In the Weeds: N.H. May Protect Worker Use; Feds Weigh Hemp THC Limits; Can Utility Power Marijuana Facilities?

March 9, 2022
Newsworthy Highlights

New Hampshire Opens Door to Accommodating Use of Medical Marijuana. On Jan. 14, 2022, a New Hampshire Supreme Court ruling opened the door to potentially allow cannabis prescribed in accordance with New Hampshire law as a reasonable accommodation in the workplace for an employee’s disability.

The plaintiff, an employee of an automotive dealer, requested to be exempt from the automotive dealer’s drug testing policy as a reasonable accommodation for his disability. The plaintiff was prescribed cannabis by his physician and enrolled in New Hampshire’s therapeutic cannabis program to treat his post-traumatic stress disorder (PTSD). According to the lawsuit, the plaintiff’s request was denied and his employment was terminated. The plaintiff subsequently sued under New Hampshire’s anti-discrimination law.

The employer argued that the requested accommodation was facially unreasonable because cannabis is illegal and criminalized under federal law and that the definition of “disability” excludes “current, illegal use of or addiction to a controlled substance.” The trial court agreed and granted the employer’s motion for judgment.

The New Hampshire Supreme Court disagreed, opining that while illegal use of or addiction to a controlled substance is not a protected disability, the law does not contain an explicit prohibition on the use of therapeutic cannabis as an accommodation for an existing disability. The plaintiff was not requesting an accommodation for any type of drug use or addiction, but a reasonable accommodation for his PTSD.

The New Hampshire Supreme Court ruled that the trial court erred in its reading of the statute and in its conclusion that, as a matter a law, therapeutic cannabis cannot be a reasonable accommodation for a disability. According to the New Hampshire Supreme Court, whether a reasonable accommodation should be made for prescribed cannabis use is a factual determination that should be decided on a case-by-case basis. The case was reversed and remanded.

New Hampshire is one of several states that have begun to recognize the role of medical marijuana for treatment of certain disabilities and to provide employment protections to employees using medical marijuana. While the New Hampshire Supreme Court did not explicitly allow cannabis as an accommodation, employers should carefully evaluate requests for workplace accommodations for therapeutic cannabis.

Federal Bill Proposes to Modify THC Limits in Hemp. The recently introduced Hemp Advancement Act of 2022 proposes to modify the tetrahydrocannabinol (THC) threshold in hemp, remove the requirement that hemp testing occur at DEA-registered laboratories and allow people with drug-related felony convictions to receive a hemp license. The bill’s sponsor indicated that, while the 2018 Farm Bill paved the way for legal hemp production, it created burdensome requirements for farmers that she says this bill would alleviate.

The bill differentiates between “hemp” and “hemp product” and expands the scope of THC. Under the bill, “hemp” is not intended for sale to consumers, while “hemp product” is a finished product. The bill would limit the “total tetrahydrocannabinol concentration” to 1% on a dry weight basis in hemp and 0.3% on a dry weight basis in hemp products. Significantly, “total tetrahydrocannabinol concentration” means the aggregate concentration of delta-8 tetrahydrocannabinol, delta-9 tetrahydrocannabinol, delta-10 tetrahydrocannabinol and the optical isomers of such substances.

Currently, the definition of hemp only limits the delta-9 tetrahydrocannabinol concentration to 0.3%.

While the bill would increase the THC cap from 0.3% to 1% for hemp, it would also expand the definition of THC to include delta-8 THC and delta-10 THC. Critics of the bill argue that it could signal the end of the delta-8 and delta-10 THC markets. As of Feb. 8, 2022, the bill was referred to the House Committees on Agriculture, Energy and Commerce, and the Judiciary.

Should Federal Energy Wholesaler Provide Electricity to Medical Marijuana Establishments in Mississippi? The Tennessee Valley Authority (TVA), a federally owned utility company, indicated it is seeking guidance on whether it should continue to provide electricity to newly licensed medical marijuana establishments. According to a statement by Mississippi Public Service Commissioner Brandon Presley, TVA should not be concerned.

Mississippi Gov. Tate Reeves signed legislation legalizing medical marijuana on Feb. 2, 2022. In response, TVA raised its concerns, as a federally owned utility company, that there is an inherent conflict with federal law if the company provides power to a licensed medical marijuana facility.

Presley’s position is that TVA is not supplying power directly to these establishments. Rather, it is acting as an energy wholesaler that supplies power to local utility companies. According to the commissioner, TVA should not be concerned with the businesses that receive power from those local utility providers. TVA made it clear there would be no interruption in service due to the new legislation.

Nonetheless, TVA is seeking guidance and clarification from federal agencies because of the conflict with federal law to ensure that its sale of federal power under wholesale power contracts does not in fact facilitate the commission of a federal offense, including under the Controlled Substances Act.

Non-Fungible Tokens to Market Cannabis. Cannabis companies are ever blending the operations of their businesses through their foray into the world of non-fungible tokens (NFTs). A non-fungible token is a unique set of data stored on a blockchain, which can be sold and traded, often associated with graphics or audio. It is a digitized unique piece of property.

Sometimes these NFTs take the shape of cannabis plants or cannabis-themed figures that may grant the holder access to exclusive events or opportunities to purchase non-digital assets. Right now, many NFT tokens are associated with the goodwill of the brand and are not designed to be used in a store. Some of the most prolific players in this space, Crypto Cannabis Club and Best Buds, have already minted NFTs that offer “real world prizes.”

Cannabis regulators have yet to offer clear guidance outside usual revenue reporting and advertisement rules. The IRS has posted a page detailing how the agency considers reporting of crypto assets, which may include NFTs. McGuireWoods is on the forefront of cryptocurrency, blockchain, digital ledgers and NFTs, and has the experience to advise on these emerging areas.

Grassroots Federal/State Legislative Highlights

Michigan Consolidates Hemp and Marijuana Regulation. Starting April 13, 2022, Michigan’s Marijuana Regulatory Agency will be renamed the Cannabis Regulatory Agency to regulate processing, distribution and sales of both marijuana and hemp in the state under one agency. This change is based on Executive Reorganization Order 2022-1, signed by Gov. Gretchen Whitmer.

Currently, the Marijuana Regulatory Agency regulates marijuana and the Michigan Department of Agriculture and Rural Development regulates hemp. This transition of authority is intended to effectively regulate all forms of cannabis and to expand tax revenue from the industry as crossovers between hemp and marijuana become extensive.

Bill to Legalize Adult-Use Cannabis Fails in South Dakota. On March 3, 2022, the South Dakota House of Representatives voted 40-28 against SB 3, which would have legalized adult-use cannabis in the state. The bill narrowly passed the Senate in an 18-17 vote on Feb. 23.

South Dakota’s path to legalization of adult-use cannabis has faced significant obstacles. In 2020, the state’s supreme court struck down Amendment A, a ballot initiative passed by South Dakota voters that would have legalized adult-use cannabis in the state, as an unconstitutional violation of the state’s single-subject rule. It is possible that the issue will come before South Dakota’s voters again in the future; the group South Dakotans for Better Marijuana Laws is continuing its signature drive to get the issue back on the ballot in 2022.

D.C. May Ban Employers’ Adverse Action Against Employee Cannabis Use. On March 4, 2022, the D.C. Committee on Labor and Workforce Development approved a committee print that would prohibit most employers from taking adverse action against employees who use or test positive for cannabis. D.C. law already prohibits most employers from testing applicants for cannabis until the employer has extended a conditional offer of employment.

The proposed law would not apply: (1) to employees holding safety-sensitive positions; (2) if compliance would cause the employer to violate a federal law, contract or funding agreement; (3) if the employee possesses cannabis at work; (4) if the employee exhibits symptoms of cannabis use or impairment; and (5) to post-accident drug testing.

Employers who violate the proposed law would be subject to lawsuits and possible fines between $1,000 and $10,000 (depending on size of employer and number of violations), plus back wages and attorneys’ fees. The bill also proposes to modify the D.C. Human Rights Act to require employers to treat the use of medical marijuana like the use of a prescription medication. In effect, this would require employers to grant reasonable accommodations to medical marijuana patients who use cannabis to treat a disability.

If passed, the bill would not take effect until one year after its enactment date, or potentially later if the bill does not receive funding in the city budget.

“In the Weeds” is McGuireWoods’ biweekly ounce of highlights in the budding cannabis, hemp and CBD industries. For more information, see our newsletter archive, our Edible Bites podcast series (available on Apple and Spotify), or visit our Cannabis, Hemp & CBD practice.