Date: June 2017

Legalized Marijuana and Workers’ Compensation: Advanced Issues in Workers' Compensation

Louisiana legalized medical marijuana with the passage of Act 96 of the 2016 Regular Session, which amended La. R.S. 40:1046, entitled “Recommendation of marijuana for therapeutic use; rules and regulations; Louisiana Board of Pharmacy and the adoption of rules and regulations relating to the dispensing of recommended marijuana for therapeutic use; the Department of Agriculture and Forestry and the license of a production facility.” Though the new law has not yet been implemented, it will certainly have tangible effects on the workers’ compensation system in Louisiana, including the right of an employer to terminate an employee who legally uses medical marijuana, and the employer’s responsibility to pay for medical marijuana if it is deemed to be reasonable and necessary by the claimant’s treating physician. Though there is no jurisprudence concerning these issues in Louisiana, courts across the country have addressed these questions and have made rulings which may provide guidance for future disputes.

Overview of Louisiana’s Medical Marijuana Law

On May 19, 2016, Governor Edwards signed into law Act 96 of the 2016 Regular Session. The law provides, in pertinent part:


The passage of Act 96 changed existing law in Louisiana by allowing physicians to “recommend” medical marijuana in addition to prescribing it. Formerly, La. R.S. 40:1046 only permitted physicians to “prescribe” cannabis for certain therapeutic uses. This was unworkable, however, because it put physicians in direct conflict with federal law prohibiting the prescription of Schedule I narcotics. [1] On the other hand, federal jurisprudence has recognized a physician’s ability to “recommend” a course of treatment for his patient as protected by the First Amendment. [2] Therefore, Act 96 bifurcates prior law into two sections. Section 1 permits physician recommendation, and section 2 permits physician prescription. Other than this, the sections are virtually the same. Importantly, section 2 becomes the operative law if and when the U.S. Drug Enforcement Administration reclassifies marijuana from a Schedule I drug to a Schedule II drug. At that time, Section 1 becomes null and void.

Section 1046 also provides an extensive regulatory process through which it will be implemented. Specifically, it places the onus on the Louisiana Board of Pharmacy and the Department of Agriculture and Forestry to develop rules and regulations to both facilitate the new law and to establish safeguards for monitoring the use of medical marijuana after the law is implemented. Additionally, it requires the Louisiana State Board of Medical Examiners to promulgate rules and regulations for physicians to follow in recommending marijuana for therapeutic use. [3]

The Board of Pharmacy is charged with adopting rules and regulations related to the dispensing of recommended marijuana for therapeutic use. These rules must include, among other things: (1) standards, procedures, and protocols for the effective use of recommended marijuana for therapeutic use as authorized by state law, (2) standards, procedures, and protocols for the dispensing and tracking of recommended medical marijuana, and (3) procedures and protocols to provide that no recommended therapeutic marijuana use may be dispensed from, produced from, obtained from, sold to, or transferred to a location outside of this state. [4]

Moreover, the Board is responsible for developing an annual, nontransferable specialty license for a pharmacy to dispense medical marijuana, and must limit the number of these specialty licenses to “no more than ten.” [5]  The Board is tasked with establishing standards for the licensure of dispensers of medical marijuana and standards for the revocation, suspension, and nonrenewal of licenses. [6] They must also establish health, safety, and security requirements for dispensers. [7] Finally, the Board is required to establish financial requirements for license applicants under which each applicant must demonstrate the financial capacity to operate a marijuana pharmacy and the ability to maintain an escrow account in a Louisiana financial institution in the amount of two million dollars. [8] 

The Department of Agriculture and Forestry is the second body charged with implementing the new law, and is responsible for developing rules and regulations concerning the extraction, processing, and production of medical marijuana and the facility producing it. [9] The Department shall also develop an annual, nontransferable specialty license for the production of medical marijuana, and it shall generally limit the number of licenses to only one in the state. [10] However, the legislation also gave the Louisiana State University Agricultural Center and the Southern University Agricultural Center a right of first refusal to be licensed as production facilities, both of whom have accepted this right. [11] Thus, they will be the only licensed producers of medical marijuana in the State. At this time, both universities are in the process of selecting contractors to fund and initialize the project.

Because of the extensive regulatory measures that must be put in place prior to implementation, La. R.S. 40:1046 has not taken effect in the state at this point. At this time, both the Department of Agriculture and the Board of Pharmacy have issued draft proposed rules and regulations which have gone through the administrative public comment period, and, once finalized, they will be submitted to the legislature for approval.

Once the regulatory process is completed and the law is implemented, it could potentially have extensive repercussions for the workers’ compensation system in Louisiana.

Conflict with Federal Law

Even though Louisiana law permits the use, cultivation and distribution of medical marijuana and even extends immunity from prosecution to patients who properly possess marijuana, and to their caregivers and parents, [12] federal law still prohibits the possession of marijuana. Marijuana is classified under the Controlled Substances Act [13] as a Schedule I drug, along with LSD, heroin, and GHB. [14] The Act describes Schedule I drugs as those that (1) have a high potential for abuse, (2) have no currently accepted medical use in treatment in the United States, and (3) there is a lack of accepted safety for use of the drug or other substance under medical supervision. [15] 

Because of this dichotomy between federal and state law concerning marijuana, the U.S. Department of Justice issued a memorandum on August 29, 2013, as a guide to federal prosecutors on marijuana enforcement in light of several states legalizing the possession or use of marijuana. The memo sets forth eight priorities on which federal enforcement of marijuana is directed. These priorities are: 1) preventing the distribution of marijuana to minors; 2) preventing revenue from the sale of marijuana from going to criminal enterprises; 3) preventing the diversion of marijuana from states where it is legal under state law to other states; 4) preventing state-authorized marijuana activity from being used as a cover for trafficking other illegal drugs; 5) preventing violence and the use of firearms in the cultivation or distribution of marijuana; 6) preventing drugged driving; 7) preventing the growing of marijuana on public lands; and 8) preventing marijuana possession or use on federal property.

The memo continues that outside of these enforcement priorities the federal government has traditionally relied on states and local law enforcement agencies to address marijuana activity. But, the enactment of state laws authorizing marijuana production, distribution, and use has disrupted this joint federal-state approach. In an attempt to restore balance, the memo provides that jurisdictions permitting marijuana activity must implement strong regulatory and enforcement systems such that federal enforcement priorities are not threatened. Therefore, in terms of when the federal authorities will step in, their guiding principle is whether the conduct at issue implicates one or more of the eight enforcement priorities. The memo also states that it does not alter in any way the Department’s authority to enforce federal law, including federal law relating to marijuana, regardless of state law, and even in jurisdictions with effective regulatory systems, evidence that conduct threatens federal priorities will subject that person or entity to action.

Some commentators have suggested that the Department of Justice memo signals a retreat by federal authorities on the war on medical marijuana. [16] However, that observation is contingent upon entirely too many unknown factors, including the strength and efficacy of Louisiana’s regulatory system and the interpretation of the eight priorities. Furthermore, because there has been a change of power in the White House since the memorandum was issued, it is unclear whether the Department of Justice under the Trump administration will stand by the 2013 memorandum, or whether the new administration will take a different position on the issue of medical marijuana.

Impact on Workers’ Compensation

The passage of Act 96 could potentially have lasting effects on the workers’ compensation system in Louisiana. Specifically, the passage of this Act necessarily raises the following questions:
(1) Is medical marijuana a compensable medication when the employee’s treating physician deems it to be reasonable and necessary?
(2) May an employer deny benefits and/or terminate an employee who tests positive for marijuana when that employee possesses the medical marijuana legally?

Compensability of Medical Marijuana

One of the primary questions that stems from the new medical marijuana law is whether an employer must pay for medical marijuana when a physician has recommended that such treatment is reasonable and necessary. It is important to note that La. R.S. 40:1046 only allows a physician to recommend marijuana for therapeutic use for certain “debilitating medical conditions,” which only includes cancer, HIV/AIDS, cachexia or wasting syndrome, seizure disorders, epilepsy, spasticity, Crohn’s disease, muscular dystrophy, or multiple sclerosis. [17] Thus, in the context of workers’ compensation, the statue is likely only applicable in rare circumstances.

Though the issue of compensability of medical marijuana has not been addressed by Louisiana courts, there are several cases on the issue nationwide. The leading caselaw comes from New Mexico, California, and Maine. Specifically, the Court of Appeals of New Mexico has addressed this issue in three recent decisions: Vialpando v. Ben’s Automotive Services, [18]  Maez v. Riley Indus., [19] and Lewis v. American General Media. [20] The New Mexico court concluded in all of these cases that an employer is responsible for reimbursing an employee for medical marijuana expenses.

In Vialpando, the employee sustained a low back injury while in the course and scope of his employment, which required numerous surgical procedures. The employee was determined to reach maximum medical improvement, but he had a combined whole body impairment of 43 to 46 percent, and a 99 percent permanent partial disability. His doctors testified that he was constantly in “high intensity multiple-site chronic pain,” and he was prescribed multiple narcotic pain relievers and anti-depressants. [21] 

Five years later, the employee filed an application for approval of medical treatment for medical marijuana after having been certified for the program by his health care provider and another doctor based on “severe chronic pain that was debilitating." [22] Based on this evidence, the WCJ found that the employee was qualified to participate in the medical cannabis program, and that participation in the program constituted reasonable and necessary medical care. Thus, the WCJ ordered the employer to reimburse the employee for the medical marijuana.

On appeal, the employer argued, inter alia, that the WCJ’s order was illegal because it required the employer to violate federal law in reimbursing the worker for his marijuana expenses, and that the order violated federal public policy. The court, in analyzing this dispute, acknowledged that the Supremacy Clause requires that any conflict between New Mexico’s medical marijuana laws and the Controlled Substances Act would have to be resolved in favor of the CSA. However, the court still rejected this argument because, it reasoned, the employer’s argument that he would be forced to violate federal law “does not cite to any federal statute it would be forced to violate.” [23]  Furthermore, the court cited to the DOJ’s August 29, 2013 memorandum for the proposition that the WCJ’s ruling did not violate federal public policy because the memorandum demonstrated that the DOJ was generally “deferring to state and local authorities” on this issue. [24] Thus, the appellate court affirmed the WCJ’s ruling requiring the employer to reimburse the employee for medical marijuana expenses. [25]

Similar arguments were made by the employer in Lewis v. American General Media [26] after the WCJ required it to pay for medical marijuana for an injured employer. At the Court of Appeal of New Mexico, the employer argued that the DOJ had issued a second memorandum concerning medical marijuana, which indicated that its position in the first memorandum “rested on the expectation that states that have enacted laws authorizing marijuana-related conduct will implement clear, strong, and effective regulatory and enforcement systems in order to minimize the threat posed to federal enforcement priorities.” [27]

Based on this second memorandum, the employer argued that New Mexico’s statutory and regulatory scheme was insufficient to satisfy the DOJ’s requirements to justify deterrence to state law. The employer also stated that it would be required to break federal law by paying for marijuana, and, contrary to Vialpando, cited to certain specific federal statutes that it would be violating in doing so. [28]  However, despite these arguments, the court followed its decision in Vialpando, stating that the employer’s argument “raises only speculation in view of existing Department of Justice and federal policy.”  [29]

The same conclusion was reached in twin decisions from the Maine Appellate Division of the Workers’ Compensation Board in Noll v. Lepage Bakeries [30] and Bourgoin v. Twin Rivers Paper Co., LLC. [31]  In Noll, the ALJ concluded that the use of medical marijuana constituted reasonable and necessary medical treatment, and ordered the employer to pay for that treatment. The employer argued on appeal that this ruling was in error because it essentially required the employer to be “complicit in the commission of a federal crime,” and because the risk of prosecution under federal law presents a strong policy reason militating against reimbursement. [32]  The court, citing Vialpando and the Justice Department’s memorandum, rejected this argument, and found that there is “no basis in federal law or policy identified by the parties that would preclude a self-insured employer from reimbursing an injured employee for costs associated with medical marijuana.” [33]

Finally, it appears that California is the only state in which a court has determined that an employer is not responsible for reimbursing an employee for medical marijuana, and that ruling was based on specific provisions within California’s medical marijuana laws. In De Dios v. Carroll’s Tire Warehouse, [34]  the Workers’ Compensation Appeals Board for the State of California noted that the state’s Health and Safety Code provides that nothing in California’s Compassionate Use Act “shall require a governmental, private, or any other health insurance provider or health care service plan to be liable for any claim for reimbursement for the medical use of marijuana.” [35]  Thus, because California’s medical marijuana law contains this specific provision, the court found that medical marijuana was not compensable, regardless of whether it was found to be reasonable and necessary. [36]

Based on these cases, it seems that courts are typically ruling that medical marijuana is compensable when it is found to be reasonable and necessary, except in cases where state law provides otherwise (i.e. California’s specific statutory exclusion). Because there is no provision in La. R.S. 40:1046 that would create an exclusion such as the one in California, there is no statutory basis upon which a Louisiana court could deny coverage for marijuana. [37]

If medical marijuana is found to be compensable under Louisiana law, there are numerous other questions that are necessarily raised. Specifically, because there are no treatment guidelines concerning medical marijuana, it will be very difficult for employers to value and evaluate reimbursement. Moreover, there are considerations concerning whether an employer must accommodate an employee that is using medical marijuana, despite having drug-free policies in the workplace. Many of these questions remain unanswered at this time, though there is some guidance from caselaw in other states.

Employer’s Right to Terminate Employment and/or Deny Benefits

Of additional importance in considering Louisiana’s new medical marijuana law is the extent to which it prevents an employer from enforcing its drug-free workplace policies, and whether a positive drug test will preclude recovery for an employee who uses marijuana pursuant to a valid physician recommendation. Again, these issues have not been discussed by Louisiana courts, but they have been considered in Colorado, Michigan, Ohio, Oklahoma, and Washington.

One of the leading cases concerning an employer’s rights is Coats v. Dish Network, LLC. [38]  There, the complainant was a quadriplegic who registered and obtained a state-issued license to use medical marijuana to treat painful muscle spasms caused by his condition. The employee stated that he consumed the marijuana outside of work. During a random drug test for his employer, he tested positive for THC, and he informed his employer that he was a registered medical marijuana patient and planned to continue using it. Subsequently, the employer terminated Coats for violating the company’s drug policy.

Coats filed a wrongful termination claim against his former employer based on a provision of Colorado law which generally prohibits employers from discharging an employee based on his engagement in “lawful activities” off the premises during non-work hours. [39]  Because Colorado law allowed him to use medical marijuana, he argued that his activities were “lawful” under the law, and thus he was entitled to the protections of the Colorado laws prohibiting termination. Notwithstanding this argument, the Court of Appeals and Supreme Court of Colorado granted the employer’s motion to dismiss, noting that, because the employee’s use of medical marijuana was unlawful under federal law, it was not a “lawful activity” under state law. [40]  Thus, the employer’s termination was valid, and Mr. Coats’ claim was dismissed.

Likewise, the court in Casias v. Wal-Mart Stores, Inc., [41]  considered a similar issue. There, the plaintiff, an individual who was registered to use marijuana for medical purposes, tested positive for marijuana after he was injured at work. He was subsequently terminated due to his violation of Wal-Mart’s drug use policy, and he filed suit alleging wrongful discharge. The employer filed a motion to dismiss, arguing that Michigan’s medical marijuana laws (the “MMMA”), are preempted by the Controlled Substances Act, and that the MMMA does not create a private right of action or confer any employment protections on marijuana users. The court granted the motion to dismiss, finding that the MMMA does not confer any employment protections, and thus declined to address the issue of federal preemption.

In its reasoning, the Casias court noted that the MMMA “does not regulate private employment. Rather, the Act provides a potential defense to criminal prosecution or other adverse action by the state.” [42]  Further, the MMMA says nothing about private employment rights, or that employees are protected from disciplinary action should they use medical marijuana, or that private employers must accommodate the use of medical marijuana outside the workplace. [43]  Significantly, the court noted that the MMMA “contains no language stating that it repeals the general rule of at-will employment in Michigan or that it otherwise limits the range of allowable private decisions by Michigan businesses.” [44]

Despite these decisions protecting an employer’s right to terminate an employee who uses medical marijuana, there is also caselaw that states that the usage of marijuana alone is not sufficient grounds to deny benefits. For example, in Trent v. Stark Metal Sales, Inc., [45]  the employee was injured while in the course and scope of employment when a piece of steel fell on his legs. A urine drug screen was performed about a week later, at which time the employee tested positive for marijuana. The employee filed a claim for workers’ compensation benefits, and also filed a motion in limine requesting the court to exclude any testimony concerning drug testing. The trial court granted the motion upon finding that marijuana can remain in a person’s system beyond the week-long period at issue in the case, and there was no evidence of when the employee used the marijuana. The trial court also excluded testimony that the employee had informed coworkers that he would not be able to pass a drug screen on the day of the injury.

On appeal, the employer argued that the employee was in violation of the employee handbook at the time of his accident, and thus he was not in the course and scope of his employment at the time he was injured. The court rejected this argument, however, finding that regardless of whether he violated a workplace rule, the law provides that an employee is entitled to benefits unless his drug use was the “proximate cause” of the injury. [46]  Because the employer could not prove that the employee was under the influence at the time of the injury, or that having marijuana in his system somehow caused his injury, the employee was entitled to benefits. [47]

Based on this caselaw, it seems that, though an employer may terminate employees who use medical marijuana pursuant to a valid license, the use of marijuana alone is not sufficient grounds to deny benefits. Because Louisiana has similar statues to those in Ohio and Oklahoma concerning denial of benefits based on intoxication and the requirement that the intoxication be a cause of the injury, [48]  it is possible that similar reasoning would be applied by Louisiana courts. However, it is also relevant to note that La. R.S. 23:1081 provides that if, at the time of the accident, there is evidence of use of “non-prescribed controlled substances” as defined in the Controlled Substances At, it shall be presumed that the employee was intoxicated. This provision could therefore affect any decision of a Louisiana court regarding the effect of marijuana usage on workers’ compensation benefits.

Conclusion

The passage of Act 96 of the 2016 Regular Session and the resulting amendment of La. R.S. 40:1046 raises numerous questions concerning how medical marijuana will affect the workers’ compensation system in Louisiana. Specifically, employers and employees alike will be called upon to litigate over whether medical marijuana is compensable, and, if so, how that treatment should be compensated. Moreover, employers will be faced with the question of whether they may deny benefits and/or terminate employment for employees who are injured on the job while under the influence of medical marijuana which they validly use and possess.

Both of these questions, and the additional issues necessarily raised by them, exist in the background of the ultimate question that has not been addressed by the courts: whether state medical marijuana laws are preempted by the federal Controlled Substances Act. At this time, courts have declined to hold that the Supremacy Clause requires preemption of state laws concerning medical marijuana. As a result, for the moment, there is little certainty regarding how the issue of preemption should affect a WCJ’s decision on compensability.

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1 Schedule I controlled substances are subject to the most strict regulation because the federal government has determined that they have a “high potential for abuse,” “no currently accepted medical use in treatment in the United States,” and a “lack of accepted safety” for “use under medical supervision.” The Controlled Substances Act prohibits physicians from prescribing Schedule I drugs. Conant v. McCaffrey, C 97-00139 WHA, 2000 WL 1281174, at *1 (N.D. Cal. Sept. 7, 2000), aff'd sub nom. Conant v. Walters, 309 F.3d 629 (9th Cir. 2002) (citing 21 U.S.C. 812(b)(1)).
2 Conant, 2000 WL 1281174, at *15.
3 La. R.S. 40:1046(B).
4 Id. at § 1046(C).
5 Id. at § 1046 (G).
6 Id. at § 1046(C)(2)(f).
7 Id. at § 1046(C)(2)(i).
8 Id. at § 1046(C)(2)(k)(ii).
9 Id. at § 1046(H).
10 Id. at § 1046(H)(2)(a).
11 Id. at § 1046(H).
12 Act 343 of the 2016 Regular Session. Critically, however, at this time, Act 343 does not provide immunity to producers or dispensers of therapeutic marijuana.
13 21 U.S.C. § 801, et seq.
14 Id. at § 812.
15 Id.
16 Other recent developments have been construed as a backing off of the federal government on medical marijuana prosecution. Of late, litigants have urged that in a provision in the 2015 appropriations bill, Congress banned the Department of Justice from spending money to stop states from implementing their own state laws that authorize the use, distribution, possession or cultivation of medical marijuana (the Rohrabacher-Farr provision). Because judicial interpretation of this argument has been focused in California, a medical marijuana friendly jurisdiction, its likelihood for success in conservative districts such as Louisiana is unknown.
17 La. R.S. 40:1046(A)(2)(a).
18 2014-NMCA-084, 331 P.3d 975.
19 2015-NMCA-049, 347 P.3d 732.
20 2015-NMCA-090, 355 P.3d 850.
21 Id. at 976-77.
22 Id. New Mexico’s medical marijuana law allows an individual to use marijuana for therapeutic use when suffering from severe chronic pain. See Lynn and Erin Compassionate Use Act (2007).
23 Id. at 980.
24 Id. at 980.
25 See also Maez, supra, wherein the Court of Appeals of New Mexico affirmed its prior ruling in Vialpando, and noted that a “recommendation” may be sufficient to constitute reasonable and necessary medical care, even where the physicians did not actually “prescribe” it.
26 2015-NMCA-090, 355 P.3d 850.
27 Id. at 857, citing Memorandum from James M. Cole, Deputy Attorney General, to All United States Attorneys, Guidance Regarding Marijuana Financial Related Crimes (February 14, 2014).
28 Id. at 858.
29 Id.
30 Case No. App. Div. 15-0061, Decision 16-25 (August 23, 2016).
31 Case No. App. Div. 15-0022, Decision 16-26 (August 23, 2016).
32 Noll, supra, at 7.
33 Id. at 9-10; See also Bourgoin, supra, which applied the reasoning in Noll to reach the same conclusion.
34 Case Nos. ADJ 528481, ADJ 6022408 (September 9, 2013).
35 Id. at 3.
36 Id. at 4.