The Changing Landscape of Cannabis Legalization: Compliance and Ethics Program Challenges


By Amy E. McDougal, CCEP[1]
Session DG11:  Compliance & Cannabis in the Workplace:  Navigating the Changing Landscape of Legalization
September 17, 2019, 1:30 – 2:30 PM

A Colorado sales manager flies to South Dakota to interview a potential new vendor. While driving a car rented by the company, the employee is rear-ended while stopped at a light and is injured. The employee’s urine is tested as a routine, post-accident measure for worker’s compensation and is positive for THC metabolite because the employee recreationally consumes marijuana. Will state law in Colorado require your company to pay worker’s compensation? Will your insurance carrier cover the payments? Can the company legally terminate the employee? Should the employee be terminated for a no-fault accident? Will the rental company bring an action against your company based on the drug screen done on your manager?

If you haven’t already pondered how the legalization of cannabis will impact your corporate compliance and ethics program, the time has arrived. The past few years have brought a dizzying flurry of state legislation aimed at decriminalizing and legalizing cannabis or “marijuana”. Across the country, states are legalizing marijuana for medical and/or recreational purposes. Currently, 47 states, the District of Columbia and the territories of Puerto Rico and Guam lawfully permit some form of marijuana for use in medical treatment, and some of these jurisdictions permit recreational use.  Since cannabis products are used by people, and companies employ people to do work, this poses new risk areas for every company.

The production, sale, distribution, and use of marijuana remains illegal under federal law. This creates tangible friction between federal and state laws including employment laws. While additional protections beyond the federal employment rights laws have historically been available in some states, as states legalize marijuana for medicinal or recreational use, they are taking vastly different approaches leading to a substantial challenge for corporations that operate in more than one state.

No two state laws are the same with respect to what constitutes lawful use of marijuana and what protections are afforded to employees who consume cannabis products. For example, while some states explicitly state that an employer is not required to accommodate the use of medical marijuana, others provide affirmative protection for workers who lawfully use medical marijuana. In addition, at the time of this article eight states and the District of Columbia have legalized recreational marijuana. It is reasonable to expect this number will continue to increase, creating additional concerns for employers who seek to balance a drug-free work environment with the rights of their employees to receive recommended medical treatment or engage in lawful recreational use.

Given this ever-shifting legal landscape and how rapidly the law is developing, it is important to incorporate this risk area into your periodic risk assessment process so appropriate oversight, policies, procedures and monitoring can be proactively established.

When assessing the risks from the presence of marijuana in the workplace and an employer’s obligations to its workforce, there are many federal laws that come into play including the Americans with Disabilities Act, Family and Medical Leave Act, Drug Free Workplace Act, Federal Acquisition Regulations, and the National Industrial Security Program for workplaces that have employees with security clearances. These laws are in addition to the newly passed state laws on cannabis and can have an expansive effect on employers’ and employees’ rights.

The Drug Free Workplace Act (DFWA) is one sweeping law that prohibits all cannabis in the workplace. It requires some federal contractors and all recipients of federal grants to agree that they will provide drug-free workplaces as a precondition to receiving a contract or grant from federal agency. The DFWA applies to federal contractors who have contracted with a federal agency for the provision of services, not goods, in excess of the Simplified Acquisition Threshold. As of July 2018, this threshold was $250,000. Comparatively, recipients of federal grants of any amount must adhere to the requirements of the DFWA.

For federal contractors, the requirements of the Drug Free Workplace program include a statement/policy, training and education, monitoring, auditing, reporting, and discipline. If your company is subject to the DFWA, this program should already be in place. However, a DFWA program does not ensure that employees will never consume cannabis products.  Whether it was prescribed, or an employee uses it recreationally, our current drug testing systems are not able to detect when cannabis was consumed – either in the workplace, or at home. Thus, the risk assessment and corporate policies need to address this issue before it becomes an issue in states where cannabis is legalized in some capacity. Otherwise, termination of employees who have consumed cannabis can become a legal minefield.

If your company is not subject to the DFWA, what then? In Alaska, Colorado and the District of Columbia, the law explicitly states that an employer is not required to permit or accommodate the consumption, possession, transfer, display, transportation, sale or growing of marijuana in the workplace. The law expressly states it is not intended to affect the ability of employers to have policies restricting the consumption of marijuana by employees. How far corporate policies can go into an employees’ non-working time is yet to be seen, but all indications are we will see a wide range of approaches that vary dramatically by state.

It is very important for employers who are required or seek to have drug-free workplace programs to have the necessary oversight, policies, training, monitoring, and auditing required to maintain a drug-free workplace. In states with more liberal consumption policies, clarity will be king for employers and employees alike.  Join me at CEI 2019 at the National Harbor to discuss these issues and more!