Treez Files Summary Judgement in Lawsuit Against Feds Over Cannabis-Related Visa Denial

Treez Inc., a company that provides software services to state-legal cannabis businesses, filed a motion for summary judgment Sept. 18 in its lawsuit against the federal government over an H-1B visa denial for one of its executives from India.

The H-1B visa category is usually applied to people who wish to perform specialty occupation “services of exceptional merit and ability,” according to the U.S. Citizenship and Immigration Services (USCIS). It is a temporary, nonimmigrant visa typically reserved for highly educated people.

California-based Treez petitioned the USCIS in December 2021 for H-1B status for Ameya Vinayak Pethe, a “highly skilled and educated software developer,” to work as the company’s director of development operations while residing in Missouri, according to the motion for summary judgment the legal team at Davis Wright Tremaine LLP filed this week on behalf of Treez in the U.S. District Court for the Northern District of California.

In January 2022, the USCIS approved Treez’s petition for Pethe’s H-1B status to work as a software developer through Jan. 12, 2025, according to the motion.

However, when Treez filed an amended petition a few months later—solely to change Pethe’s employment location from Missouri to Pennsylvania—federal government officials sent a request for evidence (RFE) invoking an “illegality rule,” demanding that Treez prove Pethe’s work as a software engineer does not “aid and abet activities” that violate the Controlled Substances Act (CSA), according to the motion.

Although Treez is still fighting to get the amended petition approved, the company is now asking the court to grant a summary judgment before the underlying petition expires in less than four months.

According to Treez, the company confirmed with federal officials that Pethe’s work does not include cultivating, processing, distributing or delivering cannabis and contended that providing software to state-legal cannabis businesses does not constitute “aiding and abetting” as a factual or legal matter. Treez’s legal team at DWT pointed out in the motion that the USCIS previously approved numerous petitions for other Treez nonimmigrant workers in 2016, 2017, 2019 and 2021.

Still, the USCIS reversed its previous practices with Treez and denied the amended petition for Pethe’s H-1B visa in October 2022.

“Just like the original petition [for Pethe], these other Treez H-1B petitions all identified the nature of Treez’s business and connection to state-legal cannabis retailers,” DWT Partner John A. Goldmark wrote in the Sept. 18 motion.

“And just like the original petition [for Pethe], defendants approved Treez’s other petitions without any additional requirements beyond those included in the regulations,” he wrote. “Defendants did not invoke any purported ‘illegality rule,’ or provide any indication they would take the position that Treez’s business was violating federal criminal law—much less that defendants would anoint themselves the interpreters and arbiters of federal criminal drug laws.”

In the October 2022 denial order, Kristine R. Crandall, the acting director for the USCIS’ California Service Center, determined that Treez’s proposed employment of Pethe “appears” to violate federal law under the CSA.

Crandall acknowledged that while USCIS will “generally defer to its prior determination of eligibility” for an H-1B visa, it would not do so if there was a “material error,” “material change” or “new material information.” Crandall said questions arose regarding the legality of the services being provided by Treez but did not say which of the three material standards served as the genesis of deviating from the agency’s prior approvals.

“The evidence of record shows that working for your organization involves providing marijuana dispensaries with business solutions,” Crandall wrote. “While not actively participating in manufacture, possession, or distribution of marijuana, the beneficiary would provide dispensaries with software solutions and business applications at your direction. Among these solutions and applications are point of sale, dispensary inventory management, and omnichannel sales delivery solutions. These services are intended to sustain and overhaul business solutions for marijuana dispensaries. Through the provision of these services to dispensaries, the beneficiary would, in fact, be aiding and abetting a violation of the CSA.”

In response, Treez filed a lawsuit in November 2022—naming Crandall, the USCIS, the U.S. Department of Homeland Security and USCIS Director Ur M. Jaddou as defendants—claiming the USCIS arbitrarily and capriciously denied the H-1B amendment for Peth’s relocation to Pennsylvania on grounds that had nothing to do with the amendment.

Treez’s legal team claims that the defendants wrongfully extended a legal standard for aiding and abetting any activities “related to” state-legal cannabis operations.

According to Treez, the government’s “dangerous position implicates the operations of all legal businesses that provide any services to customers in the state-legal cannabis industry—from telephone and internet providers to sign makers and ATM providers.”

While USCIS officer John Batiste reviewed Treez’s amended petition for Pethe in July 2022 and initially recommended it for approval, Batiste reversed his position to match that of his superior, according to the DWT attorneys. Batiste later asserted that Treeze is different from other Software as a Service (SaaS) providers like Microsoft, Intel, IMB and Oracle because the company is “focused” on the “marijuana industry,” according to the DWT attorneys.

However, court-ordered documents revealed that the defendants had approved a “multitude of similar petitions for years despite notice that those petitioners were providing services to state-legal cannabis clients, just like Treez,” according to the DWT attorneys.

The legal team provided the example of an approved H-1B visa for Baker Technologies Inc.—a company that “creates and operates a customer relationship management (CRM) platform which is specifically tailored to the legal cannabis industry”—to employ a database program manager to oversee its software.”

“Defendants even approved an H-1B for a ‘management analyst’ to directly conduct studies and improve operations at the petitioner’s own recreational cannabis dispensaries,” the DWT attorneys wrote in this week’s motion.

Treez’s legal team argued that the defendants engaged in no rule-making procedures to adopt a new “illegality rule” in their amended petition denial for Pethe’s H-1B visa. Instead, the defendants began “invoking and applying it to visa petitions in a haphazard, irregular, and inconsistent manner,” according to the DWT attorneys.

As such, Treez requested relief in this week’s motion for summary judgment, arguing that the defendants’ denial order violated the Administrative Procedure Act by “exceeding their statutory jurisdiction, promulgating a new rule without the required procedure, and arbitrarily and capriciously denying plaintiffs’ amended H-1B petition.”