Danielle M. Dwyer – Cannabis Industry

August 15, 2024 by Danielle M. Dwyer

Employers Must Engage in the Interactive Process with Medical Marijuana Users and Cannot Refuse to Hire a Job Applicant Based on Marijuana Use Alone.

By: Kathleen O’Malley and Danielle Dwyer

Recently, Attorney General Matthew J. Platkin announced a Finding of Probable Cause by the New Jersey Division on Civil Rights (DCR) against Prince Telecom LLC (Prince) for declining to hire a medical marijuana user as a cable installation technician. The DCR found the job applicant was subject to disability discrimination in violation of the New Jersey Law Against Discrimination (LAD). The basis for the DCR’s determination was Prince’s rescission of a job offer after the applicant, a medical marijuana user, tested positive for cannabis in connection with a pre-employment drug screen.

Prince, a company that constructs and maintains telecommunications and cable systems, offered a technician job to the applicant pending a drug test. The applicant informed the company that he had a medical marijuana prescription and used marijuana to treat a disability. When the applicant tested positive for cannabis, he provided his medical marijuana prescription card to the company, after which Prince rescinded the job offer. Prince maintained that it could not provide the applicant with any accommodation given the safety-sensitive nature of the job duties of the position (such as, driving company vehicles, operating machinery, working with electrical wires, climbing ladders and lifting 50 pounds or more). According the DCR, Prince assumed that hiring a medical marijuana user to perform such tasks would expose the company to “enormous” liability.

The DCR issued a Finding of Probable Cause because Prince did not ask the applicant for additional information about the nature of his disability; how often and what time of day the applicant used marijuana; and what effect, if any, his medical marijuana use might have on him during work hours. By failing to initiate discussions of that nature with the applicant, the DCR concluded that Prince did not meet its obligation to engage in the interactive process. Under the LAD, employers have an affirmative duty to consider reasonable accommodations for applicants and employees. Broadly speaking, this means an employer should have a dialogue with a disabled applicant or employee and should ask questions to determine whether the individual can perform the essential functions of the job with or without a reasonable accommodation. Once the employer has sufficient information from the individual and/or the individual’s healthcare provider about the disability and any proposed accommodations, the employer can evaluate whether it is able to offer a reasonable accommodation without posing an undue burden on the company. Employers who fail to engage in this interactive process violate the LAD—which is exactly what the DCR has accused Prince of doing.

While the LAD protects individuals with disabilities, it is also worth noting that both medical and adult marijuana use are legal in New Jersey and the state has enacted protections for the use of marijuana. The Jake Honig Compassionate Use Medical Cannabis Act (CUMCA) prohibits an employer from taking an adverse employment action against an employee or applicant (e.g., terminating or refusing to hire) based on the fact that the employee is registered as a medical marijuana user. The Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (CREAMMA) protects adult use of marijuana and prohibits employers from taking adverse employment actions due solely to a positive drug test for cannabis. CREAMMA also has specific and stringent protocols with respect to drug testing in the workplace. Because CREAMMA went into law after Prince rescinded the applicant’s job offer, the DCR did not review Prince’s conduct to determine whether it violated that statute as well.

Notably, the DCR did not find that Prince had to accommodate the applicant’s use of marijuana in workplace or that it had an obligation to hire him. The agency found that Prince had an obligation to engage in the interactive process—to gather information sufficient to consider whether it could have reasonably accommodated the applicant’s disability. If Prince had learned the applicant used medical marijuana after work hours and would not be impaired or under the influence when reporting for duty, Prince may have been able to reasonably accommodate the applicant’s disability. The laws in New Jersey are clear that employers have a right to maintain a drug-free workplace and do not have to accommodate use of medical marijuana in the workplace or during work hours. Based on the DCR’s finding, Prince’s error was that it made too hasty a decision and did not gather any information from the applicant to determine whether it could have accommodated his disability.

Of note, a Finding of Probable Cause is not a final determination on the merits. It means the DCR determined that there is sufficient evidence to warrant further proceedings against Prince. The parties will now have the opportunity to resolve the case voluntarily through conciliation. If the parties cannot resolve the matter, the case will move to the Office of Administrative Law or the Superior Court for further adjudication.

November 8, 2023November 13, 2023 by Danielle M. Dwyer

Labor Peace Agreement Mandate Challenged in Federal Court

States legalizing cannabis are increasingly requiring that cannabis licensees enter agreements allowing unions access to their employees for organization activities. Some states go even further, not only requiring a labor peace agreement (LPA), but that employees agree on the terms of a collective bargaining agreement (CBA) soon after licensure. As we previously reported, such requirements are especially prevalent along the East Coast, with varying labor requirements imposed by New York, New Jersey, Virginia, Delaware, and Connecticut, as well as California. Continue reading “Labor Peace Agreement Mandate Challenged in Federal Court”

August 7, 2023 by Danielle M. Dwyer

Bipartisan House Bill Shows Feds May Be Relaxing Stance on Marijuana in Employment Decisions

Although several states have relaxed their stances on marijuana, and in turn protected employees’ lawful off-duty use of marijuana, employees (and often contractors) of the federal government are usually excluded from these protections. Marijuana remains a Schedule I substance under federal law, and thus is unlawful, without exceptions.

However, the federal government is starting to take steps towards softening its stance on marijuana, which may be welcomed news to many considering that the federal government is the largest employer in the United States.

On July 27, 2023, Representatives Jamie Raskin (D-MD) and Nancy Mace (R-SC) introduced bipartisan legislation in the U.S. House of Representatives that would allow job applicants who are current or former marijuana users to receive federal security clearances and have access to federal job opportunities. The Act, titled the Cannabis Users’ Restoration of Eligibility Act, or the “CURE Act,” would amend the Intelligence Reform and Terrorism Prevention Act to prohibit current or past use of marijuana from being a consideration with respect to a person’s eligibility for security clearances or eligibility for employment with the federal government.

Individuals who are denied security clearance or employment will also be afforded the opportunity to have that decision reviewed by the applicable federal agency under the Act. If it is determined that current or past marijuana use was the reason for the denial, the agency is to reconsider the same.

The Act, in its current form, is silent as to whether federal agencies can continue to test current employees for marijuana, and what actions, if any, agencies can take against current employees who test positive for marijuana.

The CURE Act has a ways to go before it becomes law, and it is likely to meet significant resistance along the way. Nevertheless, the progress marijuana has made in becoming more acceptable and mainstream is evident, and those on Capitol Hill are taking notice.

June 16, 2023 by Deanna J. Lucci

NYS Office of Cannabis Management June 2023 Updates

This week, the New York State Cannabis Advisory Board (CAB) and the Cannabis Control Board (CCB) held meetings to discuss the current state of the cannabis industry and proposed regulations and legislation. The CCB is the approval and oversight body of the Office of Cannabis Management and is responsible for approving the regulatory framework for New York’s cannabis industry. This includes licensing cannabis businesses and approving the regulations and rules that will govern the cannabis industry in the state.

Cannabis Advisory Board Meeting

On June 13, 2023, the CAB met at CUNY School of Law in Queens to discuss the revised proposed regulations after receiving 3,500 public comments. These regulations range from focusing on achieving environmental and sustainability targets in the industry to rules for third-party platforms. Current proposals involve allowing the current Registered Organizations (i.e. vertically integrated medical cannabis operators) to co-locate three adult use dispensaries among their eight medical dispensaries. The CCB will vote on the final regulations at its first meeting in September. The CAB and CCB’s hope is to have a live functioning cannabis industry “with all the bells and whistles.”

The Conditional Adult-Use Retail Dispensary (CAURD) License is the first retail dispensary license available to businesses in New York State. These licenses are awarded to justice-involved New Yorkers and their family members. A “justice-involved” individual is someone who has been convicted of certain marijuana-related offenses in New York.

The State hopes to create a foundation to support an equitable industry. The CAB discussed the benefits of being a part of the CAURD Academy, which offers live education, seminars, office-hour meetings, calls with operators from other states, one-on-one mentorship, vendor demos, and access to accountants. Twenty-five licensees have taken part in the Academy thus far.

The CAB also discussed the NY Social & Economic Equity Plan and its recent report analyzing the national landscape of the cannabis market. Between 1980 and 2021, cannabis-related misdemeanor and felony convictions resulted in lost lifetime earnings of approximately $31 billion, and Black and Hispanic people accounted for 83% of those losses.

Acknowledging that it is inherently difficult for small operators to compete against large corporations, regardless of funding, the CAB agreed that New York State must protect its two-tiered market, enforce antitrust laws, protect against predatory practices, and approve regulations that are pro-competition and pro-employee. The CAB noted that cannabis cultivators and farmers want a clear path to licensure, additional Registered Organizations, and a community-driven incubator program.

Cannabis Control Board Meeting

On June 15, 2023, the CCB met in Buffalo to discuss recent Board updates and hear from the public. Chair Tremaine Wright opened the meeting by assuring New York residents that the state is continuing to open more dispensaries, expand access, and further develop New York’s cannabis supply chain.

The CCB approved Resolution No. 2023-23: Consideration of Conditional Adult-Use Retail Dispensaries. This adds 36 CAURD licenses in the Bronx, Brooklyn, Manhattan, Queens, Central NY, Mid-Hudson, and‒for the first time‒the Finger Lakes. Seven dispensaries were approved in the Finger Lakes region. This approval brings the number of CAURD to 251. Wright said these locations will help farmers get more of their product to market.

The Board then presented updates to the market. There are currently 13 open retailers statewide with more than 40 in development. Twenty-one percent of New Yorkers now live in a city with legal cannabis access. Some dispensaries are delivery-only, which is a new form for the state. Consumers are asked to look for a QR code on the window of the dispensary confirming that it is approved by the state. Retail sales are growing; cannabis sales year-to-date are $22.6 million. Some of the dips in sales were attributed to pop-up shops that have transition to brick-and-mortar spaces, which often require a brief shutdown to build out a new space. Product innovations are occurring regularly. Flower sales make up 51% of the revenue, with the rest split between beverages, complex caramels, premium vapes, and more. This widening of product options draws more consumers to the legal market.

The Executive Director reported next that under a newly enacted law, the Office of Cannabis Management (OCM) and the taxing authorities began raids on unlicensed businesses since June 7, 2023. This law allows OCM to take action against businesses selling cannabis without licenses, bolsters OCM authority by conducting regulatory inspections, utilizes court orders to padlock doors if necessary, and allows OCM to seize illicit cannabis.

Each location inspected is issued a notice of violation for selling cannabis without a license. The maximum penalty is $10,000 per day, plus potential additional penalties and consequences if sales continue.

Finally, during the closing comments, board member Reuben McDaniel resigned, presumably as a result of the perceived conflict of interest of his being both a CCB board member and also as the president of DASNY.

March 22, 2023 by Danielle M. Dwyer

CANNABIS INDUSTRY THE LATEST FRONTIER FOR LABOR ORGANIZING EFFORTS

As legal adult-use cannabis continues to spread across the country, so does a movement to unionize cannabis workers. The need for dispensary and cultivation workers has rapidly increased, along with the demand for higher wages, improved benefits, diversity and inclusion efforts, and more.

To date, 21 states and the District of Columbia have legalized adult use marijuana. Bills to legalize adult use marijuana are pending in several other states. According to Forbes, cannabis sales in the United States are estimated to reach $57 billion by 2030. The industry shows no signs of slowing down. Labor unions have taken notice and have seemingly set their sights on the cannabis workforce.

The efforts of labor unions have been buoyed by labor peace agreement (LPA) laws. While LPA laws vary by state, they generally require cannabis companies to take a hands-off approach to union organizing efforts as a condition of doing business in the state. This means the company cannot interfere with organizing efforts. However, unions typically also agree via the LPAs not to interfere with the operations of the business. Alternatively, some LPA laws offer preferential status in licensing applications for companies that enter into LPAs.

California, New York, New Jersey, and Virginia all have varying degrees of requirements with respect to LPAs in their states. Pennsylvania and Illinois do not require LPAs, but the states offer certain advantages to companies who enter into LPAs. Several other states, such as Massachusetts, Connecticut, and Minnesota, are contemplating enacting their own LPA requirements.

The apparent enthusiasm of organizing efforts largely paid off for unions in 2022. According to Bloomberg Law’s NLRB Election Statistics report, unions prevailed in 76% of overall elections in 2022, one of the highest success rates on record. The United Food and Commercial Workers Union, which has dubbed itself “the Cannabis Workers’ Union” representing more than 10,000 cannabis members, won 70% of representation elections in 2022. They are not the only ones. The International Brotherhood of Teamsters, which has unionized some cultivation workforces, won 66% of representation elections in 2022.

While there has been some litigation surrounding LPAs and organizing efforts, to date, most cannabis companies do not appear to be challenging these requirements. This has the strategic benefit of allowing cannabis businesses to get licenses and begin operations, rather than engage in what could be a prolonged legal battle. However, as unions expand and tighten their grasp on cannabis workforces, industry groups may start to fight back.