Adult-use cannabis legalization was passed in New York State when Governor Andrew Cuomo signed the Marijuana Regulation & Taxation Act (the “MRTA”) into law on March 31, 2021, after the Governor had previously attempted to include the legalization of adult-use cannabis in his last three budget proposals. The MRTA is expected to create significant economic opportunities for New Yorkers and the State, which should help the State generate some much needed tax revenue  to address the budget shortfalls resulting from the Covid-19 pandemic. The Governor’s office estimates that legalization could create 30,000 to 60,000 new jobs and the tax collections from the adult-use cannabis program could reach $350 million annually.

In order to raise the projected revenue while furthering the stated policy goals of helping those from disproportionately impacted communities and community reinvestment, New York took a novel approach to taxation of cannabis. The Act implements a new cannabis tax structure imposing a tax per milligram of tetrahydrocannabinol, better known as THC, the active chemical found in cannabis, with a tiered rate structure depending on final product type. Section 493(a) of the MRTA provides that adult-use cannabis products sold by a distributor to a retailer will be taxed at the following rates based upon the amount of total THC, as reflected on the product labels:

(1) cannabis flower at five-tenths of one cent (0.5) per milligram;

(2) concentrated cannabis at eight-tenths of one cent (0.8) per milligram; and

(3) cannabis edible product at three cents (3.0) per milligram.

In addition to the unique tax imposed by product type, Subsections (b) and (c) of Section 493 further impose a retail tax of nine (9%) percent upon the sale of adult-use cannabis products, as well as an additional four (4%) percent going to the local cities, counties, towns, or villages.

Of the 18 states that have legalized recreational marijuana to date, Illinois is the only other state to incorporate a potency based tax structure, imposing a 25% tax rate for cannabis products with THC concentration above 35%, and only 10% for products that fall below the threshold. While this hybrid product-specific taxation model has yet to be widely tested across the patchwork of individual state cannabis markets and frameworks, there are similarities to the taxation of the alcohol industry. However, taking such an unprecedented and granular approach to cannabis taxation could further delay the much-anticipated start date for legal sales, already unlikely to occur for close to two years, by adding an administrative hurdle requiring product-specific testing and potency labeling by regulators.

There is much still unknown about the timing, specific regulations, and licensing requirements to be promulgated by the newly created Office of Cannabis Management (OCM), governed by a Cannabis Control Board, which will oversee and implement the law, and whether there may be administrative complications arising from the taxation model. In the event logistical or other administrative difficulties complicate the rollout, it should be noted that the MRTA provides that the Board, no later than January 1, 2023, will be required to make recommendations to lawmakers regarding “the appropriate level of taxation of adult-use cannabis” and could potentially address any concerns with the taxation model.

Following closely on the heels of both New York and New Jersey enacting recreational cannabis laws, New Mexico and Virginia have enacted their own laws allowing adults to use cannabis for recreational purposes. Virginia went further by enacting the first law providing employment protections to individuals using cannabis oil. Although not immediately effective, New Mexico and Virginia employers should immediately assess the implications of the laws on their current policies and drug testing practices.

Virginia’s Cannabis Oil Law

In late March 2021, Virginia amended the state’s medical cannabis law to prohibit discrimination against lawful users of medical cannabis oil, which is defined to mean: any formulation of processed cannabis plant extract, which may include oil from industrial hemp extract acquired by a pharmaceutical processor pursuant to state law; or a dilution of the resin of the cannabis plant that contains at least five milligrams of cannabidiol (CBD) or tetrahydrocannabinolic acid (THC-A) and no more than 10 milligrams of delta-9-tetrahydrocannabinol (THC) per dose. The term does not include industrial hemp, as defined in state law, that is grown, dealt, or processed in compliance with state or federal law, unless it has been acquired and formulated with cannabis plant extract by a pharmaceutical processor.

The law, which becomes effective July 1, 2021, states:

  • No employer shall discharge, discipline, or discriminate against an employee for their lawful use of cannabis oil pursuant to a valid written certification issued by a practitioner for the treatment or to eliminate the symptoms of the employee’s diagnosed condition or disease pursuant to the state’s cannabis oil law.
  • Notwithstanding this prohibition, the law does not (i) restrict an employer’s ability to take any adverse employment action for any work impairment caused by the use of cannabis oil or to prohibit possession during work hours, (ii) require an employer to commit any act that would cause the employer to be in violation of federal law or that would result in the loss of a federal contract or federal funding, or (iii) require any defense industrial base sector employer or prospective employer, as defined by the U.S. Cybersecurity and Infrastructure Security Agency, to hire or retain any applicant or employee who tests positive for THC in excess of 50 ng/ml for a urine test or 10 pg/mg for a hair test.

Virginia Recreational Cannabis Law

Beginning on July 1, 2021, the Virginia Cannabis Control Act (CCA) will allow those 21 years of age or older to possess up to one ounce of cannabis and to cultivate up to four cannabis plants per household for personal use. Retail sales will not begin until January 1, 2024. However, some advocates continue to push for an earlier start to retail sales, particularly for already-established dispensaries.

The CCA does not directly address drug-free workplaces, though it acknowledges that cannabis causes impairment and prohibits driving while under the influence of cannabis. We have no reason to doubt that employers can still prohibit cannabis and impairment at their worksites, but we will monitor developments in that state to see whether it may issue further guidance in this area.

New Mexico Recreational Cannabis Law

On April 12, 2021, New Mexico Governor Michelle Lujan Grisham signed the state’s recreational cannabis law. It is effective in late June 2021. While the law does not provide employment protections to recreational users, New Mexico employers still must be mindful of the protections afforded to those using cannabis for medicinal purposes.

The law states that it does not:

  • Prohibit an employer from taking an adverse employment action against an employee who is impaired by, possessing, or using cannabis at work or during work hours.
  • Require an employer to commit any act that would cause it to be noncompliant with or in violation of federal law or federal regulations or that would result in the loss of a federal contract or federal funding.
  • Prevent or infringe on an employer’s rights to adopt and implement a written zero-tolerance policy regarding cannabis use, which may allow for the discipline or termination of an employee on the basis of a positive drug test that indicates any amount of THC or its metabolites.

The law does not apply to employees who are subject to the provisions of the Federal Railway Labor Act and should not be construed to interfere with any collective bargaining agreement between the employer and a labor organization representing its employees.

Next Steps for Employers

Employers should monitor developments surrounding these new laws and stay aware of regulatory developments that further address impacts the laws may have on workplaces in New Mexico or Virginia.  Employers also should consider reviewing and revising their drug and alcohol free workplace policies and practices to ensure compliance in New Mexico, Virginia and the many other states with such laws.

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

The big news this week is that New Mexico legalized adult-use marijuana.  Mississippi’s medical cannabis program faces a state Supreme Court challenge.  And South Dakota’s program is also having its day in court.  Idaho may legalize hemp.  And finally, Uber may get into the marijuana delivery business.

New mexico

New Mexico Governor Michelle Lujan Grisham (D) signed a bill legalizing adult-use cannabis this week.  This brings the total to 21 states and territories where marijuana is fully legal. Possession of up to two ounces and home grow will be allowed as of June 29, with sales to begin in April 2022.

mississippi

Not that legalization will necessarily lead to smooth sailing.  In fact, sometimes it lands you in court.  Take Mississippi, for example.  Medical marijuana won support from 70% of the voters in November, a hefty majority.  So what’s the problem?  Due to the legislature’s failure to update the state’s ballot initiative rules, opponents of the bill make the argument that the initiative is invalid.  The state’s Supreme Court promised to rule soon – further bulletins as events warrant.

south dakota

And it’s not just Mississippi.  The South Dakota Supreme Court will hear oral argument in a challenge to the state’s adult-use ballot initiative later this month.  Opponents claim that the initiative covered two topics: legalization and setting up a way to legalize.  This, they argue, violates the law requiring ballot initiatives to cover one topic only.

idaho

Remember when the federal government legalized hemp?  Did you think the states would have legalized the crop by now?  Well, if you did, you’d be mostly right.  But there’s always one in a crowd, and when it comes to hemp, Idaho is that one.  That could be about to change.  This week, the legislature passed a bill allowing hemp, which is on its way to the governor’s desk.

and finally

After more than a year of COVID, we’re all gotten pretty used to having things delivered.  But what about cannabis?  Uber CEO Dara Khosrowshahi says the company would start bringing cannabis products to your doorstep, if federal regulations permitted.

Stay safe and be well everyone – we’ll see you next week!

On March 31, 2021, New York legalized the recreational use of cannabis, enacting “The Marijuana Regulation and Taxation Act.”

This new law legalizes personal possession of cannabis, home cultivation of cannabis, and allows for the expungement of certain marijuana convictions. Importantly, it also modifies New York Labor Law to impose new restrictions on employers.

New York’s cannabis law provides employment discrimination protection for cannabis users.  Cannabis use is now part of the “off-duty” conduct for which employers cannot take an adverse employment action, similar to off-duty political activities and the like.  Under the amended Section 201-d(2) of the Labor Law, it is now unlawful for an employer to refuse to hire, terminate, or “otherwise discriminate” against an individual for that individual’s use of cannabis, as long as it is within state law.

The new cannabis law carves out three exceptions for employers to take an employment action because of an individual’s cannabis use. Two of the exceptions allow an employer to take an employment action based on an individual’s cannabis use where required by federal or state law, or where federal contracts or federal funding are implicated.

The third exception allows employers to discipline or terminate employees who are impaired at work.  Employers are allowed to take an adverse employment action against an employee who, while at work, “manifests specific articulable symptoms” of impairment from the use of cannabis.  These symptoms could either hurt the employee’s work performance or generally interfere with the employer’s safe and healthy work place.

As a consequence, employers cannot rely on drug tests nor can they rely on knowledge that an employee uses cannabis outside of work to discipline their employees.  Instead, managers and supervisors should be aware of the physical symptoms of possible cannabis impairment.  Employers should also consider adding policies for reporting symptoms of cannabis impairment so that the business is prepared to be able to take adverse employment action if an employee exhibits symptoms of cannabis impairment.

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

Federal legislation to legalize cannabis is under consideration.  In state news, Virginia moved up its timeline to legalize possession and home grow.  New York launched a cannabis control website.  We take a look at what’s happening in Montana.  South Carolina probably won’t legalize medical marijuana.  And finally, only cannabis could unite Snoop Dogg and Charles Koch.

federal legislation

Senate Majority Leader Chuck Schumer (D-NY) supports federal decriminalization that would allow states to legalize.  Senators Cory Booker (D-NJ) and Ron Wyden (D-OR) are working with Schumer to draft a bill.  So where is the President on this?  According to Vice President Kamala Harris, the administration has been too busy to give the matter much attention.  Seems like Congress needs to do the heavy lifting, if they want a bill enacted.

Virginia

The Virginia legislature agreed to Governor Ralph Northam’s changes to its marijuana bill on Wednesday, moving up the timeline for legalization.  This means that possession and home cultivation of small amounts of cannabis become legal on July 1 of this year.  Retail sales, however, won’t begin until 2024.

new york

The Empire State’s Office of Cannabis Management website is up and running.  The governor’s office announced the website launch late last week.  It educates the public on state regulations, and provides information on both medical cannabis and adult-use cannabis licensure.

montana

Regular readers doubtless recall that Montana was one of several states to legalize marijuana in November.  So how’s the implementation going in Big Sky Country?  It’s complicated.  The House of Representatives passed three different bills this week that would tax sales at different rates and use the money raised for different purposes.  Now the bills move onto the Senate.  Further bulletins as event warrant.

south carolina

The prospects for medical marijuana legalization in South Carolina look bleak.  So what’s the holdup?  Sen. Greg Hembree (R-Myrtle Beach), who opposes the bill, announced this week that he will block the legislation.  Rules require a three-fifths vote to override this move, and the bill’s backers are doubtful they can muster that much support.

and finally

Snoop Dogg’s work with Martha Stewart is well known to fans of cooking shows and The Puppy Bowl.  But that unlikely pairing is nothing in comparison to his latest strange bedfellow.  The rapper started the Cannabis Freedom Alliance with Charles Koch, the libertarian billionaire known for opposing environmental regulation.  On marijuana however, the Chairman and CEO of Koch Industries is all green.  The third member of the founding group is criminal justice reform advocate Weldon Angelos, head of the Weldon Project.

Big Takeaways

Recently, when dismissing a former employee’s claims brought under the Americans with Disabilities Act (ADA), the District of Connecticut issued two welcome reminders to employers. First, to set out an ADA disability discrimination claim, a plaintiff must allege that the employer was aware of the plaintiff’s disability. Second, and just as important, the ADA does not provide protection against discrimination based solely on medical marijuana use or require accommodation of medical marijuana use (although state laws may provide some protections).

Case Summary

In Eccleston v. City of Waterbury, Case 19-cv-1614 (D. Conn. Mar. 22, 2021), Plaintiff was a firefighter for the City of Waterbury.  According to the Complaint, in 2017, Plaintiff was diagnosed with Post-Traumatic Stress Disorder (PTSD). Sometime thereafter, Plaintiff informed his battalion chief that he was thinking of applying for a medical marijuana card. Plaintiff was told that doing so “would not be a good idea.” Even so, Plaintiff obtained a marijuana card in January 2018. Critically, when talking to his battalion chief, Plaintiff did not mention his PTSD diagnosis, or that he sought a medical marijuana card for the purpose of treating a purported disabling condition.

Continue Reading Firefighter’s Federal Disability Claims Based on Pot Use Snuffed Out by Connecticut District Court

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

It’s been a big week.  New York legalized cannabis.  New Mexico legalized cannabis.  Virginia may speed up legalizing cannabis.  The Biden administration is getting pushback on how it treats staffers who used cannabis.  North Dakota won’t legalize cannabis, via legislation anyway.  And finally, there’s a new version of “Chopped,” with a green ingredient.

new york

We’ve been reporting that New York is about to legalize for so long that it would take a whole blog post to list every mention.  Well, yesterday it happened.  The legislature passed a bill, and Governor Cuomo (D) signed it.

new mexico

Some very big news that may get lost in the hoopla over New York is that New Mexico also legalized.  Like New York, the legislature passed a bill, and sent it to Governor Lujan Grisham (D) for her signature.

virginia

The legislature passed a legalization bill in late February, so you might think this story ended then.  Not so fast, or, actually, not fast enough.  Governor Northam (D) wants Virginians to be able to possess and grow cannabis by July of this year, rather than waiting until 2024.  The legislature will consider this idea when it reconvenes later this month.

biden staffers

We reported last week that some members of the Biden staff got into trouble over past marijuana use.  House Democrats sent a letter to the President late last week, asking him to reconsider the administration’s employment policy.

north dakota

Where would this column be without the Dakotas?  We’ve mentioned one or the other in eight of our posts this year alone.  This week, it’s North Dakota’s turn in the spotlight.  After a legalization bill went down to defeat last week, Senator Dick Dever, (R-Bismarck) introduced a bill to put the question to voters in 2022.  Needless to say, further bulletins as events warrant.

and finally

The Food Network has a new edition of its popular “Chopped” show.  “Chopped 420” will feature cannabis among the mystery ingredients.

Stay safe and be well everyone – we’ll see you next week!

With the cannabis industry’s growth into a multi-billion dollar industry, employing about 321,000 individuals, comes the intensification of focus from unions viewing the industry as a large growth opportunity.  Much of the union organizing to date has been led by the United Food and Commercial Workers International Union, which launched a cannabis organizing campaign in 2011.

Since October 2020, efforts to unionize workers in the cannabis industry kicked into overdrive.  Ten cannabis facility workers voted to unionize in those five months throughout the country in Rhode Island, California, DC, Massachusetts, Pennsylvania, New Jersey, and Illinois.

This past month in Chicago, 40 employees at Sunnyside Cannabis Dispensary in Chicago’s Lakeview neighborhood became the first dispensary workers in Illinois to ratify a union contract. Additionally the state’s first cannabis union contract was ratified in December by more than 180 workers at the Cresco Labs cultivation center in Joliet.

Continue Reading Unionization Efforts Spreading Throughout the Cannabis Industry

TBT readers are invited to join Seyfarth Shaw LLP’s upcoming webinar, “High Times in NJ: New Recreational Marijuana Law Limits Employers’ Options to Prevent Impairment.”

Register here

There is no cost to attend, but registration is required.

Thursday, April 8, 2021
1:00 p.m. to 2:00 p.m. Eastern
12:00 p.m. to 1:00 p.m. Central
11:00 a.m. to 12:00 p.m. Mountain
10:00 a.m. to 11:00 p.m. Pacific

Recreational and medical marijuana laws are sweeping the nation. Most recently, New Jersey passed a recreational marijuana law with more employment protections for users than any other state. With more than ten states’ experience to draw upon, plus all we have learned from court decisions providing protections to medical marijuana users, employers are increasingly concerned and confused about best practices for minimizing the risk of litigation while avoiding the safety hazards and accidents that might occur as a result of marijuana use. While New Jersey and other laws protect employers’ rights to prohibit marijuana possession and use at the workplace, they nevertheless create potential liabilities for employers who enforce existing policies, employ common drug testing methods, and not consider state disability discrimination laws. This webinar will provide practical advice on how best to address this new wave of laws related to medical and recreational marijuana use.

Learn more about the program and speakers here.

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

Often, our news summary focuses on the states – they seem to have all the action.  This week, however, we start with news from the federal government.  The SAFE Banking Act is back.  There’s new legislation that would allow cannabis companies to buy insurance.  And the Biden administration takes action against staffers who have used marijuana.  We have updates on two states moving towards legalization: New Mexico and New York.  And finally, Arizona is offering edibles to those who get their COVID vaccinations.

safe banking act

A bipartisan group of Senators introduced the Secure and Fair Enforcement (SAFE) Banking Act earlier this week.  The legislation never came up for a vote in the Senate in the 116th Congress, but that chamber is now under new management. Will it be more successful this time around?

insurance for marijuana businesses

Another bill attracting bipartisan support is The Clarifying Law Around Insurance of Marijuana (CLAIM) Act.  This would allow businesses to purchase insurance products, and allow insurance companies to sell them, without fear of federal penalties.  It would also allow companies who provide space or services to the cannabis industry to do so openly, without fear of losing their insurance.

biden staffers

One of the week’s biggest stories centers around Biden administration staffers, who were fired, suspended or asked to work in a remote setting, due to previous cannabis use.  Despite numerous states’ having legalized or moving rapidly in that direction, the federal prohibition poses problems for security clearances.

new mexico

Governor Michelle Lujan Grisham (D) announced that a special legislative session will convene next week to consider a cannabis legalization measure.  Unable to debate the bill in the regular session that just ended, the Governor said she wanted to have more time to deal with amendments.  “…rushing through amendments in the final hours of a session, when there’s a mountain of other very important work to be done, is not the right way to do something of this magnitude.”

new york

The “Will They or Won’t They” plot line that has plagued New York’s efforts to legalize for years may finally be coming to an end.  News outlets are reporting that Governor Andrew Cuomo (D) and lawmakers reached a deal to allow adult-use cannabis.  A vote could come as soon as Saturday, but next week may be more likely.  Once again, further bulletins as events warrant.

and finally

We’ve reported before on marijuana-related incentives for people to get their COVID vaccines.  Who could forget DC Marijuana Justice’s Joint for Jabs program?  Now, The Mint, an Arizona dispensary chain, is offering edibles to those who present a vaccination card at one of their stores.

Stay safe and be well everyone – we’ll see you next week!