The marijuana industry is huge and growing. In 2017, legal marijuana was a $1.5 billion industry in Colorado alone according to data from the Colorado Department of Revenue, and it has been identified by many analysts as one of the fastest growing industries in the United States.

To date, 33 states and the District of Columbia have legalized either medical marijuana or recreational marijuana, or, in some jurisdictions, both. But the federal Controlled Substances Act still categorizes marijuana as a Schedule 1 drug, which means selling less than 50 kilograms of marijuana is punishable by up to five years in prison and a $250,000 fine. This disconnect between state and federal laws raises a lot of questions for business owners for which there are few definitive answers.

(One update: since mid-December 2018: Hemp has been taken off the Controlled Substances Act. Hemp is defined as Cannabis below .3% THC and also includes extracts of CBD. Hemp is now like any other commodity. Higher percentages of CBD/THC remain categorized as a Schedule I substance.)

The issues surrounding legalized marijuana use are new and just being sorted out by the courts and legislatures—each state will resolve them differently. Here is what business owners need to know about marijuana now.

Marijuana Use During Working Hours

Under current law, employers generally do not have to allow employees to use marijuana at work. Of the 33 states that have legalized some use of marijuana, 19 of them have passed statutes providing that employers do not need to accommodate marijuana use on their premises during work hours. Four of those 19 statutes go one step further and provide that employers may discipline employees if they are discovered to be under the influence of marijuana, even if the employee is using it lawfully under state law. While four other states have been silent on the issue, no state has expressly stated that marijuana use must be permitted on an employer’s premises during work hours. In Massachusetts, the new recreational use law “shall not affect the authority of employers to enact and enforce workplace policies restricting the consumption of marijuana by employees.”

Therefore, Employers generally can rest assured that they can continue to maintain drug-free workplaces under present law.

Marijuana Use During Non-Working Hours

What about using marijuana during non-working hours and off company premises that may result in a positive drug test? Courts in Arizona, Delaware, and Minnesota have held that a positive drug test is not enough for an employee to be terminated. By contrast, courts in California, Montana, Oregon, and Washington have held that employers can have a zero-tolerance policy, meaning they can terminate an employee simply based on positive drug test results. Other state courts have not yet had the opportunity to interpret this issue.

“The Massachusetts Supreme Judicial Court did rule last year that employees must seek accommodations for employees who use medical marijuana. The justices decided in favor of a woman whose offer of employment was rescinded by a marketing firm after she tested positive for marijuana. She had previously told the company she used medical marijuana at home to help control Crohn’s disease.” From the AP


As laws continue to change and more states allow marijuana use for medical or recreational purposes, employers must continuously monitor and update their policies. Employers must also remain aware of and in compliance with any notice requirements for employee drug testing. Despite the changing legal landscape around marijuana, employers can have faith in the fact that, to date, courts have generally been empathetic to employers who want to protect the safety and drug-free nature of the workplace.

If you have any questions about how your state’s marijuana laws affect your current policies, give us a call. We can help you develop or revise employment policies to ensure they comply with current federal and state requirements.

This article is for informational purposes only and is not intended to be construed as written advice about a Federal or state tax matter nor as legal, financial or any other advice. Readers should consult with their own professional advisors to evaluate or pursue tax, accounting, financial, or legal planning strategies.

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