THC Product Variety Muddles Drug Compliance Path for Employers

Employers continue to face challenges reconciling the varying legal statuses of intoxicating hemp-derived products on the market containing the psychoactive compound in marijuana, or THC, with their workplace drug testing policies.

This legal gray area was back in the forefront last week in a split decision from a three-judge panel of the US Court of Appeals for the Fourth Circuit, which rejected the US Drug Enforcement Administration’s stance that cannabinoids products derived from legal hemp become illegal after manufacturing processes.

The 2018 Farm Act, which de-scheduled hemp and its derivatives, unambiguously covers the hemp plant, cannabinoids, and any derivatives with a maximum 0.3% delta-9 THC, the majority said. The decision adopted a recent Ninth Circuit precedent, becoming the second federal appeals court to reject the government’s stance.

The lack of guidance regarding THC from Congress has left the US Food and Drug Administration to regulate, while states use the Farm Bill’s non-preemption clause to create their own rules.

But the patchwork of state laws regarding the legality of certain cannabinoids places multi-state employers in a particularly difficult position as they determine how to address the presence of THC metabolites in drug tests to avoid potential discrimination lawsuits, attorneys say.

Drug Testing

The presence of THC—and even CBD that may have trace amounts of the psychoactive compound—can lead to positive drug test results. Drug screenings don’t differentiate whether a metabolite came from marijuana or hemp, attorneys said.

The Fourth Circuit’s decision stems from a finding that real estate developer Diamondback Investment Group LLC didn’t violate the Americans with Disabilities Act by firing a worker who tested positive for THC. The worker couldn’t invoke a North Carolina law barring termination for using legal products because she failed to prove her disability and show that the hemp-derived products she allegedly used for health reasons weren’t illegal, the majority said.

With the growing popularity of CBD and various products containing THC, employers must be prepared to address false-positive drug screens if workers claim they’re using a legal substance, said Nancy Delogu, co-chair of Littler Mendelson PC’s drugs and alcohol practice group.

“This is a complex area, and employees may not understand the court’s point that simply because you can buy something at a convenience store does not mean that it contains only federally approved substances or, even if it does, that the use may not be protected from an employment perspective,” she said.

Employers may even need to consider having a medical expert consult on whether the employee in fact used whatever drug was detected legally before taking an adverse employment action, Delogu said.

Recruitment Issue

The widespread legalization of marijuana nationwide and the evolution of THC consumption methods amid shifting societal attitudes has prompted employers to consult legal experts to navigate the intricate terrain of employment protections for such users, attorneys said. They aim to balance the recruitment and retention of a skilled and diverse workforce with potential liabilities and safety concerns.

For instance, multi-state employers specifically have eliminated pre-employment testing of certain substances like marijuana where it’s already legal, while others have rethought strict drug policies to better reflect their potential talent pool that increasingly includes a population that uses marijuana.

It’s an issue “percolating under the surface” as employers balance recruitment and retention efforts “with their interest in having a drug-free workplace,” said Chase Stoecker of McGlinchey Stafford PLLC.

“A lot of people don’t realize what they’re buying at the gas station or corner store may be legal but contain substances that can trigger a positive drug test” and cause termination, he said.

A positive test doesn’t mean a worker is high on the job, said Robert DiPisa, co-chair of Cole Schotz PC’s cannabis law group.

The active compound can remain in the body as fat for several days or even weeks after consumption, causing a positive result. A screening also doesn’t determine what the level of THC is in the body.

As marijuana legalization has spread, attorneys generally advise employers to move away from pre-employment screening for jobs that aren’t safety-sensitive and instead prioritize on-the-job impairment and post-accident drug testing.

Legal Framework

The ADA prohibits bias against qualified individuals with disabilities but doesn’t provide protections for the use of federally illegal substances.

CBD is legal only if derived from hemp, so workers may argue for ADA protections if they use it for medical reasons, especially if prescribed for a disability. A worker could also claim disparate treatment if they believe they were singled out for discipline or termination due to their use of hemp or CBD products.

The success of such claims, however, would depend on whether the product at issue is tied to a recognized disability and if the employer failed to provide reasonable accommodation, attorneys said.

Many states have specific employment protections for marijuana users, but protections for hemp or CBD users aren’t common. California and New York, however, have enacted protections for cannabis users that could extend to hemp and CBD products.

Potential legal implications for employers arising strictly from the Fourth Circuit case are minimal because the court “recognized that a drug-free workplace program is not by its nature discriminatory and that drug tests that seek the presence of illegal drugs are a valid workplace goal,” Delogu said.

But the case serves as a cautionary tale for employers to establish clear policies concerning the use of substances during and after work hours. Employers must carefully handle positive drug test results because of the complexities around substances like THC, which may be legal in some forms but still detectable in tests, DiPisa said.

The ruling warrants companies “to dust off their handbooks and take a second look at their approach to hemp-derived products and even cannabis,” he said.

The case is Anderson v. Diamondback Inv. Group LLC, 4th Cir., No. 23-01400, decision issued 9/4/24.