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Updated Oct 24, 2023

Cannabis at Work: How Employers Are Reacting to the Legalization of Marijuana

Cannabis is legal in 39 states for medical use and 18 states for recreational use. But just because it's legal doesn't mean it's accepted at work.

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Max Freedman, Business Operations Insider and Senior Analyst
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Although cannabis remains a federally illegal substance, the number of states that permit its use is growing rapidly. Currently, 18 states (plus Washington, D.C.) have marijuana laws in place that permit the cultivation, possession and use of marijuana for all adults, while 39 states have legalized some form of a medical marijuana program. These policy developments have created a new challenge for employers that maintain drug testing policies either as part of the employee onboarding process or a periodic condition of employment.

Naturally, employers have a financial interest in ensuring that employees are not coming to work intoxicated, but cannabis use off the clock would result in a failed drug test as well. Employers are responding to these shifting laws in a variety of ways – some much more strict than others.

How cannabis laws have changed

In two decades, cannabis legalization has gone from a fringe issue to a national discussion. In the 1990s, only five states plus Washington, D.C., had marijuana laws permitting medical use. That number gradually crept up to eight states plus D.C. after the turn of the 21st century, yet legalized adult-use cannabis (often referred to as recreational marijuana) remained unheard of.

It wasn’t until 2012, when Colorado voters passed Amendment 64, that adult-use cannabis was legalized for the first time. Since then, 17 other states plus D.C. have joined the fold, adopting adult-use legalization laws of their own. Most recently, states on the East Coast have adopted legalization measures, including Massachusetts, New York and New Jersey.

In the same time frame, the number of states in which residents can obtain a medical marijuana card has grown to 39. While cannabis remains an illegal substance under the Controlled Substances Act, the federal government has largely taken a states-first approach to regulating the cannabis industry that was born as a result of the changing laws. However, there are cannabis reform bills circulating on Capitol Hill now, including the Marijuana Opportunity Reinvestment and Expungement (MORE) Act, which would federally legalize cannabis.

Did You Know?Did you know
Cannabis is one of the fastest-growing industries in the U.S. and could reach $30 billion in market value by 2025.

Cannabis legalization and workplace drug policies

These rapid changes have left many employers in a precarious position. Many employers maintain zero-tolerance policies on using drugs (including marijuana) in and outside the workplace and, naturally, don’t want their employees showing up to work intoxicated.

The legality of cannabis is not the issue; certainly, employees drinking on the job is grounds for termination in any company, despite alcohol’s legal status. However, determining whether employees and job applicants are using cannabis on the job or on their own time is more difficult, said Matt C. Pinsker, a former adjunct professor of homeland security and criminal justice at the L. Douglas Wilder School of Government and Public Affairs of Virginia Commonwealth University.

“For employers, a key issue involving marijuana is not legalization, but workplace safety,” said Pinsker, who is also a criminal defense attorney. “The problem for employers is that impairment, because of marijuana, is usually much more difficult to detect and test for than alcohol. Unlike alcohol, it is very difficult for employers to determine if a positive drug test for marijuana is the result of drug usage during work or on non-work hours, so it is logistically simpler to just have an outright ban.”

But, in some cases, state law makes workplace drug policy more complicated than a simple blanket ban on marijuana use.

Adult-use cannabis vs. medical cannabis

There is a significant distinction between adult-use cannabis, a leisurely activity of choice, and medical cannabis, which is prescribed as a medicine to patients who use a medical marijuana card to get cannabis for a variety of conditions outlined under state laws. Some states bring that distinction into the workplace, and it can impact employers’ drug policies.

“Employers must understand their rights and duties when it comes to drug testing, because state laws are evolving,” said David Reischer, attorney and CEO of “Marijuana is still federally illegal, and employers generally are allowed to have a drug-free workplace and to enforce zero-tolerance policies.”

However, it’s critical that you, as a small business owner, know whether any of your employees are medical marijuana patients and if your state’s laws protect their usage of cannabis in the workplace or against the failure of employer-mandated drug tests, Reischer added.

“A company needs to be careful when disciplining medical marijuana users,” said Reischer. “Several states have specific laws protecting medical cannabis patients from employment discrimination. Typically, employers can require drug testing before employment and at random times, so long as there is no discrimination against medical marijuana users [who] are legally allowed cannabis for medicinal reasons.”

Further muddying workplace drug policies is the question of employee morale. Many employees argue that legal usage of cannabis off the clock should not be grounds for their termination if they fail an employer drug test. Employers need to keep in mind the attitude of their workforce when making disciplinary decisions related to drug testing.

How employers are responding

How are employers responding to the change in laws and attitudes? Some employers are maintaining tight restrictions and zero-tolerance policies, even for off-the-clock cannabis consumption. Others are relaxing their policies and disciplining employees for failed drug tests only when it’s clear their productivity has been negatively impacted. Some employers even allow employees to openly consume cannabis on the clock.

Maintaining zero-tolerance drug policies

According to Derek Riedle, owner of cannabis lifestyle company Civilized, the ongoing federal prohibition of cannabis has prompted many employers to maintain strict workplace drug policies, sometimes even for medical cannabis patients.

“We’re seeing more and more employers revisit their workplace rules around cannabis, but because it remains illegal at a federal level in the U.S., most companies still have a zero-tolerance policy,” Riedle said. “It’s more common to see employers loosen up their regulations for patients with a valid medical cannabis card, but even that is not guaranteed.”

Tying enforcement of company drug policy to job performance

In his cannabis lifestyle company, Riedle permits employees to periodically step away for a consumption break, especially if it prompts a burst of creativity. Other employers, however, have concerns surrounding cannabis consumption as it relates to employee productivity and have enforced their policies accordingly.

“As an employer, I have no plans to relax any drug policies in and around my work environment as we move forward in this new era of cannabis tolerance and legality,” said Abtin Hashemian, owner of a Los Angeles-based Subway franchise. “[Against] the backdrop of legalization in California, I’ve had to terminate employment for several of our employees due to performance-related issues stemming from cannabis intoxication while on the clock.”

Hashemian said his franchise’s high-performance and results-oriented culture is important to him, so he feels obligated to act when productivity is impacted. However, Hashemian added that he is certain many well-performing employees consume cannabis off the clock and that he is ultimately indifferent to it as long as their work remains up to par. When it comes to medical patients, he added, employers should always consult with an attorney to determine the best approach.

Are you a small business owner looking to develop your own policies for your employees? Learn how to create an employee handbook from scratch and what a disciplinary action policy should entail.

How marijuana use can impact job safety

The conversation around marijuana in the workplace takes a completely different shape in occupations with a higher likelihood of on-the-job employee injuries.

According to a study in the Journal of Occupational and Environmental Medicine, there may be a statistical correlation with marijuana use and an increased likelihood of workplace accidents. This risk is amplified for workers whose jobs involve driving vehicles – especially public transit drivers – as several studies have correlated marijuana intoxication with impaired driving ability. 

The risk often associated with marijuana use and job safety have informed workers’ compensation laws in several states. In Wisconsin, for example, if an employee is injured in the workplace while intoxicated under any controlled substance, including marijuana, then the employer can reduce the workers’ comp indemnity benefits by 15%, with a maximum allowed reduction of $15,000. In Michigan, workplace injuries sustained by employees while intoxicated aren’t covered by workers’ comp at all.

Although marijuana in the workplace can be concerning for safety-sensitive positions, it may safeguard against workers’ comp claims in other occupations. According to a study published in the journal Health Economics, states with medical marijuana programs saw a 7% decrease in workers’ comp claims. This drop may stem from medical marijuana treating many of the same illnesses and symptoms that employees use workers’ comp claims to address.

Key TakeawayKey takeaway
Using marijuana can impact your job safety, even though it's legal in a number of states. Especially if you are an at-will employee, you'll want to be careful and read up on your company's and state's policies.

Trial-and-error period of changing cannabis laws

The states are often referred to as laboratories of democracy, and we’ve seen this type of trial-and-error approach in cannabis legalization as each state builds on the experiences of its forerunners. As cannabis legalization becomes normalized and more widespread, employers will have to experiment with different approaches that suit their industry, brand and workplace culture.

Much as with other workplace policies, there is no right or wrong answer. The best approach will be different for each company; it’s ultimately whichever arrangement ensures workplace safety, productivity and high employee morale.

As the cannabis legalization debate moves from the states to the halls of Congress, workplace drug policy on cannabis is something more employers should think about.

Adam Uzialko and David Cotriss contributed to the writing and reporting in this article. Source interviews were conducted for a previous version of this article.

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Max Freedman, Business Operations Insider and Senior Analyst
Max Freedman has spent nearly a decade providing entrepreneurs and business operators with actionable advice they can use to launch and grow their businesses. Max has direct experience helping run a small business, performs hands-on reviews and has real-world experience with the categories he covers, such as accounting software and digital payroll solutions, as well as leading small business lenders and employee retirement providers. Max has written hundreds of articles for Business News Daily on a range of valuable topics, including small business funding, time and attendance, marketing and human resources.
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