Access to legal medical cannabis is a blessing for those in need of alternative medical treatments and those poised to rake in profits from its sale. But for business owners, the new law could cause a few headaches, at least initially.
In 2021, the Alabama Legislature passed a bill making the sale and use of medical cannabis legal in the state, and Governor Kay Ivey signed the bill into law. The Alabama Medical Cannabis Commission was formed to create regulations and license businesses to sell medical cannabis. When their work is done, Alabamians suffering from a short list of approved health conditions and who are armed with a doctor’s prescription will be able to buy and use cannabis to seek relief from their ailment.
The competition to get a toehold in Alabama’s medical cannabis industry is stiff, as experts believe its sales could approach $380 million in three years. There’s money in it for the state too; tax revenues from the sale and fees from licenses will add funds to Alabama’s budget. Some figures put the sales tax haul between approximately $6 million and $11 million annually.
The expected economic windfall has made the road to the law’s implementation rocky; the process is currently mired in multiple lawsuits, with several businesses who were vying for one of the valuable licenses claiming the commission has violated the state’s Open Meeting Acts and overstepped its power by voiding the first round of licenses.
All drama aside, it’s clear medical cannabis is poised to become big business. But it will also have big impacts on all other Alabama businesses. Is your company ready to deal with the implications of legalized cannabis use?
If not, start preparing now. While recent delays are unwelcome for those awaiting the relief medical cannabis can provide (and those hoping to jump on its profit-potential train), the pause can help business owners and managers. Take advantage of the time and take the advice of Melisa C. Zwilling, a labor and employment attorney at Carr Allison. She asserts legalized medical cannabis will have significant impacts on employers. “There are multiple employment issues swirling around this [law] change,” she said. The first move necessary to protect your business is making a choice.
DELICATE DECISION
Will you allow your employees to be under the influence of legalized medical cannabis while at work or not? Alabama’s law gives employers the opportunity to choose, with a few restrictions (see sidebar page 39). According to Zwilling, there is no middle ground here. “You’ve got to make a decision,” she said, “and then you must clearly communicate that policy to all employees, train managers on implementation of the policy and ensure your employee handbook is updated to reflect the policy.”
But the path to your decision is littered with questions in varying shades of gray. Before you rewrite your employee rules, consider these key points to ensure you understand the full implications of each option.
RECRUITING TOOL OR TURN OFF?
The right employees are essential for any business, and finding them continues to be a challenge, so how your medical cannabis policy might affect attracting and retaining them is a crucial factor. “Will you alienate potential employees or lose employees otherwise doing a good job if you decide to prohibit the use of medical cannabis? It’s an important question,” said Zwilling. She also pointed to a recent employment article claiming workplace policies seen as “friendly” to medical cannabis use might help recruit a different kind of hire. “I think this is really about the perspective of the younger generation,” she said. “A company allowing medical cannabis has a more positive company culture overall in their view.”
PRODUCTIVITY BOOST OR BANE?
The brain fog and slowed physical responses associated with cannabis’s “high” suggest that use of the drug, even as medicine, would decrease an employee’s contributions during a workday, but Zwilling pointed to the opposite possibly being true in certain cases. “For employees who have health conditions currently hindering their efficiency and effectiveness, if they can see their condition improved by medical cannabis, the business could benefit,” Zwilling said. “They’ll get more from those employees and better retain those employees.”
EXTRA DUE DILIGENCE
If a business decides to allow the use of medical cannabis, owners and managers will need to ensure their employees are following the rules. “It is only approved for specific conditions and has to have been prescribed,” Zwilling said. “Businesses should check and verify that, but in reality, many will take a hands-off approach.” She also notes that the law allows requiring employees to notify you if they are using medical cannabis. “That will make it easier to monitor and ensure the use doesn’t cause a hazard or safety issue.” And while some employers may feel led to modify job requirements or working conditions for employees who use medical cannabis, the law does not require them to, even if they’ve made medical cannabis permissible in their workplace.
If you don’t allow medical cannabis, you may choose to amp up enforcement of the policy with employee drug tests (if you’re not already conducting them). If cannabis is detected, you can discipline or fire the employee, even if they have a prescription. “And even if work performance is not affected,” said Zwilling. Remember, in your business, your rules apply. And your policies and your actions to enforce them are not subject to court scrutiny. “The Alabama law explicitly states there is no private right of action for employees to sue an employer for discipline or loss of job as a result of using medical cannabis, even if obtained legally,” she said. “There are no employment protections or recourse for medical cannabis users.” Zwilling did point to one possible issue: “There could be indirect issues with ADA protections if an employer uses a positive test for cannabis as a pretext for terminating an individual with a disability.”
Doctors prescribing medical cannabis bear some of the burden regarding workplace issues. Physicians are required under the law to advise patients that the use of medical cannabis could result in termination from employment without recourse and that costs may not be covered by insurance or government programs.
HR POLICY
Chewing on all the pros and cons and settling on what’s best for your business is the hard part; once a decision is made, the other key step is to apply the rule to everyone, all the time. “Whatever a business owner decides, they have to be consistent and require that every employee follows the policy—and those who don’t face the consistent consequences—to avoid inviting discrimination claims,” said Zwilling
STATE BORDER BEWARE: Even if the business is headquartered in Alabama, if there are operations and employees in other states, your policies for employees in that state must also comply with the laws of that state.
HEALTH INSURANCE IMPACTS
Under the new Alabama law, employers are not required to help pay for medical cannabis through medical insurance or reimbursement plans. And the use of medical cannabis by a business’ employees should not drive up group health plans paid for (in part or full) by the employer if the plan is with one of the largest health insurance providers in the state, Blue Cross and Blue Shield of Alabama.
“Blue Cross and Blue Shield of Alabama currently does not cover medical cannabis. Although medicinal usage has been approved in some states, including Alabama, the U.S. Food and Drug Administration has not approved cannabis for the treatment of any disease or condition,” said Sophie Martin, Director, Corporate Communications and Community Relations for Blue Cross and Blue Shield.
GOT FEDERAL CONTRACTS? Employers who receive federal contracts above $100,000 and any federal grant are required to maintain and promote a drug-free workplace. Similarly, if an employer has an employee license covered by Department of Transportation regulations, they cannot let that employee use any form of cannabis, even medical cannabis with a prescription.
