Zero-tolerance drug policies in the workplace are an endangered species. Traditional drug laws and policies as they relate to the workplace are being upended, and employers are increasingly struggling to grapple with the patchwork of state drug-testing laws – that oftentimes conflict with federal law – as well as the proliferation of legal THC-containing products derived from hemp.
Over the past five decades, drug testing employees and zero-tolerance drug policies have become staples of thousands of professions throughout the United States. However, as an increasing number of states now permit the legal use of marijuana, either medically or recreationally, many of these same states have also passed laws restricting employers’ rights to administer drug tests to employees. In short, traditional drug laws and policies as they relate to the workplace have been upended in many states, and this trend is expected to continue with other states adopting similar laws in the near future. As a result, employers are left confused and frustrated, often unable to determine what, if anything, they can do to determine if an employee is utilizing marijuana and what actions they can take if an employee tests positive for marijuana. For employers with employees in multiple states, the confusion and frustration are compounded due to being required to navigate state-by-state laws, which laws can also, sometimes, conflict.
Moreover, in addition to employers being concerned regarding their own liability, a vast landscape of additional business and legal considerations spring from marijuana use by an employee. For example, what about liability insurance coverage when an employee injures someone while on the job after consuming a federally illegal substance, such as marijuana? Will the insurance carrier cover damages resulting from the injuries? What if an employee is injured by a third-party driver who has consumed marijuana? Will the company’s insurance cover the damages, including medical expenses?
Further, there are individual circumstances that affect a company’s conduct with respect to employee marijuana use. For example, does it matter if the employee has a state-issued medical marijuana patient card? What about the type of product consumed? Do the employee’s job duties have any impact? Is this the end of zero-tolerance drug policies?
What is Marijuana? What is Hemp? Why Does it Matter?
To answer these questions, employers must first educate themselves on the legal fiction that distinguishes marijuana from hemp. While marijuana and hemp are both the plant species Cannabis sativa L., the former is federally illegal, and the latter is federally legal (as of the writing of this article). However, an employee’s consumption of either product can and oftentimes will trigger a positive drug test.
Marijuana and hemp are both the Cannabis sativa plant. The distinction is a legal fiction: Cannabis sativa is considered “marijuana” when the plant, whether growing or not, contains a delta-9 tetrahydrocannabinol (THC) concentration of more than 0.3% by dry weight. (Dry weight is the measurement of the plant when all water is removed.) By contrast, Cannabis sativa is considered “hemp” when the plant contains a delta-9 THC concentration of not more than 0.3% by dry weight.
In 1970, the Controlled Substances Act (CSA) was passed by the 91st Congress and signed into law by President Nixon. The CSA set forth four drug schedules; both marijuana and hemp were listed as Schedule I controlled substances, along with heroin, lysergic acid diethylamide (LSD), 3,4-methylenedioxymethamphetamine (ecstasy), methaqualone, and peyote. However, in 2018, the U.S. Congress passed the Agriculture Improvement Act of 2018 (2018 Farm Bill), which was signed into law on December 20, 2018. It removed “hemp” from the definition of “marihuana” under the CSA, effectively making hemp federally legal.
The 2018 Farm Bill had the effect of allowing parties to begin cultivating, processing, selling, and transporting hemp or any derivative thereof (and in compliance with state law and other licensing requirements). Just four years later, in 2022, hemp product sales reached $28 billion, according to cannabis data firm Whitney Economics.[1]
By carving “hemp” out of the CSA, the floodgates were opened to the cultivation, processing, and sale of various hemp-derived cannabinoids. The term “cannabinoid” refers to any of the various chemical constituents found in cannabis; over 100 cannabinoids are found in the cannabis plant. Delta-9 THC is the most well-known cannabinoid and the one that most people associate with marijuana. However, delta-9 THC can be derived from hemp and, when sold as such, is federally legal under the 2018 U.S. Farm Bill.
Another well-known cannabinoid, CBD, is also a federally legal substance when derived from hemp. A third hot-topic cannabinoid that can likewise be derived from hemp is delta-8 THC, which has similar effects when ingested as delta-9 THC. Delta-8 THC is a psychoactive cannabinoid that occurs naturally in the plant but can also be created through chemical synthesis in a lab to deliver the cannabinoid to the consumer in larger quantities than naturally occurs. Under the current definition of hemp, as set forth in the 2018 Farm Bill, this practice and Delta-8 itself are federally legal.[2]
Consumption of Hemp Derived Products Can Trigger a Positive Drug Test
Some states do not regulate the sale of hemp-derived products within their state. Therefore, products containing CBD, delta-8 THC, and even delta-9 THC (as long as it is derived from hemp, not marijuana) are often sold at gas stations, corner stores, farmers markets, convenience stores, and more. Requirements with respect to product testing and traceability varies by state, and, in some instances, there are little to no such requirements. This can result in impurities (as well as blatant misrepresentations) with respect to the content of the final product.
As a result, an employee’s consumption of a federally legal hemp-derived product (such as one containing delta-9, delta-8, CBD, and other hemp-derived cannabinoids) can trigger a positive drug test by an employee, even though these products may be completely legal to sell, purchase, and consume under federal and state law. For example, the cannabinoid CBD, isolated, does not contain any THC. However, CBD can also be derived from the plant in a way that it maintains the presence of other cannabinoids that are naturally occurring in the plant. Thus, some CBD products legally derived from hemp may still contain low levels of THC based on the CBD extraction process used. (These are referred to as “broad-spectrum” or “full-spectrum” CBD products.) If an employee consumes a large amount of the CBD product or consumes it regularly, this could result in the employee ingesting a sufficient amount of delta-9 THC to trigger and fail a drug test.
The takeaway is that employers should know, even if an employee tests positive for marijuana use, whether the employee may actually be consuming a product that is entirely legal under the current legal landscape before taking any adverse action against the employee.
States Where Marijuana is Legal: What Can Employers Do?
To be clear, just because marijuana is legal under state law does not automatically confer protections to employees who consume it.
As an initial matter, medical marijuana use is not protected under the Americans with Disabilities Act.[3] Of the 38 states that permit the consumption of marijuana in some form, just 24 of them have passed laws protective of an employee’s off-site use of marijuana.[4] Thus, employers’ hands are not necessarily tied when it comes to the use of marijuana by employees in states where marijuana is legal under state law. In other words, the adage “it’s legal, and therefore I cannot take action” is not always the case when it comes to (still federally illegal) marijuana.
In the 24 states in which recreational consumption of marijuana is legal, so long as there is not a state law prohibiting an employer from taking adverse action against an employee in connection with the off-duty use of marijuana, employers still have the right to terminate an employee for failing a drug test. That is, the employer is still empowered to take disciplinary (and further) action against the employee irrespective of the fact that the employee may hold a medical marijuana card, or the employee may be consuming a hemp-derived product that is legal under federal law. However, as explained later in this article, employers should not make any such decisions before understanding whether their state has any laws prohibiting such conduct and/or any post-drug test mitigation processes in place.
Of those 24 states that do allow recreational marijuana use, some states have in place laws that protect an employee against negative employment consequences for any off-duty use of marijuana, while other states protect an employee’s off-duty marijuana use only if it is used pursuant to a doctor’s medical recommendation.[5] Indeed, employers oftentimes are confused regarding these interactions of state and federal law and are unaware that an employee’s possession of a medical marijuana card is not a “get out of jail free” pass. As explained above, that is sometimes – but not always – true.
Are Zero-Tolerance Policies Dead?
Is this the end of zero-tolerance drug policies? Not yet. However, they are certainly an endangered species.
Assuming an employer has determined there are no state laws prohibiting it from taking adverse action against an employee who tested positive for marijuana, this still does not provide an employer with a green light to take adverse action. State law, again, dictates what an employer can and cannot do following a positive drug test in the absence of off-site use policies.
For example, recently, in Williams v. BHI Energy I Power Servs., LLC, Case No. 0:21-cv-1186 (KMM/DTS), 2023 U.S. Dist. LEXIS 148720, *58 (D. Minn. Aug. 24, 2023), an employee was terminated for testing positive for THC after she drank a weight-loss tea that purported to be free of marijuana. The court determined that the employer violated Minnesota’s Drug and Alcohol Testing in the Workplace Act (DATWA). The employer relied on an unconfirmed drug test and successfully argued that, under DATWA, employers must provide employees who test positive for drug use the opportunity to complete a rehabilitation program, which the employer did not do.[6]
Even more recently, in Fisher v. Airgas USA, LLC & Airgas, Inc., 2024 U.S. App. LEXIS 2258 (6th Cir. 2024) (unpublished), an employee consumed a hemp product that triggered a positive drug test. After the positive test, the employer notified his employer that he had not used marijuana, and he had been taking a hemp product to alleviate symptoms of liver cancer; he also asked for a retest. However, for purposes of that retest, the employer never told the drug testing company that the employee was taking hemp, nor did it ask the drug testing company whether hemp usage could cause the employee’s positive result. Instead, the employer just resubmitted the same sample for testing and terminated the employee when the retest came back positive.
At first, the trial court granted summary judgment in favor of the employer based on Ohio’s “honest belief” rule, which allows an employer to terminate an employee if the employer honestly believed that it has a non-discriminatory reason for doing so (even if it is later shown to be mistaken or baseless). However, this decision was later reversed. Ultimately, the federal court ruled against the employer because the employee had notified the employer that he was consuming hemp for disability purposes after the first positive drug test; the court of appeals ruled that the employer should have investigated the possibility that what the employee was consuming was not federally illegal marijuana. Because the employer did not do so and simply retested based on the same parameters, the employer could not use the “honest belief rule” and the summary judgment order was reversed.
What About Insurance Coverage?
If an employee is involved in a vehicle accident while on the job and tests positive for the presence of cannabis, will the employer’s vehicle insurance policy cover bodily or property damages resulting from the accident? A decision from the Court of Appeals of Ohio, Grange Ins. v. Cleveland, 2022-Ohio-4303 (App. 6th Dist. 2022), address this issue as well as the novel issue of extending alcohol intoxication exclusions to insured persons who use marijuana.[7]
The case of Grange Ins. v. Cleveland involved a driver insured by Grange Insurance Company (Grange). The driver caused bodily injury and property damage while driving under the influence of marijuana. Specifically, the driver was dismissed from her work after showing visible signs of impairment. As she was leaving, she proceeded to drive her car through the employer’s store window, hitting one person and nearly hitting another person, and crashing into two additional vehicles while fleeing the scene, eventually leaving her car disabled and sending her to the hospital. The driver admitted to smoking “weed” in her deposition and that the acts related to this event were attributed to such use.
Grange denied coverage to the driver on two grounds, which the court upheld. First, the insurance policy contained a criminal act exclusion which the Ohio Appellate Court found applied because the insured committed a criminal act while driving, as the recreational use of marijuana was illegal in Ohio at the time of the accident. Second, the insurance policy contained a controlled substance exclusion, which excludes coverage for bodily injury or property damage arising out of the sale, use, manufacture, delivery, transfer, or possession by any person of a controlled substance under federal law. The court accepted the insured driver’s admission under oath that she was under the influence of marijuana, a controlled substance, while driving at the time of the incident.
Farmers Insurance of Columbus, Inc. (Farmers), which covered one of the innocent persons struck by the intoxicated driver, argued that the controlled substance exclusion in Grange’s policy should be void as against public policy, the same way such exclusions are not permitted when the substance consumed is alcohol. That is, Ohio prohibits insurance companies from excluding coverage in the event of damage or injury caused by alcohol use. Farmers’ argument with respect to marijuana hinged on Ohio’s state law (and supporting policies) prohibiting insurance companies from denying claims associated with the consumption of alcohol in the state. In other words, Farmers argued the Court of Appeals should extend the prohibition on intoxication exclusion provisions with respect to alcohol to cannabis. Otherwise, innocent persons could be left injured by marijuana-impaired drivers but with no way to recover funds to pay for automotive damages, their medical care, or other injuries. The Court of Appeals summarily dismissed this argument.
The Grange case, however, does not address the difficult evidentiary question of whether a positive drug test in a particular case has resulted due to the use of federally illegal marijuana or federally legal hemp. Indeed, if a driver involved in an accident tests positive for THC, it is critical to determine if the positive test has resulted from the use of federally illegal marijuana or legal hemp. This is because, if the positive test result is due solely to a person’s consumption of federal legal hemp products, the insurance policy at issue in Grange should then cover medical expenses and property damage of those injured.
Relatedly, the Grange case could also have had a different outcome if the factual circumstances played out today because recreational consumption of marijuana is now legal in the state of Ohio but was not at the time of the decision.
The key takeaway from the Grange case is companies that employ drivers – in addition to every driver on the road, regardless of their personal marijuana use – are well advised to examine the extent of, and exclusions in, their existing coverage. Such exclusions, in the cannabis context, can render unavailable the lion’s share of coverage to which a policyholder believes they are entitled in the event of an accident caused by marijuana impairment. Indeed, even nonusers of marijuana are well-advised to take heed of these issues, as such policies may effectively leave a person innocently injured by a marijuana-impaired driver (such as the victim insured by Farmers in the Grange case) with no way to recover their medical expenses or property damage if the driver is unable to pay and their own policies do not fill in the gap.
Where Does This Leave Employers?
With few exceptions (such as certain safety-sensitive positions and a number of federally regulated professions), employers should not rely on a positive drug test as a basis for termination or taking other adverse action against an employee. Instead, employers should conduct a state-by-state analysis in each state in which they operate and in each state in which employees reside to determine, among other things, whether the employee’s off-duty marijuana use is protected. Employers should also update their drug policies to address off-duty marijuana use, the consumption of hemp products, and outline any processes mandated by state law that apply when an employee does test positive for marijuana. Employers should also confirm that whoever is performing their drug tests is screening out hemp-derived products to the extent possible. This should all be done with an understanding that, given the growing acceptance of marijuana throughout the country, employers are reporting that it is becoming increasingly difficult to hire and retain employees if their policies state that a positive marijuana drug test can be a justification for termination.
Employers also should review their insurance policies, particularly if employees drive for them or interact with the public in a manner that could result in physical injury to themselves or others or property damage.
While zero-tolerance policies were previously an accepted standard across all businesses and industries in the United States, they are now increasingly looking like they will go the way of dial-up internet, the rotary phone, and the floppy disk: a relic of the past.
[1] Forbes Daily: The Budding $28B Hemp Market’s Feud with Marijuana.
[2] AK Futures LLC v. Boyd St. Distro, LLC, 35 F. 4th 682 (9th Cir. 2022).
[3] Zarazua v, Ricketts, No. 8:17-cv-318, 2017 U.S. Dist. LEXIS 161990, at *5 (D. Neb. 2017) (no cognizable claim under the ADA for denial of access to medical marijuana); Steele v. Stallion Rockies, Ltd., 106 F. Supp. 3d 1205, 1212 (D. Colo. 2015) (termination on basis of medical marijuana use did not constitute discrimination for purposes of the ADA).
[4] On-site impairment is universally prohibited; however, there is currently no industry-accepted method for testing if someone is currently impaired by marijuana.
[5] See, e.g., La. Rev. Stat. Ann. § 49.1016;
[6] Minn. Stat. § 181.953, subd. 10(b).
[7] For a more complete discussion of the Grange case, see Ohio Appellate Decision Tackles Excluded Coverage for Marijuana Use, FORC Journal – Vol. 34 Edition 1 – Spring 2023.
Reprinted with permission from SIGMA’s IGM Magazine, September/October Issue 2024.