Puff, puff, and pass a law that provides some clarity on cannabis use in the United States—say many employers across the country. Questions facing employers and businesses are most certainly also affecting the club world.
The cannabis industry has quickly become one of the fastest growing industries in the United States. Currently, more than 60% of the U.S. population lives in states that have legalized some form of cannabis use and sales. However, cannabis still remains illegal federally under the Controlled Substances Act (CSA), which classifies cannabis as a Schedule I substance. Naturally, this has created growing interest and tension for employers and employees alike. This article explores the history of cannabis and the CSA; the growing tension between federal and state cannabis law; employee/member use of cannabis; employee/member use of cannabis derivatives, such as cannabidiol (CBD); the sale of cannabis and cannabis derivatives; policies and procedures for employers to have in place regarding cannabis; and growing trends in cannabis and cannabis derivatives.
The History of Cannabis and the CSA
The cannabis plant contains more than 110 cannabinoids, which are compounds unique to cannabis. The most well-known cannabinoid is delta-9-tetrahydrocannabinol (THC), which is responsible for the psychoactive “high” of cannabis and can affect perception, emotion, mood, cognition and motor function. But there are also cannabinoids like cannabidiol (CBD), which are non-psychoactive, yet have been demonstrated to possess medically useful properties.
The CSA, passed in 1970, authorized the Department of Justice to categorize, or “schedule,” substances according to their potential for abuse and accepted value for medical use. The CSA made unauthorized possession of scheduled substances illegal. Under the CSA, cannabis is classified as a Schedule I substance, which marks it as having a high potential for abuse and no accepted medical use. This means the manufacture, distribution, dispensation and possession of cannabis remains illegal under federal law— regardless of whether a state legalizes cannabis for medicinal and/ or recreational use.
However, despite being listed as a Schedule I substance, a lack of federal resources has left cannabis laws and prosecution largely to the states. As such, the recreational use of cannabis has been approved in the District of Columbia and in 11 states, including California, Michigan, and most recently Illinois. Another 22 states allow cannabis use for medical purposes only. Naturally, this has created a dilemma between federal and state/local law.
The Growing Tension of Federal and State Cannabis Laws
Federal Law
Under federal law, employers with “safety-sensitive positions” or having federal contracts or grants must comply with the federal Drug-Free Workplace Act. This Act was enacted to establish guidelines for employers with the purpose of maintaining a drug-free workplace. Safety sensitive positions include those in the aviation, motor carrier, railroad, transit, pipelines and maritime industries. Essentially, any position where it would be particularly dangerous if an employee was under the influence of drugs or alcohol while on the job.
State Law
State laws on cannabis vary widely. Therefore, establishing a uniform policy across the country is nearly impossible for an employer at this time. Nonetheless, regardless of an employer’s stance, it is recommended that a club have a clear and well-defined drug policy in place.
Federal and State Law Tension
Some governmental agencies and associations have made clear that state legalization will not change their policies and procedures. For example, the Department of Transportation (DOT) does not allow medical or recreational cannabis use under state law to serve as a valid medical explanation to negate a positive drug test required to perform transportation safety-sensitive positions. In addition, circuit courts, such as the Ninth Circuit, have found that the Americans with Disabilities Act (ADA) does not protect medical cannabis use or require accommodation for its use, even when legalized under state law because: (1) the ADA expressly excludes from its definition of “qualified individual with a disability” those individuals currently engaging in the illegal use of drugs, and (2) cannabis remains an illegal drug under the CSA. (James v. City of Costa Mesa, 700 F.3d 394, 397 (9th Cir. 2012)).
On the other hand, employers with employees in certain states (for example, Arizona, Arkansas, Connecticut, Delaware, Illinois, Maine, Minnesota, Nevada, New York, Pennsylvania, and Rhode Island) need to be aware that those state medical cannabis use laws have express anti-discrimination provisions that may require employers to: (1) accommodate medical cannabis use, and/or (2) show actual “impairment” as the basis for discipline or termination as opposed to relying solely on a positive drug test.
As the growing tension between federal and state cannabis law continues to rise, much is left to be determined. As such, cannabis is expected to be a hot topic during the 2020 presidential election.
Employee Use of THC-Containing Cannabis
For now, regardless of state law, private employers may still prohibit employee use of cannabis and other controlled substances. In regard to employee drug testing, state laws vary widely, but most private employers can drug test in pre-employment situations or situations where the employer has a reasonable suspicion the employee is under the influence of drugs or alcohol while at work. Random drug testing of current employees is, for the most part, prohibited in many jurisdictions.
Member/Guest Use of THC-Containing Cannabis
Businesses, property owners and landlords can ban the use and possession of cannabis on their premises. Keep in mind, no state allows the public consumption of cannabis, regardless of the state’s recreational and/or medical use laws. In addition, in many states, such as California, a business licensee may not sell alcoholic beverages or tobacco products at any premises licensed for cannabis activities.
As such, the safest procedure for a business or club is to prohibit use of cannabis on club premises by members and/or guests. This should be done via a written policy and then each club/ business must determine—based upon state law—the desired enforcement practice of that policy. Given the disparity of state laws, a blanket recommendation other than prohibition is nearly impossible at this time.
Cannabis Derivatives
In December 2018, the U.S. government passed the 2018 Farm Bill, also known as the Agriculture Improvement Act of 2018 (AIA), which legalized industrial hemp at the federal level. The AIA removed hemp from Schedule I of the CSA and reclassified it as an agricultural commodity. Hemp plants are defined as any cannabis plant that has 0.3% or less THC.
Therefore, following the AIA’s passage, hemp-derived products, including hemp-derived CBD, are legal at the federal level. However, CBD can also be manufactured using cannabis that contains THC. This THC-containing-CBD can be purchased at medical cannabis dispensaries in states with recreational and/ or medical use laws. THC is illegal at certain levels—creating a tension surrounding the use of CBD products that also contain an illegal substance.
Employee Use of CBD and Other Cannabis Derivatives
When CBD is derived from hemp, and thus contains less than 0.3% THC, it does not have any known impairing effects that employers would need to be concerned about in the workplace. CBD oil has been studied for its potential role in easing symptoms of many common health issues, including anxiety, depression, acne and heart disease. For those with cancer, it may provide a natural alternative for pain and symptom relief. Moreover, CBD oil derived from hemp will not typically cause a positive result in employment-related drug testing, since most drug tests look for evidence that an employee has ingested THC—rather than CBD.
Therefore, the analysis on accommodation for use of CBD varies widely on whether the CBD is derived from hemp or cannabis containing THC. For now, as explored above, employers will generally not have to accommodate for CBD use when the CBD contains more than 0.3% THC. However, an employer will likely have to accommodate for CBD use when the CBD is derived from hemp, and contains 0.3% THC or less.
Member/Guest Use of CBD and Other Cannabis Derivatives
According to a January 2019 nationally representative Consumer Reports survey of more than 4,000 Americans, it is estimated 64 million Americans have tried CBD in the past 24 months. One out of seven of those people said they use it every day. This creates a potential concern for clubs if members and guests use CBD while on club property.
However, other than one prescription drug product to treat two rare, severe forms of epilepsy, the U.S. Food and Drug Administration (FDA) has not approved any other CBD products. In a recent consumer update, the FDA noted that it has not evaluated whether CBD products are effective for their intended use, what the proper dosage might be, how CDB might interact with FDA-approved drugs, or whether CDB has dangerous side effects or other safety concerns. The FDA notes it is currently illegal to market CBD by adding it to a food or labeling it as a dietary supplement.
As such, the recent uptick in use of CBD products, coupled with lack of guidance and/or regulations regarding CBD use by consumers, makes blanket recommendations very difficult. Therefore, most businesses have not taken a stance on CBD use by their clients unless and until an issue presents itself. At that point, it becomes an informed business decision, and should involve local counsel. For now, member use of CBD and other cannabis derivatives at clubs appears to be an issue where further developments in law and policy should be expected.
The Sale of Cannabis and Cannabis Derivatives
CBD is currently marketed in a variety of product types, such as oil drops, capsules, syrups, food products such as chocolate bars and teas, and topical lotions and creams. Under the AIA it is legal to sell CBD nationwide as long as it contains less than 0.3% THC. However, it is crucial that those who sell CBD products do not make any direct claims regarding the medical benefits of CBD— since the FDA has not yet evaluated these statements.
There may be some products on the market that add CBD to a food or label CBD as a dietary supplement. However, under federal law, it is illegal to market CBD this way. Dietary supplements are defined very specifically by the FDA. Consequently, products containing CBD, but marketed as dietary supplements, will likely not meet the dietary supplement definition, subjecting a seller to potential violation.
Therefore, beyond standard business licensing, as long at the cannabis derivative product contains 0.3% THC or less, the seller does not require any additional licensing to sell these products.
However, a seller should remember not to make any medical claims about the benefits of such products.
Growing Trends in Cannabis and Cannabis Derivatives
The issues surrounding employers and employee cannabis use are only getting larger, as the industry is showing no signs of slowing down. From the $52 billion in industry sales to the 76% increase in cannabis-related jobs this year, statistics show the cannabis industry is on the rise. In fact, some estimate the cannabis industry will grow to at least 330,000 jobs by 2022.
Unfortunately, federal guidance on cannabis law seems to be moving at a much slower pace, and much is yet to be determined.
Policies and Procedures for Clubs to Have In Place Regarding Cannabis
For now, clubs and other private employers may still prohibit employee use of cannabis and other controlled substances, regardless of state laws. In addition, property owners and landlords can ban the use and possession of cannabis on their premises.
Regardless of the employer’s stance on cannabis use among employees and/or guests, it is important to have clear written policies in place. Given the disparity of state laws on cannabis, it is crucial to work with local counsel to develop state-specific policies.
Lastly, clubs and other employers should carefully examine the cannabis laws in their jurisdiction before drug testing or taking action against an applicant or employee who claims to use cannabis for medical purposes. Employee drug testing laws are extremely state specific, with many states—such as California—having particular nuance. Work with local counsel to make sure drug testing policies and procedures are fully in compliance with state law.
Thomas Lenz and Jonathan Judge are partners and Justin Peters is a law clerk at Atkinson, Andelson, Loya, Ruud & Romo. They can be reached at [email protected], [email protected], and [email protected].
