With Legal Cannabis on the Rise, Be Aware of These Potential Workplace Issues


In 1996, California became the first state to legalize medical cannabis use, opening up the doors to fully legalized recreational use in 2012 in Colorado and Washington. Now, there are more than 30 states in the country that have legalized cannabis in some form or another, with other states expected to follow suit within the next few years.

While legalizing cannabis has had unique effects in everything from tourism to stock portfolios, it’s also made its way into the workplace, opening up the discussion around liabilities and performance issues among employees. But while in the past an employee may have been fired for cannabis use on the job, businesses may not be right to make such a move for fear of claims from the fired employee.

This has only expanded the discussion around liability insurance, such as management liability insurance, and the steps businesses and management need to take in order to understand the state of cannabis in the workplace.

Drug Testing and Policies at Work

Even if a state hasn’t legalized cannabis, certain cities and counties within states have their own legislation permitting the use of cannabis on a medical or recreational basis. For businesses, a major issue that comes up is in regards to drugs testing in the workplace. An employer is usually permitted to conduct pre-employment or reasonable suspicion drug testing. The question presented, however, is whether or not employers in states that have legalized cannabis are still allowed to conduct testing.

Basically, yes, employers are still permitted to test employees regardless of the state where they are located and laws in place. Cannabis is currently considered a Schedule 1 drug under federal law, which means cannabis isn’t considered legal for medical use and can have a high potential for abuse. While states have their own mandates, federal law reigns supreme.

In recent years, courts have seen numerous cases where an employee was wrongfully terminated for cannabis use or testing positive for what the employee claimed was legal use of cannabis based on the state they resided in.

Federal Contractors and Other Employees

According to the Drug-Free Workplace Act (DFWA), federal contractors are required to prohibit the “unlawful manufacture, distribution, dispensation, possession, or use of a controlled substance by employees” in their place of business. Federal contractors must establish certain programs regarding drug-free awareness and create and enforce policies that subject employees to certain disciplinary acts or termination for any violations.

However, if an employer doesn’t have federal contracts and resides in a state where cannabis is legal in some form, the development of a policy is within its own discretion. If a business creates a policy that allows the use of cannabis, it should treat it in the same way as alcohol. Employees should be instructed to not show up to work under the influence of cannabis, which can affect the safety of the employee, customers, and other employees around them.

Coming to an Understanding in the Workplace

It’s recommended that employers review their current state laws that pertain to cannabis use. Employers should make sure to go over the drug and alcohol policies and revise them as necessary to ensure that everything is within compliance of the law, and to keep claims from employees away.

Zero-tolerance drug testing policies can be reversed to focus more on zero-tolerance drug-free workplace practices. Also, employers can spend time updating guidelines to address off-duty and off-premises cannabis while also contacting legal counsel to examine and amend any processes.

About Axis Insurance Services

Our mission is to help customers identify and prioritize their Professional Liability & Management Liability insurance needs, provide the most competitive coverage options available, and offer superior customer service. Each and every business has a distinctly unique set of products or services. We are committed to offering flexible and intelligent coverage solutions tailored to meet our customers’ needs. Put our experience and expertise to work for you. Give us a call at (201) 847-9175.

axis insurance services, management liability insurance, Cannabis, Legal Cannabis, Cannabis in the Workplace

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