Must an Employer Pay for Medical Marijuana?

By Alexander Castelli - Shawe Rosenthal LLP

February 21, 2020

Apparently yes – at least in New Jersey. In Hager v. M&K Construction, a New Jersey state appellate court recently affirmed a workers’ compensation judge’s order for an employer to reimburse a former employee for his use of medical marijuana for chronic pain following a work-related accident.

Case Background.  In 2001, the employee severely injured his back in a work-related accident. Over the course of the next 15 years, he underwent multiple unsuccessful surgeries and was prescribed a slew of opioid pain medications.

In April 2016, the employee was experiencing side effects from his use of opioids and wanted an alternative. His doctor provided him with an authorization for medical marijuana. During a follow-up appointment with his doctor in May 2016, the employee reported that the medical marijuana had provided some relief for his incessant pain and he had stopped taking opioids. He continues to treat his pain with two ounces of medical marijuana per month, as authorized by his doctor, for which he pays $616 a month out-of-pocket.

At the trial for his workers’ compensation claim, the judge found that the present condition of the employee’s back was causally related to his long-ago accident at work, and that the employee exhibited permanent partial total disability. Doctors for both the employer and employee “agreed that the treatment of pain with opioids carried a risk of death, and that opioids were significantly more addictive than marijuana.” The judge concluded that medical marijuana was the “clearly indicated option.” The judge ordered the employer to reimburse the employee for the costs of medical marijuana and any related expenses.

A shocked employer appealed, arguing that the federal Controlled Substances Act (“CSA”), which makes it a crime to manufacture, possess, or distribute marijuana, preempted the New Jersey Compassionate Use Medical Marijuana Act (in July 2019, the Act was amended to the “Jake Honig Compassionate Use Medical Cannabis Act”) because it was impossible to comply with both laws.

The Court’s Decision. Addressing this issue for the first time, the New Jersey appellate court found that there was no conflict between the CSA and the Jake Honig Act because an employer’s reimbursement of a registered patient’s use of medical marijuana does not require the employer to violate the CSA, as it does not manufacture, possess or distribute marijuana.

The court also rejected the employer’s argument that it would be aiding and abetting the employee in a commission of a crime – the possession of marijuana – if it reimbursed him for medical marijuana as ordered by the judge. The court found that the employer is not an active participant in the commission of a crime because it would be complying with an order requiring it reimburse the employee for the legal use of medical marijuana under New Jersey law. In addition, the court rejected the employer’s argument that compliance with the order exposes it to the threat of federal prosecution for aiding and abetting the employee in the possession of marijuana. The court noted that the employer could not point to any federal prosecution against an employer or insurance carrier for its reimbursement of authorized medical marijuana treatment.

The court further rejected the employer’s argument that the judge failed to consider whether medical marijuana can be a reasonably and necessary form of treatment under the state’s Workers’ Compensation Act because it is illegal under the CSA. The court cited to the doctors’ testimony and found that the judge weighed the “alternative legal modalities of treatment” available to the employee.

Notably, the court found that the employee’s use of medical marijuana allowed him to cease using opioids, and stated, “That achievement, by itself, in light of the opioid crisis in existence today, should suffice as a rationale for the reimbursement of medical marijuana.” (Interesting that the solution to one illegally-used substance is another one. The lesser of two evils, it appears.)

It is unclear if the case will be appealed. However, this ruling is in line with New Jersey’s recent amendment to the Jake Honig Act, which, among other things, now expressly prohibits an employer from taking any adverse action against a medical marijuana user if the adverse employment action is “based solely on the employee’s status” as a medical marijuana patient. We must wait to see if other states will follow this court’s example with regard to requiring an employer to reimburse for medical marijuana.