Marijuana Legalization: What Does It Mean for You as an Employer?

Currently, 23 states including the District of Columbia have legalized marijuana for medical use. Colorado Washington, Oregon and Alaska have also legalized the “recreational” use of marijuana.

Marijuana LegalizationCurrently, 23 states including the District of Columbia have legalized marijuana for medical use. Colorado Washington, Oregon and Alaska have also legalized the “recreational” use of marijuana. This article will tell you what you as an employer need to know about the issues that marijuana legalization presents for you in managing your employees — how the federal government’s response to state marijuana legalization comes into play, how state laws affect your right to restrict marijuana possession and use by your employees and how best to deal with marijuana possession and use by your employees.

The Federal Government’s Response
In November 2012, Colorado and Washington became the first states to legalize possession of small amounts of marijuana for recreational use. In response, President Obama directed the Attorney General to review the conflict between federal law and those state laws that had legalized limited amounts of marijuana for either medical or recreational purposes. In August 2013, the Justice Department updated its enforcement policy concerning the state legalization of marijuana, making it clear that while the DOJ had no plans to challenge Colorado’s and Washington’s legalization laws, marijuana is still illegal under the federal Controlled Substances Act (CSA). Since marijuana is still classified as a Schedule I controlled substance in the same category as cocaine, LSD, heroin and ecstasy under the CSA, its possession, distribution and use continue to be prohibited at the federal level.

Can Federal Contractors and Recipients of Federal Funds Prohibit Marijuana Use?
Yes, if you are a federal contractor or federal grant recipient covered by the Drug Free Workplace Act of 1988, you are permitted to prohibit marijuana use by your employees. The statute requires covered contractors to publish and give a policy statement to all covered employees to inform them that the unlawful manufacture, distribution, dispensation, possession or use of controlled substance is prohibited in the covered workplace (subject to the federal contract) and specify the actions that will be taken against the employee. However, the Drug Free Workplace Act does not require employers to terminate employees who test positive for marijuana and/or other controlled substances.

Do Employers Have to Accommodate Medical Marijuana Use Under the ADA?
No. You as an employer are not required to accommodate an employee’s current use of illegal drugs, including marijuana under the Americans with Disabilities Act (ADA). Moreover, under the ADA, a covered employer can prohibit illegal use of alcohol and drugs, including marijuana, at the workplace. Since the ADA does not protect individuals currently using illegal drugs, asking about current illegal drug use is not a disability-related question, and tests for the illegal use of drugs are not considered to be medical examinations. However, if an employee has entered into a substance abuse treatment program for an addiction to marijuana, you as an employer will probably have to allow the employee to complete the treatment program as a reasonable accommodation. However, if the employee tries to enter the treatment program knowing that he or she is likely to test positive for marijuana after a drug test to avoid termination, entry into the program under these circumstances will probably not shield the employee from termination.  

Employer Regulation of Marijuana Possession and Use in Colorado and Washington
In November 2012, Colorado voters approved State Constitutional Amendment 64, which legalized marijuana for recreational use. Amendment 64 contains two sections that provide employers with the ability to regulate marijuana possession and use by their employees:

Nothing in this [Amendment] is intended to require an employer to permit or to accommodate the use, consumption, possession, transfer, display, transportation, sale or growing of marijuana in the workplace or to affect the ability of employers to have policies restricting the use of marijuana by employees.
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Nothing in this [Amendment] shall prohibit an employer or any other entity who occupies, owns or controls a property from prohibiting or otherwise regulating the possession, consumption, use, display, transfer, distribution, sale, transportation or growing of marijuana on that property.

Shortly after Amendment 64 was passed, Governor John Hickenlooper (D) created a Task Force to make recommendations for legislation to regulate recreational marijuana. The Task Force was made up of local business leaders, including medical marijuana business owners, plaintiff employment lawyers, defense employment lawyers and general members of the public.  A minority of the Task Force members wanted the state legislature to adopt an impairment standard that would require employers to show that an employee was “impaired” or “under the influence,” before an employer could take disciplinary action against an employee that tests positive for THC, the active ingredient in marijuana. However, the Task Force did not adopt this impairment standard, but instead recommended to Governor Hickenlooper that there should be no changes to existing law, and consistent with the text of Amendment 64, employers should be free to have policies restricting the use of marijuana by either treating marijuana like alcohol under their employment policies or having a zero tolerance drug policy if that policy works best for that particular employer. The Colorado state legislature adopted these recommendations and did not make any changes to Colorado employment laws. Thus, Colorado employers can have policies restricting marijuana distribution, possession and use in the workplace, and employers and landlords can completely prohibit marijuana possession on their premises.
Colorado voters had previously adopted Amendment 20, the Medical Marijuana Act, which permits patients to obtain limited amounts of medical marijuana for their ailments. Amendment 20 also restricts the use of medical marijuana at work:

Nothing in this [Amendment] shall require any employer to accommodate the use of marijuana in any workplace.

There have been several Colorado court cases addressing how employers can restrict medical marijuana in the workplace. In one, the Colorado Court of Appeals held that authorized medical use of marijuana may insulate an employee from state criminal prosecution, but does not preclude the employee from being denied unemployment benefits based on the termination of employment for testing positive for marijuana in violation of an employer’s zero tolerance drug policy. The court in that case went on to hold that medical marijuana users do not have “an unlimited constitutional right to use the drug in any place or in any manner.”
In April 2013, the Colorado Court of Appeals in another case construed whether the off-duty, off-premises use of medical marijuana was protected by Colorado’s Lawful Activities Statute. This statute prevents an employer from terminating the employment of an employee due to the employee’s engaging in any lawful off-duty, off-employer’s premises activity. The employee in that case, a quadriplegic, worked for Dish in its call facility. He was licensed by the State of Colorado to use medical marijuana pursuant to Amendment 20. He alleged that he used marijuana within the limits of his license, never used marijuana on Dish’s premises and was never under the influence of marijuana at work. Dish fired him after he tested positive for marijuana, in violation of Dish’s drug policy. The employee sued Dish, alleging that his termination violated the Lawful Activities Statute. The Colorado Court of Appeals held that the employee’s use of marijuana was not lawful, because marijuana remains illegal under federal law, and upheld his firing. The employee has appealed this decision to the Colorado Supreme Court. Oral argument before the Colorado Supreme Court took place in November 2014. To date, the court has not ruled on this case.
Voters in Washington State also legalized marijuana for recreational purposes when Initiative 502 was passed in November 2012. Initiative 502 does not contain any provisions concerning marijuana possession or use by employees. Similarly, Washington’s Medical Use of Marijuana Act (MUMA), which was previously adopted by the voters, does not address an employee’s possession or use of medical marijuana. In construing an employee’s use of medical marijuana, the Washington Supreme Court in a 2011 case held that MUMA did not provide a private cause of action for discharge of an employee who uses medical marijuana, either expressly or impliedly, nor did MUMA create a clear public policy that would support a claim for wrongful discharge in violation of such a policy. Similar to Colorado, Washington employers do not have to accommodate the use of medical marijuana in their workplaces.

Other Court Cases Construing Employee Use of Medical Marijuana
Several other jurisdictions have sided with employers in cases involving the use of medical marijuana by employees. In one 2008 case, the California Supreme Court concluded that the plaintiff could not state a cause of action under California’s Fair Employment and Housing Act based upon the company’s refusal to accommodate his use of medical marijuana. In reaching this conclusion, the court held that no state law can completely legalize marijuana for medical purposes because the drug remains illegal under federal law, even for medical uses. Similarly, in a 2009 case, the Montana Supreme Court held that Montana’s Medical Marijuana Act clearly provides that an employer is not required to accommodate an employee’s use of medical marijuana. And the Oregon Supreme Court held in 2010 that Oregon’s Medical Marijuana Act was preempted by the Federal Controlled Substances Act, which expressly prohibits marijuana use without regard to medicinal purpose. The Oregon Supreme Court went on to hold that an employee currently engaged in illegal use of drugs is not entitled to reasonable accommodation.
Most recently, in 2013, the Maine Supreme Court held that the Maine Medical Use of Marijuana Act does not create a private right of action against an employer; rather, it protects against prosecution and penalties by governmental regulatory entities.

Illinois Legislature Codifies Employer’s Right to Have Drug Free Work Place Policy
On Aug. 1, 2013, House Bill 01 was signed into law by Governor Pat Quinn (D), legalizing medical marijuana in Illinois. The Illinois Medical Marijuana Act allows employers to have a  drug-free workplace and zero tolerance drug policies. In addition, employers can discipline employees for violating a workplace drug policy.

How Should You as an Employer Regulate Marijuana Use by Your Employees?
You as an employer should review your company’s substance abuse policies to ensure its restrictions concerning illegal drug use include “recreational and medical marijuana.” The substance abuse policies should be easy to understand and consistently applied.  
You are still permitted to conduct pre-employment, post-accident and reasonable suspicion drug testing, assuming that you are complying with all applicable federal, state and local laws concerning drug testing. If using a third-party vendor to conduct drug testing, verify that it is certified by the Substance Abuse and Mental Health Services Administration (SAMHSA).1 You should also ensure: the confidentiality of employee drug testing; that testing samples are correctly collected; the chain of custody is followed; the tests are conducted by properly trained and supervised lab technicians using appropriate equipment; and results are communicated through a Medical Review Officer2 trained to render judgments. If drug testing is the subject of a collective bargaining agreement, you will be required to comply with the testing and notification responsibilities under the agreement.
If you conduct suspicious activity drug testing, you should train your supervisors about what constitutes “reasonable suspicion” to require a drug test of an employee who appears to be impaired or under the influence.3
Policies prohibiting the use of marijuana by employees engaged in hazardous occupations (such as field employees of utility contractors) will likely receive less scrutiny if challenged in court than those drug prohibition policies applied to non-hazardous occupations. Finally, you should educate your employees concerning their perception of their legal (or perceived constitutional) right to use marijuana vs. your expectations concerning marijuana use in the workplace.

Vance Knapp is a member in the Labor and Employment Department at Sherman & Howard and co-chairs the firm’s Restaurant & Hospitality Industry Group. Vance has extensive experience representing employers in internal investigations, employee terminations, responding to discrimination and harassment claims, ADA accommodation issues and defending employers in wage and hour matters. He has litigated employment cases throughout the United States in federal and state courts and arbitrations. As a former prosecutor for the Denver City Attorney’s Office, he tried more than 300 cases.

1SAMHSA is a division of the U.S. Department of Health and Human Services (DHHS). The DHHS certifies laboratories to conduct drug testing.

2A Medical Review Officer is a licensed physician who receives laboratory results, has knowledge of substance abuse disorders and has appropriate medical training to interpret and evaluate an employee’s positive test result together with his or her medical history and any other relevant biomedical information.

3According to SAMHSA, supervisors who are investigating possible employees suspected of being impaired or under the influence of alcohol or drugs should ask a few important questions:  (1) Does there appear to be unusual behavior taking place (e.g., illegal activity, policy violations); (2) What specific behavior is visible; (3) Does the situation involve an individual employee or a group; (4) Are reliable witnesses available; (5) What are the physical dangers of taking or not taking action; (6) Is the situation serious enough to call security or law enforcement; (7) Is there a specific policy that applies to the situation; (8) Is it necessary to call in an expert consultation with HR, an employee assistance program or a health specialist; (9) Does the situation call for reasonable suspicion testing; (10) Is this an opportunity to prevent a problem from escalating?

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