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The Cannabis Carousel

Round and round we go with state versus federal law. Is it time to get off the ride?

January 10, 2022 Photo

With the New Jersey Supreme Court unanimously holding that employers and insurance companies must pay for medical marijuana when ordered by the court, and the Minnesota Supreme Court holding that federal law preempts the state’s medical marijuana law, companies and claims management professionals are stuck trying to sort out a legal turf war fit for a mafia movie. There is the U.S. Constitution, state constitutions, federal laws, state laws, and federal and state court decisions.

At the absolute pinnacle of the pyramid stands the U.S. Constitution. It got to that exalted position because, prior to its creation, every state had its own constitution. When the states agreed to form a confederation, they necessarily had to agree to give up some of their sovereign powers. The states did not do it willingly, fearing that it would eventually result in their ceasing to exist. When it became obvious that the Constitution would not get the necessary votes to pass, the founding fathers started amending the document. The 10th Amendment reassured the people that, “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” The people approved and the rest is (constitutional) history.

Article VI, Clause 2 of the U.S. Constitution, commonly referred to as the Supremacy Clause, states, “This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; … shall be the supreme Law of the Land; and the Judges in every State shall be bound thereby, any thing in the Constitution or Laws of any State to the Contrary notwithstanding.”

In other words, once the federal government acts on a topic, any state laws that conflict are considered void.

Pres. Richard Nixon confronted the generational culture wars of the late 1960s in part by getting Congress to approve the Controlled Substances Act (CSA). Drugs and substances that were subject to the law received a three-part test:

•     Did the drug or other substances have a high potential for abuse?

•     Did the drug or other substances have a currently accepted medical use for treatment in the U.S.?

•     Could abuse of the drug or other substances lead to severe psychological or physical dependence?

The answer to each of these questions determined which of the five schedules would apply. If, as in the case of cannabis and LSD, the substance failed all three tests, it became a Schedule I prohibited substance. When it was first enacted, the most controverted issue was whether cannabis was addictive. Fifty years later, the question is still debated. By classifying cannabis as a Schedule I drug, the federal government made cannabis illegal. States could enact even stricter laws, but any law more lenient was preempted by the CSA.

Not all states agreed. California was the first to legalize medical marijuana. The law was challenged and, in 2005, found its way to the U.S. Supreme Court in a case entitled Gonzalez v. Raich. The co-respondent had six marijuana plants pursuant to his California medical marijuana card. Drug Enforcement Administration (DEA) agents raided his home and destroyed his plants. The lower court found that Congress overstepped its authority under the Commerce Clause of the U.S. Constitution. The U.S. Supreme Court reversed, holding that, while the six marijuana plants would never enter interstate commerce, the products controlled by the CSA were part of interstate commerce and, therefore, were properly within Congress’ control.

Ten years later, in Coats v. Dish Network, LLC. (2015) a rematch took place in Colorado. Coats, a quadriplegic, used marijuana pursuant to the Colorado medical marijuana law. After failing a random drug test, his employer terminated him. Coats lost before the Colorado Supreme Court, which held that the state law merely protected Coats from state criminal prosecution for possession or use of cannabis. It did not, however, make it “lawful” under federal law.

But the world was changing.

Katelin Noffsinger worked as a health care worker when she received an offer from SSC Niantic Operating Company. After accepting the job offer and resigning her original position, she was advised that she had to submit to a pre-employment drug screen. She told the new employer that she used medical marijuana pursuant to the Connecticut Palliative Use of Marijuana Act (PUMA). When the drug screen came back positive, the employer withdrew the offer. Noffsinger sued under the anti-discrimination section of PUMA. The employer sought to dismiss the case arguing, amongst other things, that the CSA preempted PUMA. Finally, a federal judge would decide the issue of federal supremacy.

The judge commenced his opinion by stating, “This lawsuit calls upon me to decide if federal law preempts Connecticut law. In particular, I must decide if federal law precludes enforcement of a Connecticut law that prohibits employers from firing or refusing to hire someone who uses marijuana for medicinal purposes.”

Did you see what happened there? The judge changed the question from “Does the CSA preempt PUMA,” to “Does the CSA preclude PUMA?” Put another way, “Can the CSA and PUMA coexist?” In the very next sentence of his 2017 decision, the judge answered his own question: “I conclude that the answer to that question is ‘no’.” The federal judge held that while the CSA makes cannabis illegal, it does not require an employer to fire someone for using it pursuant to state law. Therefore, the new employer could not deny employment.

Take a Seat

Workers’ compensation has been relegated to a permanent seat at the kiddie table of law. When it comes to the CSA, workers’ compensation not only deserves a seat at the adult table, but also it rightfully should be at the head of it.

In Bourgoin v. Twin Rivers Paper Co (2018), the workers’ compensation court ordered the employer to pay for Bourgoin’s medical marijuana pursuant to the Maine Medical Use of Marijuana Act (MMUMA). The employer appealed, arguing that the CSA preempted the MMUMA. The majority of a sharply divided Maine Supreme Court held that the CSA preempted the MMUMA.

The court defined the issue as such: “[W]e are called upon for the first time to consider the relationship between the federal Controlled Substances Act (CSA) and the Maine Medical Use of Marijuana Act (MMUMA). We conclude that…there is a positive conflict between federal and state law, and, as a result, the CSA preempts the MMUMA as applied here.”

The majority continued, “The preemption analysis must begin with the Supremacy Clause of the U.S. Constitution, which unambiguously provides that if there is any conflict between federal and state law, federal law shall prevail.”

The court professorially explained that the Supremacy Clause only preempts state law when one of three scenarios exist:

•     Express Preemption—where Congress expressly states that federal law preempts the state law.

•     Field Preemption—where Congress explicitly or implicitly leaves no room for state law, or where federal law is so dominant that it will be assumed to preclude enforcement of the state law.

•     Conflict Preemption—where the state law actually conflicts with federal law.

After finding that the MMUMA created conflict preemption, the court went on to explain that conflict preemption presents itself in two different forms:

•     Where compliance with both federal and state [law] is a physical impossibility…because federal and state law irreconcilably conflict.

•     Where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.

The three-judge majority held that this case fit into the first sub-category of conflict preemption. The CSA made it a crime to purchase cannabis, and the MMUMA required the employer to pay for the employee’s cannabis. Finally, a state supreme court provided a reasoned opinion explaining why the CSA preempted medical marijuana laws. Well, “kind of.”

The majority argued that the CSA, as a matter of law, established that cannabis had no recognized medical use in the U.S. The MMUMA necessarily presumed that there are recognized medical uses. The Maine Supreme Court was left no other option but to strike down the MMUMA. Like earlier courts, the majority recognized while the state law provided safe harbor from state criminal prosecution, it does not and cannot “create a state right to commit a federal crime….” The court reasoned that enforcing the workers’ compensation court’s order would require the employer to commit a federal crime. The court’s majority acknowledged that “the historic police powers of the States were not to be superseded by the federal [law] unless that was the clear and manifest purpose of Congress.”

Whereas the majority acknowledged this principle in passing, the court’s two-person minority saw this concept as the very keystone of a flawed majority opinion. The court’s minority started by establishing that workers’ compensation—which was not established until about 125 years after the signing of the U.S. Constitution with its Supremacy Clause—is traditionally the purview of the states:

In cases where federal law is said to bar state action in fields of traditional state regulation, such as workers’ compensation legislation, there is an assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest intent [of Congress].

They then turned to the actual language of the CSA to redefine the question:

No provision of [the CSA] shall be construed as indicating an intent on the part of the Congress to occupy the field in which that provision operates, including criminal penalties, to the exclusion of any State law on the same subject matter which would otherwise be within the authority of the State, unless there is a positive conflict between that provision of this title and that State law so that the two cannot consistently stand together.

The minority emphasized that there was no “positive conflict” because neither the MMUMA nor the workers’ compensation judge required a citizen to possess, manufacture, or distribute marijuana. Unlike the majority, which found that compliance with both federal and state law is an impossibility, the minority found that the CSA and the MMUMA do not create an irreconcilable conflict and, therefore, preemption does not apply. Courts wanting to strike down the application of state laws rely on the majority’s reasoning in Bourgoin. Courts believing in the validity of state medical marijuana laws rely on the minority’s reasoning.

It would seem that the issue could be brought to a definitive head by federal prosecutors. All they need to do is seek an injunction against any of the over 30 state statutes. They could finally force the U.S. Supreme Court to speak. To date, they have not.

In 2009, Deputy U.S. Attorney General David W. Ogden issued an official Department of Justice (DOJ) memorandum acknowledging that the U.S. Attorney’s Office viewed prosecuting medical marijuana claims as a low priority for the government.

In every federal budget since 2014, Congress has passed a rider to the federal budget that prohibits the DOJ from spending money on prosecuting activities that are consistent with state medical marijuana laws.

The Supreme Court recently had the opportunity join the fracas. Unlike an offer made by Vito Corleone in “The Godfather,” the justices found that they had an offer they could—and did—refuse. In June 2021, the Supreme Court was asked to accept a case involving tax issues involving marijuana dispensaries. The court’s demurring was expected. What was surprising was the opinion of one of the Supreme Court’s most conservative justices, Clarence Thomas. Instead of just declaring the two magic words “certiorari denied,” Thomas opined, in part, “A prohibition on intrastate use or cultivation of marijuana may no longer be necessary or proper to support the federal government’s piecemeal approach.” He questioned, in light of the federal government’s policies, if Gonzalez still made sense.

Here is the problem: Even if Gonzalez is no longer considered correct, its reasoning is now a cornerstone of so much law that the Supreme Court would have to disrupt an entire body of law to reverse itself—and the court knows it. It appears that Justice Thomas, speaking for the Supreme Court, was telling Congress to update the law.

And as for Congress acting on the issue, there are a number of bills being debated. But to quote Michael Corleone, heir to Corleone family business in “The Godfather” movies, “There are negotiations being made that are going to answer all of your questions and solve all of your problems. That’s all I can tell you right now.” 

Editor’s Note: Due to corporate communication restrictions, Bradley Hamline contributes under a pseudonym. However, he has been vetted by CLM Magazine’s editors to confirm his extensive experience and background. Questions or comments should be sent to eric.gilkey@theclm.org.

About The Authors
Bradley Hamline

Bradley Hamline is a corporate claims and risk manager who specializes in managing the intricacies of workers' compensation programs, policies, claims, and regulations.  

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