A Year in Review of Ohio’s Adult Use Cannabis Program for Employers

On November 7, 2023, Ohio became the twenty-fourth state to legalize adult-use cannabis with 57% of voters voting in favor of Issue 2, also known as the Act to Control and Regulate Adult Use Cannabis. Ohio cannabis dispensaries began recreational sales on August 6, 2024, and in the months since, employers in the state have remained in limbo, needing to decide how to respond to the rapidly changing landscape concerning medical and recreational cannabis laws.

Ohio’s Adult Use Program

As of November 16, 2024, Ohio dispensaries have sold more than 2.2 million non-medical products, made more than $166 million in sales, and generated nearly $10 million in tax revenue that would have otherwise gone to the illicit market or neighboring states. The state has earmarked tax revenue from adult-use sales to be used for:

• social equity and job initiatives,
• municipalities and townships with adult-use dispensaries, and
• programs to support substance abuse and addiction services,
• with the remaining revenue to support the Division of Cannabis Control.

Ohio employers must reckon with the fact that adult-use cannabis sales will continue to grow while also considering the ramifications of drug-free workplace policies.

Status of Ohio Employers and Federal Contractors

Since the inception of Ohio’s medical marijuana program, employers have not been required to accommodate an employee’s marijuana use, which now includes adult-use cannabis. Under Ohio Rev. Code § 3780.35(A)(1), which is part of Issue 2, employers are not required to “permit or accommodate an employee’s use, possession, distribution of adult-use cannabis otherwise in compliance with this chapter.” Thus, while Ohio now generally permits adults to use cannabis, employers are not required to accommodate its use.

From a workforce management perspective, Ohio employers are left with difficult decisions as they wrestle with decisions concerning whether to continue to enforce drug-free workplace policies or continue to include cannabis on drug screen panels. Nothing under Ohio law “[p]rohibits an employer from establishing and enforcing a drug testing policy, drug-free workplace policy, or zero-tolerance policy.” Furthermore, Ohio law statutorily considers individuals discharged from employment because of that individual’s use of cannabis as a discharge for just cause if the use of cannabis violated an employer’s policy regulating the use of cannabis.

Simply put, employers in Ohio are free to maintain drug-free workplace policies and, at times, will be required in specific industries. It is crucial, however, that if employers implement drug-free workplace and testing policies, they implement such practices that are nondiscriminatory and consistent.

Recent Case Law Updates and Practical Considerations for Employers

Ohio law does not require employers to accept marijuana usage in the workplace. However, avoiding liability from an employee’s positive drug test is not as simple as just pointing to the Ohio Revised Code. For example, the Sixth Circuit Court of Appeals recently questioned the termination of an employee following a positive result due to cannabis. In Fisher v. Airgas USA, LLC, et al., an employee took a leave of absence for surgery and recovery from liver cancer. Once returning to work, the employee was experiencing pain and nausea as a side effect of his surgeries. Based on a former coworker’s recommendation, the employee began taking a product called “Free Hemp” to help with his symptoms. The employee never told Airgas that he was using the product, but Airgas also did not have any policy prohibiting the use of hemp products. After the employee failed a random drug test, Airgas informed him that his sample returned positive for cannabis. The employee denied using cannabis and asked for a retest, explaining that the “Free Hemp” product may have triggered the positive result. However, Airgas did not inform the drug screening company of this, nor did they ask whether using the product could result in a positive drug test. After his retest came back positive, Airgas terminated his employment.

In the district court, Airgas was granted summary judgment on the employee’s disability discrimination claim under the defense known as the honest belief rule. This defense is successful when the employer proves that it honestly believed in a nondiscriminatory reason for firing the employee. This rule requires the employer to provide evidence that it made a reasonably informed and considered decision when discharging the employee. Still, if the employer conducts no meaningful investigation, the defense will not be successful. The Sixth Circuit reversed the district court’s grant of summary judgment because after the employee informed them of the possible reason for the positive test, Airgas resubmitted the same sample for testing and did not inform the drug screening company of the employee’s reasoning. Thus, because Airgas did nothing to investigate the possibility that the hemp product triggered the positive result, the court found it could not establish that it made a reasonably informed and considered decision.

This case shines a light on the difficulties confronting employers when employees (or prospective employees) unwittingly consume hemp-derived products containing metabolites that may yield positive test results. The risk will continue to grow for employers as cannabis and hemp-derived products become more widespread for individuals who historically may not have considered using these products.

In another case, the United States Supreme Court accepted a petition for review of a case involving a truck driver failing a drug screening that he attributed to a CBD product that was marketed as not containing THC. Cannabidiol, also known as CBD, is another component of the cannabis plant but does not elicit a psychoactive response.

The issue that the Supreme Court is reviewing is whether the plaintiff can sue the manufacturers of the CBD product under the federal Racketeer Influenced and Corrupt Organizations Act (RICO). The defendant argued before the Second Circuit Court of Appeals that the plaintiff’s injuries are purely personal, i.e., unknowingly ingesting THC, for which RICO does not provide an avenue for relief. However, the Second Circuit ruled in favor of the plaintiff by reasoning that his personal injury was a necessary precursor to his business injury. On review, the Supreme Court will determine whether RICO is the appropriate avenue to assert these claims.

Science’s Current Limitations and the Development of Rules in Other States

Many employers have begun moving away from testing for the presence of tetrahydrocannabinol, also known as THC, which is a psychoactive component of the cannabis plant, for pre-employment drug screenings, for the precise reason outlined in Airgas.

Current science does not test for impairment; it tests for use, which does not necessarily implicate the workplace. This does not come without consequences for the employer. For example, Ohio’s Bureau of Workers’ Compensation (OBWC) provides a 4% or 7% premium rebate if the employer participates in its Drug-Free Safety Program. Earning the 7% rebate on premiums requires the employer to impose:

• pre-employment drug screenings for all new hires and
• randomly drug test at least 15% of its workforce every year.

The OBWC has yet to remove cannabis from being included in this program. Thus, removing cannabis from drug screening panels requires the employer to balance whether it is willing to forego the OBWC premium rebates while also ensuring it casts a wide net for qualified candidates. For safety-sensitive positions, this might be a consideration that outweighs the benefits.

Furthermore, in Ohio’s drug-free workplace program, employers may require employees to submit a urine sample for testing for the presence of drugs where there is reasonable suspicion that an employee is under the influence. What becomes problematic for cannabis, however, is that the currently available scientific methods for testing will not provide the employer with evidence that the employee was under the influence of cannabis at that moment. Other states create even more difficulty for employers to establish reasonable suspicion testing.

New York, for example, technically allows employers to test for the presence of marijuana only when the employer has reasonable suspicion that the employee is under the influence. What circumstances could the employer base this reasonable suspicion on?

• Neither the smell of cannabis nor other stereotypical signs of cannabis may be used as evidence of articulable symptoms of impairment under New York labor law.
• Moreover, New York law expressly disallows the employer from using a positive drug test for cannabis as a basis for an employment action precisely because of the currently available science.

In 1988, Congress enacted the Drug-Free Workplace Act, which requires Federal agency contractors and grantees to certify that they will provide a drug-free workplace as a pre-condition of receiving a contract or a grant from Federal agencies. Under the Act, any organization that receives a federal contract of $100,000 or more or receives a federal grant must implement a drug-free workplace program. While the Drug-Free Workplace Act does not directly require federal contractors to screen for cannabis in drug tests, the specific contract may set forth certain requirements. Other federal agencies have guidance where an employer is subject to federal licensing guidelines. For example, the Federal Department of Transportation prohibits cannabis use in its regulated industries. It does not authorize medical marijuana as a valid excuse for a positive drug test of CDL licensed drivers.

These competing laws and regulations leave employers in a state of limbo. Multi-state employers may feel the more straightforward route would be to stop testing for the presence of marijuana altogether. But is it worth bypassing substantial rebates on workers’ compensation premiums in states like Ohio? The answer to that question may be no. In any event, any policy concerning drug testing must be enforced in a nondiscriminatory fashion and may require the assistance of legal counsel to understand the individual employer’s considerations fully.

What to Keep in Mind Moving Forward

Because science is still lacking for drug screenings to distinguish between recent cannabis use and active impairment, considerations for employers implementing policies will continue to actively change.

As the science and enforcement of various federal and state laws continue to evolve, practical considerations for employers must be flexible to account for the ever-changing landscape.