Tag: Marijuana

Massachusetts to Require CGL and PL Coverage for All “Marijuana Establishments”

In regulations finalized just before the March 15, 2018, deadline, the Massachusetts Cannabis Control Commission (CCC) has included a provision requiring the maintenance of liability insurance or an escrow account to cover potential liabilities. This applies to all Marijuana Establishments, which include marijuana cultivators, craft marijuana cooperatives, marijuana product manufacturers, marijuana retailers, independent testing laboratories, marijuana research facilities, marijuana transporters and “any other type of licensed marijuana-related businesses,” except for medical marijuana treatment centers, which are already subject to a comprehensive regulation scheme, including a similar requirement.

Provisions

Under the new regulations, Marijuana Establishments must obtain and maintain general liability coverage with minimum limits of at least $1 million per occurrence and $2 million aggregate, and product liability insurance coverage of $1 million per occurrence and $2 million aggregate, with a maximum deductible of $5,000 per occurrence. 935 CMR 500.105(10)(a).

In the event that a Marijuana Establishment is unable to obtain the required coverage, upon providing documentation of the unavailability of coverage, the requirement may be met by the deposit of $250,000, or some other amount approved by the CCC, into an escrow account. 935 CMR 500.105(10)(b).

Any new applicant will be required to provide a description of its plan to obtain the required insurance coverage or otherwise meet the requirements of this regulation as part of the application process. 935 CMR 101(c)(5).

This insurance requirement is one of several designed to ensure the financial responsibility of marijuana businesses in the Commonwealth, including a requirement that applicants detail the amounts and sources of capital resources available to them, and a requirement that a license applicant provide documentation of a bond or other resources held in an escrow account in an amount sufficient to adequately support the dismantling and winding down of a Marijuana Establishment pursuant to 935 CMR 500.101(1)(a).

Synopsis

The recreational marijuana business regulations were approved on March 9, 2018, after extensive hearings and public input. The regulations must be signed by the Secretary of the Commonwealth and published in the Massachusetts Register, which is expected to take place on March 23, 2018. The regulations become effective upon publication.

Massachusetts voters approved the legalization of recreational marijuana via ballot in November 2016. The CCC plans to begin accepting applications on April 1, 2018, and recreational marijuana sales are expected to begin on July 1, 2018. Existing medical marijuana treatment centers have been given priority for licensure in towns and cities where the number of licenses is limited, see MGL c. 94G, § 5(c), and already will have these coverages in place. However, as applications will be reviewed on a rolling basis, we would expect to see the number of businesses seeking this coverage only increasing.

 

© 2018 Wilson Elser
This post was written by Kara Thorvaldsen of Wilson Elser.

War on Weed: AG Jeff Sessions Creates Reefer Madness

Attorney General Jeff Sessions has caused chaos in the marijuana industry and is forcing those who have made efforts to create legalized businesses in compliance with state laws to ponder whether their anticipated profits will go up in smoke. In a memo to all U.S. attorneys, Sessions rescinded Obama-era decrees that restrained prosecutors from enforcing federal drug laws in states that acted to legalize marijuana under their own laws. The decrees created an environment in which states felt they had the freedom to legalize marijuana without interference from federal authorities. Nonetheless, all aspects of the marijuana industry – for example, growing, manufacturing related products, distributing, advertising, and managing property used to grow, manufacture or distribute marijuana – have remained illegal. The updated guidance from Sessions now encourages federal prosecutors to resume enforcing these laws.

It is no coincidence that Sessions, a longtime opponent of the legalization of marijuana for recreational use, issued his guidance just days after California allowed recreational marijuana businesses to open their doors. Those who follow this issue know Sessions also has his sights set on enforcing federal drug laws against those engaged in the medical marijuana industry. Sessions requested Congress remove a budgetary provision currently prohibiting the Department of Justice (DOJ) from using funds to “prevent certain states ‘from implementing their own State laws that authorize the use, distribution, possession or cultivation of medical marijuana[.]’”[1]

This new guidance highlights the conflict that exists between federal law and the laws of state, local and tribal governments that have seemingly legalized marijuana both recreationally and medically. This should be cause for concern for those involved in the marijuana industry. Federal drug laws prevail over the comparable laws of states, cities and tribal communities; so, compliance with those laws is not a defense to the violation of federal laws prohibiting every aspect of the fast-growing marijuana industry. A key factor for its future is what happens to the Rohrabacher-Blumenauer Amendment, also known as the Rohrabacher-Farr Amendment, which prohibits the DOJ from spending federal funds to interfere with state medical marijuana laws. The law will expire on January 19 absent its annual re-authorization from Congress.

Ultimately, the manner in which the guidance from Sessions will be implemented by federal prosecutors around the country is uncertain. However, now that the prosecutors have the freedom and the instruction to enforce the drug laws against the marijuana industry, it is likely they will flex their muscles. This will result in substantially adverse legal and economic consequences for the businesses and individuals engaged in that industry. If you are concerned about the impact this new guidance may have on you, your business or an investment of yours, please contact your Dinsmore attorney. We have many attorneys experienced in this area, including multiple former federal prosecutors, who can assist you with your needs and concerns.

[1] Jeff Sessions’ letter regarding Department of Justice Appropriations is available at https://www.scribd.com/document/351079834/Sessions-Asks-Congress-To-Undo-Medical-Marijuana-Protections.

 

© 2017 Dinsmore & Shohl LLP. All rights reserved.
This post was written by Robert G. Marasco and Marisa K. Fenn of Dinsmore & Shohl LLP.

High Time for Massachusetts Employers to Consider a Marijuana Use Policy

All employers should maintain an employee handbook or similar policy statement that clearly sets out the employer’s position on drug and alcohol use. While federal laws relating to marijuana possession and use have not changed, many states have revised their statutes to legalize, decriminalize, or otherwise permit marijuana possession and use. This has caused some confusion for employers, who must balance the conflicting state and federal rules.

Over thirty states have enacted legislation allowing marijuana use in certain situations. In some states (California and Massachusetts, for example), medical and recreational use is permitted.  In many other states, such as Connecticut and Rhode Island, only medical use is permitted.  A number of states have also adopted legislation that specifically protects marijuana users from termination from employment based solely on a positive test for marijuana.

Massachusetts does not have such a statute. However, the Massachusetts Supreme Judicial Court recently issued a ruling that greatly complicates the issue of how to deal with an employee who is using marijuana. In Barbuto vs. Advantage Sales and Marketing (July 17, 2017), the SJC ruled that an employee who had been terminated as a result of a positive marijuana test could bring a claim for handicap discrimination under the Massachusetts anti-discrimination statute.  In Barbuto, the plaintiff was an employee of the defendant, who had a valid prescription for marijuana to help in treating Crohn’s disease.  After the employee was terminated because of a positive marijuana test, she brought a claim against the employer alleging, among other counts, a failure to provide a reasonable accommodation under the Massachusetts anti-discrimination statute.  The trial court dismissed all of the employee’s claims.  On appeal, the SJC upheld the trial court’s dismissal of most of the claims, but held that the employee could bring a claim under the anti-discrimination statute for disability discrimination and a failure to accommodate.  The SJC then reversed the dismissal of that count and sent the matter back to the trial court.

The SJC was careful to point out that employers could limit or defeat such claims by showing that allowing marijuana use would cause an undue hardship on an employer’s business, such as where the permitted use would conflict with other requirements like the Federal Drug Free Workplace Act. The SJC also clearly stated that Massachusetts law does not require any employer to permit on-site marijuana use as an employee accommodation. Even with those limitations, however, the Barbuto ruling does create some landmines for employers.  Massachusetts employers should become very familiar with the marijuana laws applicable in all states in which they have employees, and should enact employment policies consistent with those laws (which may differ significantly from state to state).  In addition, employers should consider and adopt (and consistently apply) policies that address how a positive test is handled (including addressing any reasonable accommodation issues).  For now, in Massachusetts, an employer will need to show how accommodating an employee’s medically prescribed marijuana use creates an undue hardship on the employer, and employers wishing to prohibit all marijuana use will need to be able to show this.

This post was written byMark J. Tarallo of Murtha Cullina.

Read more employment law news at the National Law Review.

Recreational Pot Comes to Nevada…But Why Are The Shelves Empty?

On July 1, 2017, Nevada became the fifth state in the United States to legalize the sale of recreational marijuana. The epicenter of “what happens here, stays here” tourism just added a new vice to its repertoire! So, what’s the problem?

Among other things, Nevada’s recreational marijuana dispensaries are facing the specter of empty shelves. Why? Because a wrinkle in the ballot measure that legalized recreational marijuana sales in Nevada gives licensed liquor wholesalers a temporary 18-month monopoly on marijuana distribution rights… “unless the [Nevada] Department [of Taxation] determines that an insufficient number of marijuana distributors will result from this limitation.” In order to fill its shelves, a Nevada-licensed recreational marijuana dispensary must use a licensed recreational marijuana distributor to transport the product from the cultivation facility to their stores (whereas dispensaries selling medical marijuana were allowed to move “medical-use” product from cultivation locations without an independent distribution network).

Despite efforts by marijuana dispensaries to stock up prior to July 1, overwhelming demand for recreational marijuana has resulted in dwindling supplies. And now, distributors are nowhere to be found. That is because very few liquor wholesalers have applied to become licensed marijuana distributors, and those that have made such application have failed to meet the requirements for licensure. The Nevada Department of Taxation (NDOT) reported that as of July 7, 2017, ZERO distribution licenses have been issued by NDOT.

Perhaps liquor wholesalers fear risking their federal alcohol permits issued by the Alcohol and Tobacco Tax and Trade Bureau? It would appear that marijuana distribution licenses would have to be issued to persons other than liquor wholesalers – however, nothing is that simple. A small group of liquor wholesalers, known as the Independent Alcohol Distributors of Nevada, sued and, on June 21, won a temporary injunction against NDOT to prevent marijuana distribution licenses from being issued to persons other than liquor wholesalers.

In response, on July 7, Governor Sandoval endorsed emergency regulations that would give NDOT the authority to determine whether there are a sufficient number of marijuana distributors to service the market – a determination that would allow NDOT to open up distributor licensing to those other than licensed liquor wholesalers. The emergency regulations will be considered by NDOT on July 13. Stay tuned.

This post was written by  Kate C. Lowenhar-Fisher   Jennifer J. Gaynor   Jeffrey A. Silver and Gregory R. Gemignani  of Dickinson Wright PLLC.

RICO Madness: Marijuana Operations Face RICO Challenges in Federal Courts

Don’t look now cannabis businesses, but your neighbors may be raising a racket. A June decision by the 10th Circuit Court of Appeals in Denver may have opened the doors to new legal challenges to marijuana operations: civil suits under the Racketeer Influenced and Corrupt Organizations Act (RICO).

RICO was originally intended to go after the mafia and other organized crime, but its broad language means it can be applied in other settings. RICO allows a private citizen to sue “racketeers” for damage to business or property due to the racketeer’s illegal activities or activities that were conducted under his guidance. Since marijuana remains illegal under federal law, the production or distribution of marijuana is considered racketeering.

In this case, a Colorado couple claimed a neighboring marijuana operation was creating “noxious odors” that drifted onto their land allegedly causing the value of their property to drop. The Reillys contended that the odors coming from the marijuana facility adjacent to their land were a nuisance because it “interfered with their present use and enjoyment of the land” and caused a “diminution in its market value.” The Reillys (aided by Safe Streets Alliance, an anti-marijuana organization that was also party to the case) argued that any business engaged in the commercial cultivation and sale of recreational marijuana is a criminal enterprise for purposes of RICO, so they were entitled to relief under federal law.

The District Court in Colorado dismissed the suit for failure to state a claim under RICO.  The District Court stated that Reillys’ injury (the noxious odors and reduced market value) was “speculative” and that they failed to provide any concrete evidence that they had provided harm. The District Court ruled that a “clear and definite” showing of damages were necessary under RICO.

On appeal, the 10th Circuit’s three-judge panel reversed the District Court’s conclusion that the Reilly’s claim of damages was merely “speculative” and thus must be dismissed. Instead, the 10thCircuit held that by alleging that the Reillys’ property has been directly injured by their neighbors’ “odorous and publicly-operating criminal enterprise,” the Reillys properly stated a claim and the case can proceed.

The 10th Circuit ruling also went out of its way to explain that the defendants’ growing marijuana as alleged would meet the elements of a RICO claim. As alleged, defendants were (a) racketeering by growing marijuana, which remains illegal under federal law; (b) were an “association-in-fact enterprise”; (c) the defendants conducted the enterprise’s affairs; and (d) that this activity constituted a “pattern” of illegal acts that is the direct cause of the Reilly’s alleged damages. By providing such analysis, it may have provided a roadmap to future plaintiffs for RICO.

Anti-legalization advocates such as the Safe Streets Alliance are likely on the lookout for more RICO cases to bring against marijuana operators. They likely believe they have found a profitable way to improve litigation risks on marijuana companies even in the event of federal inaction on marijuana and state expansion. Not only are the RICO charges relatively easy to bring, but if successful, RICO plaintiffs can receive treble damages. Treble is lawyer-speak for triple, meaning that plaintiffs can receive up to three times the actual damages. Plaintiffs, if successful, are also eligible to have their attorney’s fees covered by the defendant and have the courts shut down the marijuana operation.

For marijuana operators around the country, now is the time to assess your liability and reduce litigation risk:

  • Review leases and other documents that may contain limitations as to what you can do on your property
  • Review local ordinances on noxious odors and other nuisance rules, as they could be the basis for a dispute
  • Be in strict compliance with any and all state laws related to cannabis
  • Avoid any public disputes that could raise attention to your company
  • Moreover, perhaps above all else, determine if you have any frustrated neighbors that anti-legalization advocates could target. If you have an ongoing dispute with a neighbor, attempt to resolve it amicably before it can rise to this level

RICO charges are challenging, but a prepared company can avoid the trouble before it starts.

Growing Questions About Employee Medical Marijuana Use Leave Employers in a Haze

The intersection of employment and marijuana laws has just gotten cloudier, thanks to a recent decision by the Rhode Island Superior Court interpreting that state’s medical marijuana and discrimination laws. In Callaghan v. Darlington Fabrics Corporation, the court broke with the majority of courts in other states in holding that an employer’s enforcement of its neutral drug testing policy to deny employment to an applicant because she held a medical marijuana card violated the anti-discrimination provisions of the state medical marijuana law.

Background

Plaintiff applied for an internship at Darlington, and during an initial meeting, she signed a statement acknowledging she would be required to take a drug test prior to being hired.  At that meeting, Plaintiff disclosed that she had a medical marijuana card.  Several days later, Plaintiff indicated to Darlington’s human resources representative that she was currently using medical marijuana and that as a result she would test positive on the pre-employment drug test.  Darlington informed Plaintiff that it was unable to hire her because she would fail the drug test and thus could not comply with the company’s drug-free workplace policy.

Plaintiff filed a lawsuit alleging Darlington violated the Hawkins-Slater Act (“the Act”), the state’s medical marijuana law, and the Rhode Island Civil Rights Act (“RICRA”). The Hawkins-Slater Act provides that “[n]o school, employer, or landlord may refuse to enroll, employ, or lease to, or otherwise penalize, a person solely for his or her status as a cardholder.”  After concluding that Act provides for a private right of action, the court held that Darlington’s refusal to hire Plaintiff violated the Act’s prohibition against refusing to employ a cardholder.  Citing another provision that the Act should not be construed to require an employer to accommodate “the medical use of marijuana in any workplace,” Darlington contended that Act does not require employers to accommodate medical marijuana use, and that doing so here would create workplace safety concerns.  The court rejected this argument, concluding:

  • The use of the phrase “in any workplace” suggests that statute does require employers to accommodate medical marijuana use outside the workplace.
  • Darlington’s workplace safety argument ignored the language of the Act, which prohibits “any person to undertake any task under the influence of marijuana, when doing so would constitute negligence or professional malpractice.” In other words, employers can regulate medical marijuana use by prohibiting workers from being under the influence while on duty, rather than refusing to hire medical marijuana users at all.
  • By hiring Plaintiff, Darlington would not be required to make accommodations “as they are defined in the employment discrimination context,” such as restructuring jobs, modifying work schedules, or even modifying the existing drug and alcohol policy (which prohibited the illegal use or possession of drugs on company property, but did not state that a positive drug test would result in the rescission of a job offer or termination of employment).

The court thus granted Plaintiff’s motion for summary judgment on her Hawkins-Slater Act claims.

With respect to Plaintiff’s RICRA claim, the court found that Plaintiff’s status as a medical marijuana cardholder was a signal to Darlington that she could not have obtained the card without a debilitating medical condition that would have caused her to be disabled. Therefore, the Court found that Plaintiff is disabled and that she had stated a claim for disability discrimination under RICRA because Darlington refused to hire her due to her status as a cardholder.  Importantly, the court held that the allegations supported a disparate treatment theory.

Finally, while noting that “Plaintiff’s drug use is legal under Rhode Island law, but illegal under federal law [i.e. the Controlled Substances Act (the CSA”)],” the Court found that the CSA did not preempt the Hawkins-Slater Act or RICRA. According to the court, the CSA’s purpose of “illegal importation, manufacture, distribution and possession and improper use of controlled substances” was quite distant from the “realm of employment and anti-discrimination law.”

Key Takeaways

While this decision likely will be appealed, it certainly adds additional confusion for employers in this unsettled area of the law – particularly those who have and enforce zero-tolerance drug policies. The decision departs from cases in other jurisdictions – such as California, Colorado, Montana, Oregon, and Washington – that have held that employers may take adverse action against medical marijuana users.  The laws in those states, however, merely decriminalize marijuana and, unlike the Rhode Island law, do not provide statutory protections in favor of marijuana users.  In those states in which marijuana use may not form the basis for an adverse employment decision, or in which marijuana use must be accommodated, the Callaghan decision may signal a movement to uphold employment protections for medical marijuana users.

While this issue continues to wend its way through the courts in Rhode Island and elsewhere, employers clearly may continue to prohibit the on-duty use of or impairment by marijuana. Employers operating in states that provide employment protections to marijuana users may consider allowing legal, off-duty use, while taking adverse action against those users that come to work under the influence.

Of course, it remains unclear how employers can determine whether an employee is under the influence of marijuana at work. Unlike with alcohol, current drug tests do not indicate whether and to what extent an employee is impaired by marijuana.  Reliance on observations from employees may be problematic, as witnesses may have differing views as to the level of impairment and, in any event, observation alone does not indicate the source of impairment.  Employers choosing to follow this “impairment standard” are advised to obtain as many data points as possible before making an adverse employment decision.

All employers – and particularly federal contractors required to comply with the Drug-Free Workplace Act and those who employ a zero-tolerance policy – should review their drug-testing policy to ensure that it (a) sets clear expectations of employees; (b) provides justifications for the need for drug-testing; (b) expressly allows for adverse action (including termination or refusal to hire) as a consequence of a positive drug test. Additionally, employers enforcing zero-tolerance policies should be prepared for future challenges in those states prohibiting discrimination against and/or requiring accommodation of medical marijuana users.  Those states may require the adjustment or relaxation of a hiring policy to accommodate a medical marijuana user.

The Callaghan decision also serves as a reminder of the intersection of medical marijuana use and disability.  Here, the court allowed a disability discrimination claim to proceed even though Plaintiff never revealed the nature of her underlying disability because cardholder status and disability were so inextricably linked.

Finally, employers should be mindful of their drug policies’ applicability not only to current employees, but to applicants as well. In Callaghan, the court found the employer in violation of state law before the employee was even offered the internship or had taken the drug test.

This post was written byNathaniel M. Glasser and Carol J. Faherty of Epstein Becker & Green, P.C.

Marijuana in the Workplace: The Growing Conflict Between Drug and Employment Laws

Despite the growing number of states that have legalized the use of marijuana, the drug remains illegal under federal drug laws. The legal landscape is made more confusing when considering the differing levels of employment protection that these state laws offer to marijuana users. With this patchwork of state laws, employers are left to grapple with whether and how to accommodate their employees who use marijuana for medical purposes or for off-duty personal consumption.

The Legal Landscape

Twenty-three states and the District of Columbia have legalized medical and/or recreational use of marijuana. These jurisdictions provide marijuana users with varying levels of protection against employment discrimination. The majority—Alaska, California, Colorado, Georgia, Hawaii, Maryland, Massachusetts, Michigan, Montana, New Jersey, New Mexico, Oregon, Vermont, and Washington—merely decriminalize use. Other jurisdictions—Arizona, Connecticut, Delaware, the District of Columbia, Illinois, Maine, Minnesota, Nevada, New Hampshire, New York, and Rhode Island—in addition to decriminalizing use, also provide statutory protections against discrimination. Some of these jurisdictions even require accommodation of underlying disabilities.

However, marijuana is still classified as a Schedule I drug (high potential for abuse, no acceptable medical use) and remains illegal under the federal Controlled Substance Act (“CSA”). While last year Congress passed a bill to defund the Department of Justice’s efforts to challenge state-legal medical marijuana programs, the Obama administration’s public position is that it “steadfastly opposes legalization of marijuana.”

Federal precedent in this area has provided employers with broad rights to take adverse action against individuals who use marijuana, whether or not for medical purposes and/or protected under state law. For instance, under the Americans with Disabilities Act (“ADA”), courts have held that marijuana users—regardless of the legality of the use under state law—are not qualified individuals with a disability entitled to anti-discrimination protections. See, e.g., James v. City of Costa Mesa, 700 F.3d 394 (9th Cir. 2012).

Employers, however, must be careful not to rely on medical marijuana use as a pretext for firing an employee with an underlying disability. The U.S. Equal Employment Opportunity Commission (“EEOC”) recently took aim at a Michigan-based assisted living center that fired a nursing administrator who used medical marijuana to treat her epilepsy and thus failed a drug test on her second day of work. EEOC v. Pines of Clarkston, Inc., No. 13-CV-14076, 2015 U.S. Dist. LEXIS 55926 (E.D. Mich. Apr. 29, 2015). The district court denied the employer’s motion for summary judgment on the individual’s ADA claim. Although acknowledging that a positive test for medical marijuana constituted a legitimate, non-discriminatory reason for discharge, the district court concluded that the EEOC raised a genuine issue of material fact as to whether the articulated reason was a pretext for disability discrimination, particularly because the employee had been questioned about her disability during her interview and subsequently after the positive drug test. The case eventually settled but should be heeded by employers as a warning that a positive drug test for marijuana may not insulate them from discrimination claims under the ADA.

Unresolved Conflict Between Employer and Employee Rights Under State Law

State law provides greater protections to marijuana users. However, while courts have infrequently addressed the conflict between state law employment protection and marijuana use, those that have considered such issues generally have found in favor of an employer’s right to take adverse action against an employee who tests positive for marijuana.

The Colorado Supreme Court highlighted this issue when, in Coats v. Dish Network, 350 P.3d 849 (Colo. 2015), it held that an employee may be fired for using marijuana even though he legally used the drug off duty. Colorado law prohibits termination for lawful off-duty conduct, and Coats was a registered medical marijuana patient who only consumed marijuana during non-work hours. Nevertheless, because smoking marijuana was still illegal under the federal CSA, the court held that such use did not constitute lawful conduct under the Colorado statute.

The decision in Coats is consistent with earlier decisions in California, Montana, Oregon, and Washington that have held that decriminalization laws do not confer a legal right to smoke marijuana and that employers may take adverse action against users. See Ross v. RagingWire Telecomms., Inc., 174 P.3d 200 (Cal. 2008); Johnson v. Columbia Falls Aluminum Co., LLC, No. 08-0358, 2009 Mont. LEXIS 120 (Mont. 2009); Emerald Steel Fabricators, Inc. v. Bureau of Labor & Indus., 230 P.3d 518 (Or. 2010); Roe v. TeleTech Customer Care Mgmt. (Colo.) LLC, 257 P.3d 586 (Wash. 2011). Of course, statutes in these states have decriminalized marijuana use but do not expressly provide employment protections to users.

Employers must tread more carefully in jurisdictions that grant express protections to marijuana users. Courts in these states have not decided whether an employee’s rights under such a state statute trump the rights of an employer to take adverse action against the use of a drug categorized as illegal under federal law.

Advice for Employers

While many implications of legalizing marijuana use are yet to be decided by the courts, employers clearly may continue to prohibit the on-duty use of, or impairment by, marijuana. Employers, particularly federal contractors required to comply with the Drug Free Workplace Act, also may continue the implementation of workplace drug testing programs.

Employers, however, must treat positive tests for marijuana cautiously. Decisions in California, Colorado, Montana, Oregon, and Washington collectively provide support to take adverse action against employees who use marijuana, recreationally or medicinally, and may suggest that such employer-favorable rulings will issue even from courts reviewing state statutes providing employment protections. Thus, a bright-line approach to discharging or refusing to hire marijuana users may be defensible related to marijuana use. But given the uncertain state of the law, employers should consider taking the following steps to reduce potential liability:

  • Engage in the interactive process to determine whether medical marijuana use can be accommodated.

  • Particularly in jurisdictions providing employment protections for medical marijuana users, engage in a fact-based inquiry to determine whether the individual is a medical marijuana cardholder and whether the job can accommodate the individual’s use of medical marijuana.

  • Develop and/or review policies that expressly address the right to take adverse action upon a finding of marijuana use.

  • When taking such adverse action, document the reasons to avoid a pretext argument.

Of course, employers should work with legal counsel to closely monitor the changing legal landscape in their jurisdictions as this area of unsettled law is ripe for future litigation.

Article By Nathaniel M. Glasser & Jonathan K. Hoerner of Epstein Becker & Green, P.C.
©2015 Epstein Becker & Green, P.C. All rights reserved.

Marijuana-Legalization Efforts and Their Impact on the Presidential Race

With the race for the White House heating up, the “politics of marijuana” is looming as a possibly significant factor.

marijuana-leaf white background

Twenty-four state ballot initiatives on marijuana legalization in 16 states have been filed already and will be voted on in November 2016, including in the “swing states” of Arizona, Colorado, Florida, Michigan, Missouri, Nevada, and New Mexico.

This is important because marijuana-legalization ballot initiatives are widely acknowledged to “turn out the vote” of single-issue, first-time, and younger voters – all of whom disproportionately vote Democratic. In close races and swing states, they may make the difference. Insiders have reported that these voters have determined the outcome in several contested races and states in the last two election cycles (e.g., in Barack Obama’s defeat of Mitt Romney in Colorado in 2012).

Moreover, the marijuana-legalization issue is increasingly a focus in U.S. Senate and House races and in pro- and anti-marijuana bills. Recently, the House Republican leadership successfully stripped out pro-marijuana-legalization amendments to two pending bills.

Away from Capitol Hill, twenty-four states and Washington, D.C., already allow for “medical”-marijuana use – at least under some circumstances. Four states (Alaska, Colorado, Oregon, and Washington) and the District of Columbia allow adults to smoke marijuana “recreationally.”

However, proponents’ efforts to introduce marijuana into the legal and cultural mainstream have met with opposition in the workplace and the courts. Even as many states allow “medical” or “recreational” use of marijuana to some extent, the courts have upheld employers’ interests in maintaining drug-free workplaces against challenges by job applicants or employees who were not hired or have been terminated because of marijuana-related substance-abuse-prevention policy violations. Employers have prevailed in every court case brought by employees claiming a “medical”-marijuana justification for their positive drug tests after the company’s adverse employment action – including many decisions in California, Colorado, Michigan, Montana, Oregon, and Washington.

This litigation results from a clash between a culture that increasingly accepts marijuana and companies that prohibit illicit drug abuse because of legitimate safety and productivity concerns. The conflict ultimately will be resolved by Congress or the courts (four lawsuits currently are pending to invalidate Colorado’s legalization of marijuana). Meanwhile, the current Administration, through the U.S. Justice Department, has acquiesced in states legalizing marijuana, essentially by refusing to enforce the federal Controlled Substances Act in those states – an unprecedented policy. This policy could change on January 20, 2017, when a new president is inaugurated.

Thus far, most presidential contenders have shied away from the issue. However, former Texas Governor Rick Perry (R) has endorsed decriminalization. Kentucky Senator Rand Paul, a Libertarian, has consistently supported states’ rights to establish their own marijuana policies and supports decriminalizing marijuana possession. Former Secretary of State Hillary Clinton (D) has hinted that she is comfortable letting the states continue to experiment.

Conversely, New Jersey Governor Chris Christie (R) and Texas Senator Ted Cruz (R) have strongly opposed marijuana legalization, and Florida Senator Marco Rubio (R) also is on record as opposing marijuana legalization.

What the Congress does between now and mid-2016 may be critical. Supporters of marijuana legalization are gearing up. The marijuana industry has hired well-positioned lobbying firms. One of their top issues is to fix the rules that bar marijuana businesses from using banks. The well-funded National Cannabis Industry Association (NCIA) is supporting legislation that would change federal law to recognize the rights of local jurisdictions, including Washington, D.C., to create and regulate their own marijuana laws.

Finally, the U.S. Senate Appropriations Committee voted in support of opening banking services to state legal marijuana business. Senate Bill 683, the CARERS Act of 2015, introduced by New Jersey Senator Cory Booker (D), seeks to amend the federal Controlled Substances Act (21 U.S.C. § 801 et seq.) to ensure that CSA would not apply to anyone acting in compliance with state law relating to the production, possession, and distribution of medical marijuana. The proposal transfers marijuana from Schedule I to Schedule II of the CSA and prohibits federal banking officials from discouraging depository institutions from providing financial services to a marijuana-related, state-permitted legal business. A similar amendment was passed by the full House of Representatives in 2014. The House has not yet taken up the issue in 2015. House Republicans, however, supported a budget plan that would prevent legal sales of marijuana in the District until at least 2017.

Estimates indicate that the value of the legalized marijuana industry currently approaches $3 billion nationwide and is growing. Obviously, a lot is at stake.

The resolution of the marijuana-legalization issue, at both the federal and state levels, could play a significant role in determining the outcome of the upcoming presidential election.

Article By Mark A. de Bernardo & Robert Horn of Jackson Lewis P.C.
Jackson Lewis P.C. © 2015

Oklahoma and Nebraska Challenge Colorado’s Amendment 64: Legalized Marijuana

In 2012, Colorado was the first state to legalize recreational marijuana with Amendment 64.  While this has made Pizza Franchisors happy and sent snack sales through the roof, it has also created controversy and unintended consequences.  The entire country has watched Colorado sort through these issues, curious to see how things will land, how much people really want to get high, and most of all, exactly how much money is there to be made?  Along with these practical issues and enforcement questions, several legal issues have come into play as marijuana legalization—and its conflict with federal law—has changed the landscape.  Perhaps most significantly are the legal challenges to Colorado’s statute in front of the Supreme Court.

Colorado’s Amendment 64 changed the State Constitution to allow for recreational use of marijuana. According to the law, Adults 21 or older can grow up to six cannabis plants, with 3 being mature at a time, and legally possess all the cannabis from those plants.  Adults may also travel with up to one ounce of marijuana while traveling, and gift up to one ounce to other adults 21 or over.  Consumption is regulated like alcohol.  The sale and growth of marijuana is regulated by the state, with licenses available for both growers and retail outlets.

The Attorney Generals’ of neighboring states Oklahoma and Nebraska, Scott Pruitt and Jon Bruning, respectively, have sued Colorado.  The complaint cites Colorado for creating a “scheme” that “frustrates the federal interest in eliminating commercial transactions in the interstate controlled-substances market, and is particularly burdensome for neighboring states [Oklahoma and Nebraska] . . . States where law enforcement agencies and the citizens have endured the substantial expansion of Colorado marijuana.”  Colorado’s Attorney General, John Suthers, was against marijuana legalization when it was being debated, but now he is tasked with defending the state’s controversial measure.

Oklahoma and Nebraska take issue with Colorado’s failure to take steps to prevent the drug from leaving the state.  In particular, the complaint takes issue with Colorado not requiring patrons to smoke or eat the marijuana where they purchase it, or tracking marijuana once it is sold, or requiring a background check on purchasers.  The law, in fact, only requires a driver’s license that says you are 21 to purchase the drug.  Colorado has no effective way, according to the complaint, to stop “criminal enterprises, gangs and cartels from acquiring marijuana inventory directly from retail marijuana stores.”

Concerns about a black market exist, and how the law might be creating gray areas in how pot is sold and cultivated.  A CNBC documentary “Marijuana Country: The Cannabis Boom” examines some of these issues.  Cameras follow two pot dealers as they show how loopholes in the law allow them to profit from their excess marijuana, grown legally, in a gray market heavy with craigslist postings and terminology—he is a caregiver, not a dealer, and he gifts the marijuana and receives gifts of cash in return.  It’s easy to see how this gray area doesn’t stop at the state line.

In fact, law enforcement officials from counties neighboring the Colorado border say they are seeing more Colorado marijuana, some of it still in the retail packaging, flow into their counties.  The strained jail budgets in these counties are a result of the increased enforcement costs—more impounded vehicles, more arrests and higher costs all around because of the pot coming down the highway.  Colorado AG John Suthers says 40 states have contacted his office regarding marijuana seized within their borders, and the Washington Post has gone so far as to call Colorado “the nation’s giant cannabis cookie jar.”

It is for these reasons that Oklahoma and Nebraska have filed their complaint.  Invoking the Constitutional provision that gives the Supreme Court original jurisdiction on disputes between the states, basing their complaint on the claim to the right to have federal laws prevail over contradictory state laws under the Supremacy Clause of Article VI of the Constitution.  Nebraska and Oklahoma v. Coloradohas not received permission to be filed by the court.   It should be interesting to see how the case develops.  But with over 130 metric tons of marijuana sold, legally, in Colorado last year, the demand is not going away.

The court documents and the complaint are here.

ARTICLE BY

Eilene Spear
OF
The National Law Review / The National Law Forum LLC