Lawful use of cannabis

“The business and legal landscape for hemp and cannabis in North Carolina is significant and fast-changing, and employers should not rely on outdated employment policies, handbooks, or boilerplate forms.”

The employer/employee relationship is among the most regulated.

There are many (some argue too many) federal and state laws that govern how employers may and may not treat applicants and employees. Their purpose, generally, is to ensure that employment is made available based on an applicant's or employee's merit - that is, his or her ability to do the job required - rather than other irrelevant criteria, such as an applicant or employee's "race, color, sex, religion, national origin, physical or mental limitations, or age."

One such exception in North Carolina, however, has nothing to do with that: North Carolina's lawful use of lawful products law.

It is NOT designed to ensure that an employer avoids discrimination, harassment, or retaliation based on the person's characteristics, but rather to protect an applicant or employee's right to use "lawful products" in a "lawful" way - specifically "if the activity occurs off the premises of the employer during nonworking hours and does not adversely affect the employee's job performance or the person's ability to properly fulfill the responsibilities of the position in question or the safety of other employees." The exception in question has existed since 1992.

The law has taken on new relevance in recent years because of changes in the law regarding hemp and hemp-derived cannabidiol ("CBD") products and the presence in them of tetrahydrocannabinol ("THC"). Those changes mean that employers now have to consider applicants' and employees' lawful use of such substances "off the premises of the employer during nonworking hours" if such use "does not adversely affect the employee's job performance or the person's ability to properly fulfill the responsibilities of the position in question or the safety of other employees." These issues may come into focus for North Carolina employers in a number of ways.

Hemp products, including hemp-derived CBD products, can lawfully contain up to 0.3% delta-9 tetrahydrocannabinol ("delta-9 THC") by dry weight, the psychoactive component of cannabis that is typically associated with the "high" of marijuana. Hemp products can also contain higher levels and concentrations of other naturally occurring THC, including delta-8 tetrahydrocannabinol ("delta-8 THC"), delta-10 tetrahydrocannabinol ("delta-10 THC"), and more. Some lawful hemp-derived products do not produce an intoxicating effect on the users of those goods (e.g., CBD), but some do (e.g., delta-8 THC, delta-10 THC, hexahydrocannabinol or "HHC" and others). In some instances, individuals taking lawful hemp-derived products that contain THC - even those with no intoxicating effects - may yield a "positive" result during an employment-related drug test that screens for the presence of marijuana. Given the state of the law today, the mere presence of THC in an applicant or employee's bodily system is no longer a guaranteed indicator that the person has used illegal drugs or controlled substances.

Despite decades-long policies to the contrary, as a matter of law today, hemp (and the THC found in hemp) is no longer considered marijuana and is no longer a controlled substance.

This "lawful use of lawful products" law (N.C. Gen. Stat. §95-28.2) applies to all private employers with three or more regularly employed employees and all governmental employers in North Carolina that are "the State" or "political subdivisions of the State" and has considerable teeth. "An employee who is discharged or otherwise discriminated against, or a prospective employee who is denied employment in violation of" the law may sue the employer within one year from the date of the alleged violation and possibly recover wages or benefits lost as a result of the violation, an order of reinstatement without loss of position, seniority, or benefits, an order directing the employer to offer employment to the prospective employee and reasonable costs of litigation, including court costs and attorneys' fees.

Think about that: If, for example, an unlawfully fired employee sues within the prescribed year, a trial happens two years later, and the employee wins, then she could arguably recover three (3) years' worth of "wages or benefits lost as a result of the violation" plus her attorneys' fees. The employer will have incurred its own attorneys' fees too. The resulting cumulative financial impact may be very daunting or disastrous.

The law provides employers with a few safe harbors. For example, an employer may "[r]estrict the lawful use of lawful products by employees during nonworking hours if the restriction relates to a bona fide occupational requirement and is reasonably related to … employment activities" or if the restriction relates to the fundamental objectives of the organization. But to gain the benefits of these safe harbors, employers must actively ensure their employment policies, handbooks, and procedures are in alignment with North Carolina hemp and cannabis laws as they exist today.

The business and legal landscape for hemp and cannabis in North Carolina is significant and fast-changing, and employers should not rely on outdated employment policies, handbooks, or boilerplate forms. Issues in the hemp and cannabis space are unlike any other, are far-reaching in impact, and require careful consideration and treatment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Grant B. Osborne and Hayley Wells, Ward and Smith, P.A., (c) Mondaq Ltd., 2022

From WCI's HR Answers Now ©2022 CCH Incorporated and its affiliates. All rights reserved.