As previously reported, the Tenth Circuit created a buzz when it found that cannabis companies need to pay overtime under the FLSA even though marijuana is illegal under Federal law.

Since then, another case has emerged from the “weedwork” in the Northern District of California claiming that cannabis companies owe employees: overtime hours, expense reimbursements, and penalties for failing to provide compliant meal and rest breaks.

Given the rise of wage and hour litigation, cannabis companies need to implement proper practices to weed out wage and hour claims. Some things to consider:

  • Classifying workers appropriately. In California cannabis companies who engage in deliveries must classify delivery workers as employees, not independent contractors. And now with AB 5 going into effect January 1, 2020, cannabis companies who want to use contractors for other parts of their business must ensure that they satisfy any of the enumerated exemptions.
  • Overtime. Companies should pay overtime if employees work more than 40 hours in a work week (and more than 8 hours in a day and for the first 8 hours worked on the seventh consecutive day of work in a workweek if in CA). It is important to know the differences between the FLSA and California wage laws.
  • No Off-The-Clock Work. Cannabis companies must compensate employees for all hours worked, implement policies preventing off-the-clock work, and ensure no off-the-clock work is occurring.
  • Compliant Meal Periods. In California, companies need to provide employees who work more than six hours in a day but less than 10 hours, a full 30 minute duty-free meal period before the fifth hour worked. Employees who work more than 10 hours in a day are entitled to a second 30 minute meal break, unless a waiver is at play.
  • Compliant Rest Periods. Companies operating in California also need to provide employees with at least 10 minute rest breaks for every four hours (or major fraction thereof) worked.

If you’re looking for more information on wage and hour issues, you can find it on Seyfarth Shaw’s Wage and Hour blog.

Welcome back to The Week in Weed, your Friday look at what’s happening in the world of legalized marijuana.

Virginia is a state we rarely discuss in The Week in Weed.  A glance at our archives reveals only four mentions all time.  That may be about to change.  The state’s Attorney General hosted a summit on legalizing cannabis in the state.  We’ll be keeping an eye out for further developments.

We all know the old adage, “If at first you don’t succeed, try try again.’  Legalize ND has taken that message to heart.  The group turned in language for a ballot initiative to the North Dakota secretary of state’s office, the first step in getting an initiative on the 2020 ballot.

A bipartisan group of lawmakers sent a letter to Attorney General William Barr asking that the Drug Enforcement Administration allow researchers to purchase products from state-legal dispensaries.  The hope is that more suppliers will allow for better research.

Turning our attention to the world of sports, the XFL will not be testing its players for cannabis when the new league begins play next spring.  And Major League Baseball is considering dropping marijuana testing for minor league players; major leaguers are already not tested for cannabis.

And finally, Canada’s contestant in the Miss Universe pageant wore an outfit representing the nation’s cannabis legalization in the “National Costume” segment of the competition.  “Alyssa Boston wore a green, skirted outfit with a leaf-shaped back piece, a cannabis-leaf crown, and a glittery, leaf-adorned, scepter.”  That must have been a sight to behold.

See you next week!

On January 1, 2020, the recreational use of marijuana will be legal under Illinois law. With the formal enactment of the Cannabis Regulation and Tax Act, it is expected that numerous new companies will be gearing up to enter the Prairie State’s burgeoning cannabis market. As with any new business, one of the first things for owners to consider is the company’s brand, what it will be called and how best to protect it from would-be infringers. Continue Reading Brand Protection for Illinois’ Budding Cannabis Industry

Welcome back to The Week in Weed, your Friday look at what’s happening in the world of legalized marijuana.  There’s lots of news to cover this week, so let’s jump right in.

New Jersey is talking about decriminalizing marijuana.  Regular readers will doubtless recall that legalization failed earlier this year  and that lawmakers are considering a ballot initiative.  Now, Governor Phil Murphy is pushing for statewide decriminalization, as a stop-gap measure.

In other state news, Michigan‘s sales of recreational cannabis began on Sunday, amid long lines of customers.  Illinois‘s day in the sun is not far off; sales begin there on January 1.

Meanwhile, Minnesota has expanded the number of conditions eligible for medical marijuana.  Chronic pain and age-related macular degeneration are on the list.  Patients will be allowed to use new delivery methods, and more centers will open in August 2020.

And in Wisconsin, Governor Tony Evers signed legislation making the state’s pilot hemp program permanent. Also, its rules now align with the 2018 farm bill.

On the federal level, the Food and Drug Administration sent some reminder notices to companies selling CBD products illegally.  For our take on that correspondence, see here.

In banking news, the Federal Reserve released guidance this week allowing banks to work with the hemp industry.  Financial institutions will no longer have to file suspicious activity reports on customers operating a hemp business.

Turning to overseas news, Barbados is moving towards legalizing medical cannabis.  So is BrazilNew Zealand is looking at legislation that would enforce recreational marijuana laws, if the voters choose to legalize next year.  And in the U.S. Virgin Islands, the governor is hoping the tax revenue from legalization would help shore up the government employee pension plan.

Finally, if you’re in the market for a Christmas tree, you might want to do your shopping sooner rather than later.  Some farmers are abandoning trees for hemp, causing shortages in the market.

See you next week!

On November 18, 2019, Florida Senator Lori Berman (D) introduced Senate Bill 962, which proposes to provide job applicants and employees who use medical marijuana various protections in employment. If enacted, Florida would join the growing number of states to pass laws with similar protections, including most recently in Illinois. Continue Reading Florida Senator Introduces Bill Providing Broad Employment Protections to Medical Marijuana Users

In its largest mass enforcement action involving cannabidiol (CBD) yet, the U.S. Food & Drug Administration (FDA) announced on November 25 the issuance of 15 warning letters to various companies for illegally selling products containing CBD.  In addition to the letters, the FDA published a revised Consumer Update detailing safety concerns about CBD products more broadly.  Notably, the FDA commented that it “plans to provide an update on its progress regarding the agency’s approach to these [CBD] products in the coming weeks.”  Previously, the FDA had indicated it would generate a report by this Fall.  Finally, the FDA reiterated that “[i]t is currently illegal to market CBD by adding it to a food or labeling it as a dietary supplement.”  Unlike hemp derivatives– hulled hemp seed, hemp seed protein powder, and hemp seed oil–which were added to the FDA’s Generally Recognized as Safe (GRAS) inventory, the FDA also confirmed that, at this time, CBD is not generally recognized as safe for use in human or animal food. Continue Reading FDA Stresses CBD Safety Concerns in 15 Warning Letters and Revised Consumer Update

Welcome back to The Week in Weed, your Friday look at what’s happening in the world of legalized marijuana.

Those in the marijuana industry in California will face a higher tax bill in January.  The 15% tax rate will remain the same, but it will be based on a markup rate of 80%, rather than the current 60%.

We’ve reported previously on groups pushing for a legalization initiative in Florida.  Not everyone in the Sunshine State is in favor of legal cannabis, however.  Floridians Against Recreational Marijuana are organizing against legalization.

What’s the latest in the world of hemp transport?  Glad you asked.  The governor of Idaho (which has not yet legalized hemp) signed an executive order allowing the transport of hemp across state lines.  Sadly, that won’t really help much if you’re trying to take hemp from Colorado to Minnesota.

In federal news, the U.S. Substance Abuse and Mental Health Services Administration has prohibited the use of medical marijuana as a treatment for opioid addiction.  At present, only two states, Pennsylvania and New Mexico, list opioid addiction in their medical cannabis qualifying conditions lists.

And speaking of New Mexico, medical marijuana might not be just for humans anymore!  The state’s Medical Cannabis Advisory Board will consider petitions to allow cannabis use for dogs with epilepsy when they meet next, in December.

In keeping with the holiday spirit, we would like to take a moment to thank you, our readers.  It’s a pleasure to provide you with this post every week, and we hope you are enjoying a lovely long weekend.

The Illinois General Assembly passed SB 1557, revising the language of the Recreational Cannabis Law to reduce but not completely eliminate employer liabilities.

As we previously blogged, the Illinois Cannabis Regulation and Tax Act (410 ILCS 705) (the “Legalization Act”) will legalize recreational cannabis for Illinois adults starting January 1, 2020. The Legalization Act specifically allows Illinois employers to enforce “reasonable zero tolerance or drug free workplace policies, or employment policies concerning drug testing, smoking, consumption, storage, or use of cannabis in the workplace or while on call provided that the policy is applied in a nondiscriminatory manner.” The Act permits employers to prohibit employees from being under the influence of or using cannabis in the employer’s workplace or while on call. Further, the Act (i) allows employers to discipline or terminate an employee who violates the employer’s workplace drug policy, and (ii) specifically insulates employers from liability for disciplining or terminating employees based     on the employer’s good faith belief that the employee was either impaired at work (as a result of using cannabis) or under the influence of cannabis while at work.

However, the Act raised questions about new potential liabilities for Illinois employers. First, the Legalization Act amended the Illinois Right to Privacy in the Workplace Act, which prohibits discrimination against employees for their use of “lawful products” outside of work (defined as lawful products under state law), including cannabis and marijuana. This created a potential cause of action for applicants who test positive on a for marijuana at the post-offer, pre-employment stage. Because the applicant has not started working, such a test could only detect marijuana use outside the workplace. Return-to-duty drug testing presented similar liabilities, typically detecting off duty drug use during a leave.

Employers who test current employees, e.g., post-accident or based on reasonable suspicion, faced new exposure if a discharged employee claimed the employer lacked a “good faith belief” that the employee had been impaired by or under the influence of cannabis.  For example, if the employer discharged some employees who tested positive but not others, a discharged employee could claim the employer lacked a “good faith belief” regarding impairment. Alternatively, because there is no legally or medically accepted definition of what constitutes his or her “impairment” (or being “under the influence” of marijuana), the employee could assert he was not in fact impaired at work, and that a positive test result alone cannot prove otherwise.

With the January 1, 2020 deadline approaching, Illinois business community representatives raised numerous concerns with lawmakers. The Illinois Chamber of Commerce proposed revising the Act to clarify permissible drug testing and to limit possible causes of action against employers. Both Houses have passed SB 1557, a bill which amends and clarifies many portions of the cannabis-related laws. The Act as amended would say:

Nothing in this Act shall be construed to create or imply a cause of action for any person against an employer for:

(1) actions taken pursuant to an employer’s reasonable workplace drug policy, including but not limited to subjecting an employee or applicant to reasonable drug and alcohol testing, reasonable and nondiscriminatory random drug testing, and discipline, termination of employment, or withdrawal of a job offer due to a failure of a drug test.

SB 1577 Sec. 705-10(50)(e)(1). This new provision is separate and apart from the Act’s safe harbor for employer decisions based on the employer’s good faith belief that an employee was impaired or under the influence of marijuana while performing his or her job duties.

For post-accident, random, or other forms of current employee testing, the Legalization Act now more effectively limits employer liability by expressly limiting causes of action based on discipline or termination on account of a failed drug test. However, the language regarding an employer’s “good faith belief” remains in the statute. Employees may therefore still pursue litigation alleging such a belief is required for lawful termination, and that the employer lacked this requisite belief in discharging the plaintiff.

With regard to pre-employment, post-offer testing, revisions to the Legalization Act seemingly eliminate employer liability for revoking offers due to failed drug tests. The Legalization Act as amended would explicitly permit “withdrawal of a job offer due to a failure of a drug test.” Section 705-10(50)(e)(1). While the original law amended the Illinois Right to Privacy in the Workplace Act to allow for discrimination claims founded on the use of “lawful products” (e.g. cannabis) outside work, the Right to Privacy in the Workplace Act specifically invokes 705-10(50)(e)(1) of the Legalization Act. Consequently, employer liability for withdrawing offers to applicants who test marijuana-positive – under either the Legalization Act or the Right to Privacy in the Workplace Act – has been effectively eliminated.

Governor Pritzker has not yet signed the bill into law. The Governor has sixty days in which to sign or veto or veto the bill; otherwise it becomes law effective January 13, 2020 – twelve days after the Legalization Act’s January 1, 2020 effective date. We do not know whether Governor Pritzker will take action on the amendments before the New Year. Regardless, we do not anticipate courts enforcing the Legalization Act as regards employment during early January with the amendments potentially taking effect two weeks later. We will continue to monitor developments in this area closely, and will keep employers informed.

Welcome back to The Week in Weed, your Friday look at what’s happening in the world of legalized marijuana.

Let’s start off on Capitol Hill, where the MORE Act made its way out of the House Judiciary Committee this week.  This bill would end the federal prohibition of cannabis and remove marijuana from the Controlled Substances Act.  Of course, we’re still a long way from legalization; see the iconic “I’m Just a Bill” video, if you need a refresher on how a bill becomes a law.

Moving on to the state of New Jersey, you will remember that the legislature was unable to pass a legalization bill earlier this year.  Lawmakers have now decided to hand the question to the voters with a ballot initiative.

In Michigan, the state has issued its first recreational cannabis licenses.  Sales are expected to start on December 1.

Meanwhile in hemp news, pollen drift is causing problems for hemp and marijuana growers.  The science behind this is beyond the scope of this blog, but suffice to say, the mingling is not good.

And in political news, marijuana was a topic at Wednesday night’s Democratic Presidential debate.  Senator Cory Booker (D-NJ) brought up former Vice President Joe Biden’s views on cannabis legalization.  Biden indicated he favored decriminalization and expungement, along with further research on marijuana.  Biden has previously expressed concerns that cannabis is a “gateway drug.”

See you next week!

Businesses should take note of recent developments in the CBD space. Consumer protection regulatory agencies issued another joint warning to a company selling CBD products making allegedly unsubstantiated claims. And, the FDA continues to stick to its public position that it is working toward both understanding the impact of CBD on users and crafting an effective regulatory framework. Despite this activity, Congressional leaders are still nipping at the heels of the FDA. Senator Chuck Schumer called on the FDA to issue and implement its CBD regulatory framework as soon as possible, and to report back to his office on its progress to date. In the interim, businesses will be left wondering what the rules of the road are. Continue Reading FDA and FTC Issue Joint Warning Letter For CBD Products and Senator Schumer Applies Pressure on FDA to Regulate CBD