On Feb. 22, 2021, New Jersey joined over a dozen other states in legalizing the adult use of cannabis. This change came 10 years after New Jersey legalized marijuana use for medicinal purposes. The new law, entitled New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act, permits the use and possession of regulated cannabis for adults 21 years and older and establishes parameters for cannabis-related businesses. Now that the initial excitement over this change has settled, motor vehicle dealerships wonder how the law will impact their workplaces, policies, and employees.

Marijuana: Federal and State Law

Many states have legalized cannabis use for either recreational or medicinal purposes; however, the federal government still criminalizes its use and possession. Marijuana remains a Schedule 1 drug under the Federal Controlled Substance Act. Legislation to legalize marijuana, recently introduced on the federal level, may signal a changing attitude toward cannabis’ placement on the Controlled Substance Act. Even so, since taking office, the Biden administration has not taken affirmative steps to change cannabis’ status, and the administration terminated five staffers for their prior marijuana use. It was also reported that dozens of staffers were suspended for similar behavior, even if they came from states where marijuana use is legal.

Given the current differences from federal law, it is critical for dealerships to understand what is expected of them as New Jersey employers. Although the Cannabis Regulatory Commission regulations are not due until late summer, some employment protections in the law are already effective, ranging from the hiring process to workplace policies. In addition, recent case law expands an individuals’ rights to use (or not use) cannabis in certain circumstances.

Medical vs. Recreational Marijuana

Under the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act, adults 21 and over will be able to use cannabis for their own enjoyment. Dealerships are prohibited from taking adverse employment actions against employees simply because they elect to use (or not use) cannabis. Likewise, dealerships are prohibited from relying solely on an employees’ positive drug test result for cannabis metabolites when taking an adverse action, such as discipline or termination.

The advent of an adult-use marketplace is not the only reason individuals may use cannabis products. Dealerships must recognize that employees may also be prescribed cannabis for medical reasons.
Importantly, an employee enrolled in the medical marijuana program is presumed to have a disability for the purposes of the New Jersey Law Against Discrimination (NJLAD) and/or the Americans with Disabilities Act (ADA). This means that, in addition to having additional procedural protections (i.e., time to produce a prescription following a drug test), dealerships must be prepared to engage in the so-called interactive process with employees who hold a medical marijuana card.

This does not mean that dealerships must allow the employee to use medical marijuana during the workday or on dealership property. It may, however, mean that dealerships must engage in a dialogue with the employee that is part of the medical marijuana program. This dialogue is designed to explore reasonable accommodations that allow employees to perform the essential duties of their job. Typically this includes tolerating off-duty use. Assessments are made on a case-by-case basis, and reasonableness depends on circumstance. At a minimum, dealerships should be aware current case law makes it clear that summarily terminating medical marijuana users, without first engaging in this process, is likely to lead to liability.

Workers’ Compensation and Medical Marijuana

The New Jersey Supreme Court recently considered the use of medical marijuana as a treatment through an employer’s workers’ compensation plan. The case, Hager v. M&K Construction, stands for the proposition that employers may be required to reimburse employees the cost of medical marijuana following an employee’s worksite injury.

In the Hager case, the plaintiff became disabled following a workplace accident. He spent years undergoing treatment and submitted to multiple surgeries to address spinal injuries. Given the persistent back pain, his treatment also included use of prescription opioids for pain management. Eventually, and due in part to the side effects of the opioid use, the plaintiff’s physician prescribed medical marijuana.

Eventually, a workers’ compensation trial convened to determine the nature of his work-related injuries and entitlement to benefits. During the trial, significant testimony was presented relating to the plaintiff’s surgeries, opioid reliance, and subsequent medical marijuana prescription. The plaintiff testified that the change in medication allowed him to wean himself from the opioids. The use of medical marijuana also allowed him to manage his pain and muscle spasms. The court, recognizing the plaintiff had limited treatment opinions, concluded that marijuana was the clearly indicated option. As a result, it ordered the employer to reimburse, among other things, the cost of the medical marijuana.

On appeal, the Appellate Division found in the plaintiff’s favor but also determined employers can comply with New Jersey’s medical marijuana laws without also violating federal law. This is because nothing in the medical marijuana laws required the employer to engage in the unlawful conduct of possessing, manufacturing or distributing medical marijuana. It likewise decided that the employer was not entitled to be treated as a private health insurer (and therefore exempt from reimbursing the cost of treatment).

On April 13, 2021, the New Jersey Supreme Court upheld the lower courts’ findings. The Court rejected arguments that workers’ compensation insurers should be treated like private health care providers or governmental medical assistance. The Court determined that workers’ compensation is not a private health care plan. Had the legislature intended to create an exception, it could have, considering the exceptions written into the medical marijuana statutes.

The Court was similarly unpersuaded by arguments that reimbursement for medical marijuana violated the Federal Controlled Substance Act. The Court highlighted that the State’s medical marijuana laws operated within the parameters of federal law. Pointing to federal policies prohibiting interference with state medical marijuana programs, the Court determined Congress intended for state programs to survive and flourish. Read together, with the Controlled Substance Act’s prohibitions, the Court determined it possible to comply with State and Federal law at the same time and rejected the conspiracy or aiding and abetting theories argued by the defendant.

Recognizing that the use of medical marijuana is uncommon for workers’ compensation purposes, the Court also examined the Legislature’s intent in its statutory schemes before ordering reimbursement for treatment.

The Workers’ Compensation Act may, in some instances, cover palliative care. The New Jersey medical marijuana laws included chronic pain as a qualifying condition for program eligibility. According to the Court, the legislature’s intent in these statutory schemes would be undermined by simply exempting workers’ compensation carriers from providing medical marijuana as a reasonable and necessary treatment. In reaching this conclusion, the Court reiterated the principle that reasonableness and necessity require competent medical testimony about the treatment’s symptom reduction or its ability to restore function.

In this case, the plaintiff had two options. One required the continued use of opioids, which caused the plaintiff to suffer side effects. The other option – medical marijuana – allowed him to conquer an opioid addiction despite his significant injuries and chronic pain. The credible medical testimony presented during the trial detailed the plaintiff’s need for the medication and benefits to an alternative treatment. This allowed the Court to conclude the treatment was reasonable and necessary.

The Court’s April 13, 2021 ruling highlights the continuing evolution of cannabis law and its impact on the workplace. In this decision, the Court established an expectation that medical marijuana may, depending on circumstance, be reasonable and necessary for treatment under workers’ compensation. In doing so, the Court highlighted the State’s ongoing commitment to medical marijuana as a treatment for those meeting the program’s requirements.

Viewed in concert with the New Jersey constitutional amendment governing adult recreational use of cannabis, dealerships should expect more individuals to explore marijuana use for medicinal and recreational purposes. At this juncture, it is recommended that dealerships review their policies regarding reasonable accommodations for individuals with disabilities and their workplace drug and alcohol policies to ensure compliance with this rapidly evolving industry.