New Laws and the 2021 Cannabis Effect on Employers

April 19, 2021

Update (June 24, 2021): On June 22, 2021 the Connecticut governor signed a new law, effective July 1, 2022, that: (1) requires employers to accommodate possession of palliative cannabis on the employer’s premises by a qualifying patient; (2) requires employers to distribute its drug-use and drug-possession policy to each prospective employee at the time an offer is extended; (3) prohibits discriminating against employees for using cannabis outside of work, unless such use is prohibited by a policy distributed as described above; and (4) prohibits employers from discriminating against applicants and employees for pre-employment cannabis use. Otherwise, the law allows employers to prohibit: (1) on-premises possession pursuant to a written policy distributed as described above; and (2) on-duty or on-premises impairment, including by way of reasonable suspicion. Furthermore, the law prohibits taking adverse action against a current employee solely for failing a THC drug test (unless it was a random test). Employers may take adverse action against prospective employees for failing a THC drug test if such action is permitted by a policy distributed as described above. Certain exceptions and exemptions apply to each of these general statements.

In the first four months of 2021, numerous states, including Virginia, New Mexico, New York and New Jersey passed laws dismantling restrictions on recreational and medical cannabis. Employers in these states are raising questions about whether the new laws affect their policies and views toward cannabis use.

Recent Laws

The following briefly summarizes the new bills in each state.

  • Virginia passed a law taking effect in July 2021 that eliminates criminal penalties for simple possession of marijuana and provides a process to expunge convictions automatically for certain marijuana-related crimes. The bill also creates a Virginia Cannabis Control Authority, which will regulate the cultivation, manufacture and sale of retail marijuana.
  • New Mexico passed a law taking effect in June 2021 that legalizes recreational marijuana use and sales. Under the law, people over 21 will be allowed to have up to 2 ounces of marijuana, and individuals could have six plants at home, or up to 12 per household. The law also creates a Cannabis Control Division of the New Mexico Regulation & Licensing Department to regulate and license marijuana distribution.
  • New York passed a law effective March 21, 2021, that legalized the use of marijuana for adults 21 and older, and set forth a framework for the sale of marijuana to begin in 2022. The law created two state agencies to regulate the state’s marijuana programs: the Cannabis Control Board and the Office of Cannabis Management.
  • New Jersey passed a law that took effect on Feb. 22, 2021, that legalized the sale, use and possession of recreational marijuana for individuals 21 and older. The law also created the Cannabis Regulatory Commission, which, in addition to regulating the cultivation, production, manufacture, transportation and delivery of marijuana, will prescribe a certification necessary for employers to drug test and identify impairment in employees.

Effect on Employers

As state legislatures expand the rights of individuals, those rights will inevitably cause tension with some employers’ desire to maintain a drug-free workplace. Questions employers frequently ask include: Can we continue testing applicants and employees for marijuana? Are employees allowed to be impaired at work? Must we allow employees to possess marijuana at work? Can I terminate an employee who uses cannabis off duty?

States offer different approaches to some of these questions.

  • Virginia’s new recreational cannabis law is silent regarding its effect on the employer-employee relationship. Accordingly, until the commonwealth issues additional regulatory guidance, the law does not change generally accepted principles about how employers can control their workplaces. For example, the law does not prohibit employers from testing applicants for marijuana, and employers can continue prohibiting possession and impairment in the workplace. No precedent expressly states whether an employer must accommodate an individual’s use of medical marijuana in Virginia.
  • A second law Virginia enacted in 2021, however, prohibits employers from discriminating against employees who use cannabis oil, so long as employees have valid written certification issued by a practitioner to treat symptoms of certain conditions. However, employers can still prohibit impairment caused by cannabis oil and can prohibit possession during work hours. The law also does not require employers to do anything that would result in the violation of federal law, lose a federal contract, lose federal funding, or require U.S. Cybersecurity and Infrastructure Security Agency defense industrial base sector employers to hire someone who tests positive for tetrahydrocannabinol (THC). As previously reported, Virginia also prohibits employers from requiring job applicants to disclose information concerning any arrest, criminal charge or conviction for simple possession of marijuana.
  • New Mexico’s law allows employers (in the absence of an agreement to the contrary) to implement a written zero-tolerance drug policy that prohibits employees from testing positive for THC. Importantly, however, the law does not restrict rights afforded to medical marijuana users under state law. As a result, with limited exceptions, an employer is still prohibited from taking an adverse action against an applicant or employee on the basis of the individual having a prescription for and/or using medical marijuana.
  • New York’s law protects employees’ marijuana use that occurs outside of working hours, off the employer’s premises, and without use of the employer’s equipment or other property under the same law protecting employees’ legal recreational activities outside work. Notably, the law does not prevent an employer from taking action where: (a) the employer’s actions were required by state or federal law; (b) the employee is impaired by the use of marijuana while working, which requires the employee to have “specific, articulable symptoms” that impair the employee’s performance or interfere with the employer’s obligation to provide a safe and healthy workplace; or (c) the employer’s actions would violate a federal law or would result in the loss of federal contract or funding.
  • New Jersey’s law includes expansive protections for all employees who use medical marijuana. Employers may not take adverse action against an employee who uses marijuana, or because of the presence of marijuana in the employee’s system. Further, the statute prescribes the circumstances under which an employer may drug test an employee, but requires, among other things, that the test include “a physical evaluation in order to determine an employee’s state of impairment” performed by a Cannabis Regulatory Commission-certified individual.
  • None of the new laws require employers to allow employees to be impaired at work or possess or consume cannabis in the workplace or while on the job.

Interaction With Other Laws

In addition to the issues employers face controlling their workplaces, employers must be aware of how new cannabis laws interact with other state and federal laws.

  • Reasonable Accommodations: In some circumstances and in some jurisdictions, an employer must grant an employee’s request for a reasonable accommodation if the employee has a disability under state law. This is a state-dependent issue, and the states are split on the issue. For example, states that permit employers to terminate employees for using marijuana regardless of their disabilities include California, Colorado, Florida, Georgia, Mississippi, Montana, Ohio, Oregon and Washington. States that provide a private right of action for failing to accommodate use to treat a disability (or otherwise require accommodating medical marijuana use) include Arizona, Arkansas, Connecticut, Delaware, Maine, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, Oklahoma, Pennsylvania, Rhode Island and West Virginia. State statutes and case law are subject to change, so employers should consult with counsel when confronted with any request for an accommodation to use cannabis.
  • Federal Drug-Free Workplace Laws: The Drug-Free Workplace Act (DFWA) requires certain federal contractors and federal grant recipients to maintain drug-free workplaces. This requires a workplace where employees are prohibited from manufacturing, distributing, possessing or using controlled substances. Courts have held that the DFWA does not prohibit federal contractors from employing someone who uses illegal drugs outside the workplace. Accordingly, federal contractors and grantees may be required to comply with state law and this federal law simultaneously.
  • Commercial Drivers: Employers governed by the U.S. Department of Transportation, including companies that employ individuals who drive under a commercial driver’s license, must take into account the DOT’s robust regulations regarding drug testing and possession. The DOT has made clear on multiple occasions that states’ legalization of marijuana has not modified the DOT’s drug-related regulations. Accordingly, the DOT expects employers to continue following federal law with respect to DOT-regulated employees.
  • Collective Bargaining Agreements: Employers subject to a collective bargaining agreement should remember that changing drug testing or drug use policies may be prohibited without negotiating with the bargaining unit.

Employers should routinely review their drug use and drug testing policies to ensure they remain compliant with ever-changing state and local laws. To consult with an attorney regarding your company’s cannabis-related questions, please contact the authors, a member of the firm’s Labor & Employment Department, or a member of the firm’s Cannabis, Hemp & CBD industry team.

In the newest episode of the “Edible Bites” video webinar series, McGuireWoods’ Kate Hardey and Royce DuBiner talk to John Thomas, an attorney in McGuireWoods’ Labor & Employment Department. Tune in to their discussion of employment law trends, how different state laws for medical and recreational cannabis affect employees, and how organizations should think about them going forward. Watch the video here.