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Cannabis Legal & Business Issues for Employers & Employees (Series: Cannabis Law 2020)

The cannabis and hemp industries in the U.S. have exploded in recent years due to increased numbers of states allowing businesses to grow, process, and sell cannabis products for medical and adult use. But one may ask: how are these businesses capable of operating if federal laws prohibit them. This series provides an essential foundation for any businessperson or professional looking to get smart about the cannabis industry. In the first episode of this series, our panel of experts will bring you up to speed on the complex and constantly evolving legal framework governing cannabis businesses. With this context, our panelists will also discuss the opportunities and challenges of operating in the cannabis space.

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Cannabis Legal & Business Issues for Employers & Employees (Series: Cannabis Law 2020)

  1. 1. 1
  2. 2. 2 Practical and entertaining education for attorneys, accountants, business owners and executives, and investors.
  3. 3. 3 Thank You To Our Sponsor
  4. 4. Disclaimer The material in this webinar is for informational purposes only. It should not be considered legal, financial or other professional advice. You should consult with an attorney or other appropriate professional to determine what may be best for your individual needs. While Financial Poise™ takes reasonable steps to ensure that information it publishes is accurate, Financial Poise™ makes no guaranty in this regard. 5
  5. 5. Meet the Faculty MODERATOR: Jack O’Connor - Sugar Felsenthal Grais & Helsinger LLP PANELISTS: Ruth Rauls - Saul Ewing Arnstein & Lehr LLP Charles Krugel - Law Offices of Charles Krugel Jonathan Loiterman - Green Star Growing, Inc. Rusty Magner - TrueNorth 6
  6. 6. About This Webinar - Cannabis Legal & Business Issues for Employers & Employees There is no shortage of legal issues and regulations about which employers and employees must be aware. And with the introduction of state-legalized cannabis products for both medicinal and adult use, the legal landscape governing these relationships has become even more complicated. Thankfully, you have our panel of experts to help you navigate some of the key issues surrounding cannabis from the perspectives of both employers and employees. In this episode, we’ll address numerous issues, including recent changes to state laws regarding medical and adult-use cannabis; best practices for drug testing (and being tested); dealing with employees who are registered users of medical marijuana; and navigating “drug-free workplace” rules for federal contractors, among others. 7
  7. 7. About This Series Cannabis Law 2020 The U.S. cannabis industry has exploded over the past decade. With every emerging industry comes legislation, rules, investors, and questions. The legalized cannabis industry is no different. And as more states in the U.S. adopt adult use and medical cannabis laws and regulations, it is incumbent on businesspeople and professionals to educate themselves about the challenges and opportunities facing the industry, as well as how to navigate the legal landscape governing cannabis businesses, whether those businesses “touch the plant,” or not. Thankfully, we’re here to help. In this series, we provide an essential foundation for any businessperson or professional looking to get smart about the cannabis industry. In our first episode, we present an overview of the cannabis industry and the competing legal frameworks at state and federal levels. In our second episode, we will discuss investment strategies for getting involved in the cannabis industry. Our third episode will discuss specific legal issues surrounding intellectual property rights in the cannabis space. And we’ll conclude with our fourth episode, focused on legal and business issues for employers and employees in states where cannabis has been legalized for both medical and adult use. Each Financial Poise Webinar is delivered in Plain English, understandable to investors, business owners, and executives without much background in these areas, yet is of primary value to attorneys, accountants, and other seasoned professionals. Each episode brings you into engaging, sometimes humorous, conversations designed to entertain as it teaches. Each episode in the series is designed to be viewed independently of the other episodes so that participants will enhance their knowledge of this area whether they attend one, some, or all episodes. 8
  8. 8. Episodes in this Series #1: Cannabis Basics: Getting up to Speed with Current Laws, Legislation, & Essential Business Issues Premiere date: 1/29/20 #2: Cannabis Investment: Successes, Failures, & Strategies for the Future Premiere date: 2/26/20 #3: Protecting Intellectual Property in the Cannabis Industry Premiere date: 3/25/20 #4: Cannabis Legal & Business Issues for Employers & Employees Premiere date: 4/22/20 9
  9. 9. Episode #4 Cannabis Legal & Business Issues for Employers & Employees 10
  10. 10. US Legal Landscape: Federal Prohibition The Controlled Substances Act (“CSA”), 21 U.S.C. §§ 801-971 criminalize the following with respect to cannabis: • Growing; • Processing; • Selling; • Knowingly renting, managing, or using property for the purpose of manufacturing or distribution; • Selling or offering to sell drug paraphernalia (including equipment, products, or materials of any kind which is primarily intended or designed for use in manufacturing cannabis); and • Deriving profits or proceeds from violations of the CSA 11
  11. 11. A Brief Glossary THC (tetrahydrocannabinol) • Best known & most abundant available cannabinoid in marijuana plants, responsible for psychoactive effects or the “high,” of cannabis products. CBD (cannabidiol) • One of many cannabinoids found in cannabis. CBD has gained support for its use as a medical treatment as research has shown it effectively treats pain, inflammation, and anxiety without the psychoactive effects associated with THC. 12
  12. 12. A Brief Glossary Hemp/industrial Hemp • a fibrous product that can be produced from the male cannabis plant (meaning it generally can’t be used to produce intoxicants), used in the manufacture of rope, paper, clothing, beauty products, and other goods. 13
  13. 13. The 2018 Farm Bill (Hemp Farming Act of 2018) • The 2018 Farm Bill legalized production of hemp as an agricultural commodity & removed hemp from the list of controlled substances. • Also requires Secretary of Agriculture to conduct study of hemp-related agricultural pilot programs implemented under prior 2014 Farm Bill. • Does not create a system for producers to grow hemp as freely as other crops: caps THC content for industrial hemp plants at 0.3%. 14
  14. 14. Significant Sources of Cannabis & Employment Laws 15 Cannabis Law Federal Controlled Substances Act State Medical/ Adult Use Marijuana Laws Hemp Farming Act Federal Food, Drug, & Cosmetic Act
  15. 15. Significant Sources of Cannabis & Employment Laws Cont’d 16 Labor & Employment Law Fair Labor Standards Act Americans With Disabilities Act (ADA) Family Medical Leave Act (FMLA) National Labor Relations Act (NLRA) Drug Free Workplace Act Equal Employment Opportunity Act Occupational Safety & Health Act (OSHA) State Analogues to Federal Statutes
  16. 16. State-Based Legalization of Cannabis in the U.S. At present (but constantly changing): • 33 states, 4 of 5 US Territories, & the District of Columbia allow medical cannabis use • 11 states, the District of Columbia, Guam, and the Northern Mariana Islands allow adult (or “recreational”) use of cannabis, including: Alaska, California, Colorado, Illinois, Maine, Massachusetts, Michigan, Nevada, Oregon, Vermont, and Washington • 15 other states have decriminalized cannabis use 17
  17. 17. State-Based Legalization of Cannabis Cont’d 18 Source: Lokal_Profil, CC BY-SA 2.5,
  18. 18. Common State Laws Governing Medical Cannabis Patient Registration Cards • Most states only allow access to medical marijuana through registration or identification card. • Eligibility for cards varies by jurisdiction, typically requiring a patient have a qualifying medical condition as determined by state law. • Rules vary by jurisdiction, but cards generally permit patient to seek physician authorization for cannabis use, home-grow, and other privileges. • Cards generally issued by branch of state government, require fee, and are valid for 1 year. 19
  19. 19. Common State Laws Governing Medical Cannabis Cont’d Common Qualifying Medical Conditions: Source: (accessed 2020.04.21) 20
  20. 20. Common State Laws Governing Medical Cannabis Cont’d Employer right to terminate or discipline employees • Most state laws carve out exemptions for employers, authorizing prohibitions against use on premises and on-the-job intoxication. • Some jurisdictions have produced case law supporting employers' rights to terminate employees for positive drug tests resulting from medical marijuana use. 21
  21. 21. Common State Laws Governing Medical Cannabis Cont’d Common Restrictions on Employers • Some states, while authorizing termination or discipline for marijuana use or intoxication in the workplace, limit employers' right to test for marijuana or prohibit discrimination against individuals based on medical marijuana registration cards. 22
  22. 22. State Law Protections for Employees • Many states that have legalized cannabis for medical or adult use have incorporated specific protections for employers and employees • In 14 states where medical marijuana is legal (AR, AZ, CT, DE, IL, ME, MA, MN, NV, NH, NM, NY, OK, PA) laws expressly require that employers not discriminate against medical marijuana patients. • In some states (Maine & Nevada, which also allow adult use), regulations prohibit employers from making adverse employment decisions about most workers based on cannabis use outside the workplace. 23
  23. 23. Drug Free Workplace & “Zero Tolerance” Policies • Employers in cannabis-legalized states must determine whether subject to federal Drug Free Workplace Act. • Requires federal grant recipients and federal contractors adopt zero tolerance policy at workplace & certify to federal government that workplaces are drug free. 24
  24. 24. Drug Free Workplace & “Zero Tolerance” Policies In addition to certifying drug free workplace, employers generally must: • Develop and publish for employees a written policy and ensure that employees read and consent to the policy as a condition of employment; • Initiate awareness programs to educate employees about the dangers of drug abuse, the company's drug workplace policy, any available drug counseling, rehabilitation and employee assistance programs, and penalties that may be imposed on employees for drug abuse violations; • Require that all employees notify the employer or contractor within five days of any conviction for a drug offense in the workplace; and Make an ongoing good faith effort to maintain a drug-free workplace. 25
  25. 25. Disability Discrimination Claims & Medical Patients The federal Americans with Disabilities Act (ADA) prohibits employers from discriminating against qualified individuals on the basis of disability. • ADA defines disability as “a physical or mental impairment that substantially limits one or more major life activities, a person who has a history or record of such an impairment, or a person who is perceived by others as having such an impairment.” • ADA also prohibits discrimination in job application procedures; hiring, advancement, or discharge of employees; employee compensation; job training; and other terms, conditions, and privileges of employment. 26
  26. 26. Disability Discrimination Claims & Medical Patients Cont’d ADA Continued: • Covered employers required to provide reasonable accommodations to disabled employee so employee can perform essential duties of job, as long as such accommodations do not impose undue hardship on employer. • Accommodation is generally: “any change in the work environment or the way things are customarily done that enables an individual with a disability to enjoy equal employment opportunities.” according to EEOC Some states have imposed duty on employers to accommodate employee cannabis use (known as “accommodation states”) 27
  27. 27. Recent Case Law Chance v. Kraft Heinz Foods Co. (Del. Sup. Ct. 2018) • Fact synopsis: Kraft Heinz fired employee after job site accident for failing drug test despite holding medical marijuana card. • Court held anti-discrimination provision of Delaware's medical marijuana law is not preempted by federal Controlled Substances Act, and allowed worker to proceed with most of his claims. 28
  28. 28. Recent Case Law Palmiter v. Commonwealth Health Systems, et al., No. (Pa. Com. Pl., Lackawanna Cnty. Nov. 22, 2019) • Fact synopsis: medical assistant terminated by health care employers for authorized off-site use of medical marijuana. Employee sued asserting private right of action against employer implied by anti- discrimination provision of Pennsylivania Medical Marijuana Act • Court held Pennsylvania Medical Marijuana Act does create implied private right of action against employer by employee terminated for off-site use of medical cannabis. 29
  29. 29. Recent Case Law Whitmire v. Wal-Mart Stores, Inc. (Dist. Ariz. Feb. 7, 2019) • Fact synopsis: medical cardholder employee in Arizona tests positive for cannabis after drug test triggered by on-the-job injury at Wal-Mart. Wal-Mart fired employee claiming test results indicated intoxication at time of injury, during employee’s shift. Employee sued claiming termination violated Arizona Medical Marijuana Act. • Court sides with employee and allows claim to proceed. 30
  30. 30. About the Faculty 31
  31. 31. About The Faculty Jack O’Connor - Jack is partner in the Chicago office of Sugar Felsenthal Grais & Helsinger LLP. Jack’s practice covers a range of healthy and distress business engagements. Jack leads Sugar Felsenthal’s “Vice,” practice, working with business clients in the Beer, Spirits, and Cannabis industries. Jack is also widely recognized for his excellent work as a restructuring attorney including recognition by various organizations for his strategic thinking and tactical expertise, including SuperLawyers Magazine, Leading Lawyers Magazine, and the Turnaround Management Association. 32
  32. 32. About The Faculty Ruth Rauls - Ruth concentrates her practice on complex commercial litigation, employment litigation, real estate litigation and litigation involving closely-held corporations. She has extensive experience litigating matters at the trial and appellate levels in state and federal court in New Jersey and New York, as well as in private mediations and arbitrations. She has litigated claims arising under the New Jersey Consumer Fraud Act, the New Jersey Law Against Discrimination, and various other federal and state statutory and common law causes of action. 33
  33. 33. About The Faculty Jonathan Loiterman - Jonathan Loiterman is the Chairman & CEO of Green Star Growing, Inc., a licensed cannabis grower, processor, and wholesaler in Oregon. Mr. Loiterman is licensed as an attorney in Illinois and Oregon and has served as a past Chairman of the Illinois State Bar Association’s Health Section Council as well as a member of the Oregon Liquor Control Commission’s Cannabis Advisory Board. 34
  34. 34. About The Faculty Charles Krugel - As a management side labor & employment attorney & human resources (HR) counselor, Charles Krugel,, has 24 years of experience in the field & has been running his own practice for 18 years. His clients are small to medium sized companies in a variety of industries. Charles has been lead negotiator for hundreds of labor & employment agreements & contracts. Additionally, he’s litigated dozens of court cases, administrative proceedings & arbitrations. In addition to providing traditional labor & employment law services, he represents companies desiring to institute preventive & proactive HR functions. These functions include policies & procedures, which help to efficiently & discreetly resolve issues in-house & prevent lawsuits & complaints; they also help to reduce costs & act as catalysts for increasing productivity & profits. Moreover, he’s frequently the subject labor & employment law related TV, radio & print interviews. 35
  35. 35. About The Faculty Rusty Magner - Using TrueNorth's Benefits Navigator process, Rusty Magner partners with businesses to attract, reward and retain their best employees. Magner collaborates with our firm's team of specialists to bring clarity and control to benefits costs, allowing employers to actively engage and educate employees year-round on consumer mindfulness to increase participation and further reduce costs. 36
  36. 36. Questions or Comments? If you have any questions about this webinar that you did not get to ask during the live premiere, or if you are watching this webinar On Demand, please do not hesitate to email us at with any questions or comments you may have. Please include the name of the webinar in your email and we will do our best to provide a timely response. IMPORTANT NOTE: The material in this presentation is for general educational purposes only. It has been prepared primarily for attorneys and accountants for use in the pursuit of their continuing legal education and continuing professional education. 37
  37. 37. About Financial Poise 38 DailyDAC LLC, d/b/a Financial Poise™ provides continuing education to attorneys, accountants, business owners and executives, and investors. It’s websites, webinars, and books provide Plain English, entertaining, explanations about legal, financial, and other subjects of interest to these audiences. Visit us at Our free weekly newsletter, Financial Poise Weekly, updates you on new articles published on our website and Upcoming Webinars you may be interested in. To join our email list, please visit: