California cannabis distributor Falcon Brands Inc. can proceed with extortion claims against the attorney representing a former employee, based on threats she made as part of settlement demands, a state appellate court said Thursday.

Attorney Amy Mousavi’s threat to inform Harvest Health & Recreation Inc., which was slated to acquire Falcon, about alleged illegal activity by Falcon, isn’t protected activity, and she must therefore face Falcon’s extortion claims, the California Court of Appeal, Fourth District said.

Former Falcon employee Nick Honard hired Mousavi to represent him in bringing claims of wrongful termination, failure to pay compensation, and retaliation, among others, …