The commercial litigation landscape for CBD, hemp and marijuana is constantly evolving as federal and state courts issue decisions that impact investors, commercial contracts, employment issues, intellectual property and insolvency. The CannaBizDisputes™ blog regularly tracks and reports on these developments.

New Jersey Appellate Court Requires Employer to Reimburse Employee for Medical Marijuana


On January 13, the Superior Court of New Jersey, Appellate Division, found that New Jersey’s Medical Marijuana Act (“NJMMA”) was not preempted by the federal Controlled Substances Act (“CSA”), and that the defendant was required to reimburse its former employee for the cost of his medical marijuana pursuant to the State’s Workers’ Compensation Act. Hager v. M&K Construction, 2020 WL 218390 (N.J. App. Div. Jan. 13, 2020).

Rejecting the defendant’s argument that the NJMMA was irreconcilable with the CSA and therefore preempted by federal law, the Court in Hager v. M&K Construction held that it was possible for the employer to comply with both statutes, because reimbursing the former employee for the cost of his medical marijuana did not require the employer to possess, manufacture or distribute marijuana. *8. The Court likewise found that the employer could not be guilty of aiding and abetting any violation of the CSA because making the reimbursement payments did not make it an “active participant in the commission of a crime,” and because “one cannot aid and abet a completed crime.” Id. (quoting U.S. v. Ledezma, 26 F.3d 636, 642 (6th Cir. 1994). In addition, the Court held that the employer did not fall within either of the two narrowly construed exceptions to the reimbursement obligations imposed by the NJMMA because it was neither a governmental agency, nor a private health insurer. Id. at *9. The Court also rejected defendant’s argument that reimbursing the former employee would place it at risk of federal prosecution. Id. at *9-11. The Court suggested that the employer’s risk was speculative in light of the clear public policy of New Jersey to permit the use of medical marijuana, as embodied in the NJMMA, and the federal government’s “equivocal” attitude towards prosecution for crimes associated with medical marijuana. Id. at *11. In rejecting the employer’s argument, the Court noted that it had “presented no evidence that it faces a credible threat of prosecution,” and that the employer had failed to provide any examples of federal prosecution against an employer in the circumstances presented by the dispute in Hager. Id. at *9.

In short, while the decision in Hager was based in large part upon the Court’s interpretation of the relevant state and federal statutes, it was also driven by the Court’s acknowledgement of certain public policy realities, including the growing acceptance of medical marijuana as a valid form of medical treatment, and the ever-growing scale of the “opioid crisis in existence today.” Id.

Hager thus provides yet another example of how marijuana-related cases of all kinds can be decided at the various intersections between state law, federal law, and evolving social and political attitudes towards marijuana. Hager is also noteworthy in that it may set important precedent for one day the required coverage of medical marijuana by other types of medical insurers.

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02.13.2020  |  PRACTICE AREAS: Litigation and Dispute Resolution  |  INDUSTRIES: Cannabis

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