The US Supreme Court previously ruled in favour of Jack Phillips, who runs Masterpiece Cakeshop, after he turned down an order from partners Charlie Craig and David Mullins.
The 7-2 judgement overruled a previous decision by the Colorado Civil Rights Commission, which sided with the couple.
Presenting the Court’s opinion, Justice Anthony Kennedy wrote: “The case presents difficult questions as to the proper reconciliation of at least two principles.
“The first is the authority of a State and its governmental entities to protect the rights and dignity of gay persons who are, or wish to be, married but who face discrimination when they seek goods or services.
“The second is the right of all persons to exercise fundamental freedoms under the First Amendment.
“When the Colorado Civil Rights Commission considered this case, it did not do so with the religious neutrality that the Constitution requires,” he said.
However, Phillips now faces another legal challenge - this time from transgender attorney Autumn Scardina - after he refused to make a cake which was blue on the outside and pink on the inside in celebration of her transition.
ABC News reports that Scardina placed the order in 2017, on the same day that the Supreme Court announced that it would hear Phillips’ appeal.
Confirming that it was not a “setup”, Scardina told her lawyer in the virtual trial on Monday: “It was more of calling someone’s bluff.”
Meanwhile, Sean Gates, the lawyer representing Phillips, stated that the baker could not make a cake with a message that he did not agree with.
“The message would be that he agrees that a gender transition is something to be celebrated,” his representative said.