the class period and potentially the estimated tips they were allegedly denied.
In reaching the settlement agreement, Timber Cannabis did not admit to any wrongdoing. The company specifically denied violating federal wage law or engaging in the conduct alleged by the plaintiffs. Settlements of this nature often include language where the defendant denies liability but agrees to a payment to avoid the costs and risks associated with further litigation.
Judicial Review and Approval
Judge Matthew Leitman’s approval of the settlement signifies that the court found the agreement to be a reasonable resolution of the claims, taking into account the potential outcomes of continued litigation for both the employees and the company. The judicial approval process ensures that class action settlements are fair, reasonable, and adequate for all individuals affected by the agreement.
The court’s order confirming the settlement was issued on Friday, June 6, 2025, finalizing the agreement and paving the way for the distribution of funds to the eligible employees.
Significance of the Resolution
The settlement represents a significant financial recovery for the employees involved in the lawsuit. Disputes over tips and wages are common in industries where employees rely heavily on gratuities, and this case highlights the legal protections available to workers regarding their earnings.
While Timber Cannabis denies the allegations, the $205,000 payment provides a definitive financial outcome for the more than 60 employees who claimed they were impacted by the alleged practices. The resolution closes the chapter on this particular legal challenge for the Michigan cannabis retailer.
