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Resource Center / Employment Laws

What Employers Should Know About Marijuana Legalization

Get familiar with these employer complexities of marijuana legalization laws to ensure fair hiring practices and accommodation efforts.

The letter "J" for Justworks.
Aug 10, 20218 minutes

State legalization of medical and recreational cannabis consumption is on the rise. How will this trend impact your workforce? This article helps you think through best practices and key considerations when reviewing your hiring and accommodation policies.

As a business leader, it would be difficult to miss all the cannabis laws sweeping the country at what feels like lightning speed. But before sending invites to your company’s 420 party, you’ll want to consider the important impact this change will have on remote and in-person workplaces.

You work hard to find great talent to contribute to a productive and engaging work environment. Now, more than ever, it’s important to be sure that none of the steps and decisions along the way might accidentally land you in hot water.

In recent years, D.C. and over half of the states in the U.S have legalized marijuana* in some form—recreational and/or medical—and we don’t expect this trend to stop any time soon. You should get familiar with the complexities of these laws to ensure fair hiring practices and accommodation efforts.

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The Legal Framework for Marijuana Legalization

While legalization of marijuana at the federal level is certainly a hot topic these days, there are currently no federal laws that decriminalize or legalize marijuana. This may change under the Biden-Harris administration, but in the meantime, state governments aren’t wasting any time. This will likely be a hot topic for the foreseeable future.

Employers must review state and local laws and guidance when it comes to drug testing, background checks and allowable workplace policies. Even among states where recreational marijuana is legal, the specific requirements and prohibitions can vary widely. Because of this, it can get complicated for employers with distributed or multi-state workforces that are trying to implement universal policies while navigating all these state laws. So it’s worth spending a little time to understand these changes, communicate clear policies to the workforce, and train managers to champion those policies.

Recreational marijuana laws for adult use have been enacted in over a third of all U.S. states, plus D.C., several of which have effective dates in 2021 and 2022. The provisions of these laws usually have both immediate and future-dated impacts.

How Marijuana Legalization Impacts Employers

Drug Testing

Employers with drug testing policies must be sure to check the cannabis laws of the locations where their employees perform their work. We recommend using a verified third party vendor and working with legal counsel to help ensure compliance with respect to federal, state, and local requirements.

Each jurisdiction is a bit different when it comes to the details of its drug testing laws. In certain locations where recreational marijuana is legal, like New York City and Nevada, employers are explicitly prohibited from requiring prospective employees to submit to marijuana testing as a condition of employment. Even where recreational marijuana has not been legalized we may still see restrictions on testing for marijuana, like the forthcoming law in Philadelphia (where only medical marijuana is legal) that prohibits employers from requiring marijuana testing for prospective employees.

There are exceptions to these restrictions, specifically for certain jobs or professions or where there are certain government testing requirements for safety and security purposes. Though these drug testing laws are generally specific to pre-employment testing, employers should still evaluate their testing policies for current employees. Even where testing is allowable, employers may still be prohibited from taking adverse action based on marijuana test results depending on the legalization status.

Regardless of location, as a best practice, employers who drug test should establish in advance what sorts of results might preclude an offer of employment, and what steps are needed when employee’s screening raises flags. There may need to be exceptions to these response plans — like if a positive cannabis result occurs in a location where cannabis use is allowable for recreational and/or medical purposes.

Because of all these considerations and more, you should be very intentional when choosing which types of positions require screening and what to screen for, and whether to screen at all. For example, you may decide to test certain positions (such as safety-sensitive positions) but not test other positions that you don’t need to test (or are prohibited from testing). Consulting your legal counsel is essential in understanding how to make these decisions within your organization.

Regardless of the legal framework around cannabis, as a general best practice, employers should be wary of collecting sensitive information that is not necessary for job function or business-related needs. Avoiding unnecessary disclosure of medical or personal information is the best way to ensure there is no argument that such information could influence employment decisions. Should your organization proceed with drug testing, the results and any subsequent sensitive information obtained, such as medical information, must be kept confidential and stored in a separate file from the employee’s regular personnel file.

Background Checks

In decriminalizing cannabis, many states have enacted laws that expunge arrests and conviction records for certain prior cannabis-related offenses. When an employer discovers information about marajuana-related offenses, that employer must understand whether they are prohibited from taking adverse action based on such findings. This is true regardless of whether that information is uncovered via a background report or via more informal measures, like a web search or voluntary disclosure.

Similar to drug testing, you will want to use a third-party vendor and work with legal counsel to establish in advance what sorts of results might preclude an offer of employment, and what to do in the case that an employee’s screening raises flags.

Also keep in mind that federal, state, and local laws may impose stringent requirements on the background check process applicable to some or all of your candidates and/or employees, including required disclosures before conducting background checks and restrictions on how background checks can be used to affect employment decisions.

Many states and cities prohibit conducting pre-offer background checks, and/or impose strict rules around the circumstances in which you can take adverse actions based on the results of a background check. Consulting with an employment law attorney in these situations can help ensure that you haven’t missed a critical step.

Medical Accommodations

There are many states with laws that only legalize medical marijuana use. While federal laws, such as the Americans with Disabilities Act (ADA), do not require employers to accommodate medical marijuana use during work hours, several states prohibit adverse actions against applicants or employees who test positive for marijuana if the individual is prescribed marijuana for medical purposes.

Where these laws exist, employers must consider any medical exceptions to their drug testing and screening practices and understand their accommodation obligations.

Even where laws do not explicitly address employer accommodation requirements, you should connect with your legal counsel to determine next steps. Employers generally do not have to tolerate on-the-job use of or impairment by marijuana but may need to consider medical exceptions to their normal business practices with respect to drug test results.

For any known and disclosed medical information, employers should be sure to store this confidential information in a separate file from the employee’s regular personnel file per the Americans with Disabilities (ADA) standard.

Related Article: Managing an Employee with a Medical Condition: What the Law Has to Say

The Realities of Present-Day Work

With remote and hybrid work environments on the rise, the lines between work and home have become increasingly blurred. You may not be able to, nor want to, control your employees’ off-duty conduct, including the use of marijuana. That said, you generally do not have to tolerate on-the-job use of or impairment by marijuana, despite having some or all of your employees working out of their homes.

As we adjust to these new laws and workplace trends, we may see a movement towards treating cannabis as similar to alcohol in terms of responsible use and consumption in the workplace. As with alcohol, on-the-job use or impairment is generally easier to identify in person rather than in a remote environment. This may create new dynamics amongst a hybrid workforce, and it’s important to be thoughtful and intentional with the communication and enforcement of policies addressing these activities.

Employer Takeaways

It’s very important to think through these interrelated issues carefully and manage your company’s policies properly in order to maintain a safe and innovative work environment. Employers should review existing policies to determine what might need to be removed or revised in the context of these new laws.

If you have employees in multiple states, you should also consider whether you will have a universal or state-specific approach to policies addressing these issues. Beyond what’s required by law, consider your company culture and which options align best with your values to create a positive employee experience.

Due to the complexity of multi-state laws and various provisions, your employment counsel should review your policies and practices for compliance within your industry and state(s).

Since this landscape is ever-changing, we’ve created a resource dedicated to providing important compliance updates. Check out The Scoop and subscribe to the monthly newsletter for regular updates.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, legal or tax advice. If you have any legal or tax questions regarding this content or related issues, then you should consult with your professional legal or tax advisor.