June 6, 2023

Volume XIII, Number 157


June 06, 2023

Subscribe to Latest Legal News and Analysis

June 04, 2023

Subscribe to Latest Legal News and Analysis

Sessions’s Marijuana Memo Reminds Colorado Employers They Are Not Out of the Federal Weeds

Attorney General Jeff Sessions’s January 4, 2018, Memorandum for All U.S. Attorneys explicitly rescinds all prior nationwide guidance on marijuana-related offenses under the federal Controlled Substance Act (CSA) issued from the U.S. Department of Justice, including Deputy Attorney General James Cole’s August 29, 2013, Memorandum for All U.S. Attorneys (Cole Memo). The Cole Memo was until recently the guidepost for federal prosecutors in using their discretion to enforce marijuana-related offenses under the CSA. The Cole Memo directly addressed the conflict between state laws legalizing marijuana for medicinal purposes and the CSA, and set forth a new, albeit more lenient, list of priorities for prosecution and enforcement of certain marijuana-related offenses under federal law. The relaxed policy articulated in the Cole Memo spurred the state legalization of marijuana.

Following the release of the Sessions Memo, the U.S. Attorney for Colorado, Bob Troyer, issued a statement indicating the rescission of the Cole Memo does not change the approach taken to marijuana enforcement in Colorado. This approach is described as focusing on the prosecution of those who create the greatest safety threats to Colorado communities. The Department of Justice’s (DOJ’s) principle of federal prosecution supports the position that local U.S. Attorneys have discretion to modify or depart from DOJ principles as necessary in the interest of fair and effective law enforcement within their district. See Chapter 9-27.140 of the U.S. Attorneys’ Manual.

Colorado’s Attorney General, Cynthia Coffman, stated she will defend the state’s marijuana law and that she expects the federal government will continue to focus its efforts on the black market and not marijuana businesses abiding by Colorado law.

State of Marijuana Law for Colorado Employers Under the Cole Memo

While a Colorado employer generally has a right to terminate an at-will employment arrangement without consequences, Colorado's Lawful Off-Duty Activities Statute (LODAS) is an exception to that maxim. LODAS provides, in part:

It shall be a discriminatory or unfair employment practice for an employer to terminate the employment of any employee due to that employee's engaging in any lawful activity off the premises of the employer during nonworking hours unless such a restriction: (a) [r]elates to a bona fide occupational requirement or is reasonably and rationally related to the employment activities and responsibilities of a particular employee or a particular group of employees, rather than to all employees of the employer; or (b) [i]s necessary to avoid a conflict of interest with any responsibilities to the employer or the appearance of such a conflict of interest. C.R.S. § 24-34-402.5(1).

In sum, the statute makes it an unfair and discriminatory labor practice to terminate an individual’s employment based on the employee’s engagement in “'lawful' outside-of-work activities." Coats v. Dish Network, LLC, 350 P.3d 849, 850, 2015 CO 44 (Colo. 2015). It is often repeated by Colorado courts that the general purpose of section 24-34-402.5 is to keep an employer's proverbial “nose” out of an employee's off-site, off-hours business. Coats v. Dish Network, L.L.C., 303 P.3d 147, 151, 2013 COA 62 (2013), aff'd, 350 P.3d 849, 2015 CO 44 (2015).

The Coats v. Dish Network opinion issued by the Colorado Supreme Court in 2015 provided a guiding light to both Colorado and national employers in the murky waters where state cannabis legalization and employment laws commingle. Coats, a quadriplegic, was fired from his position as a telephone customer service representative at Dish Network after testing positive for THC. Coats had a medical marijuana license, and used cannabis outside of working hours for medical purposes only. After he was fired, Coats sued Dish Network for wrongful termination, arguing that Colorado’s Medical Marijuana Amendment made the use of medical marijuana “lawful” for purposes of LODAS. The Supreme Court declined to decide that issue, instead ruling that the term “lawful” should be interpreted broadly to include the prohibition of the possession of cannabis under CSA.

Recently, at least one subsequent Colorado court decision took care not to extend the lawful/unlawful dichotomy of Coats to other types of employment actions. The U.S. District Court of Colorado rejected an employer’s argument that the Court lacked subject-matter jurisdiction over a FLSA claim brought by security guards against the employer, which was engaged primarily in providing security services to the cannabis industry. Kenney v. Helix TCS, Inc., Civil Case No.1:17-cv-01755-CMA-KMT (D. Colo. Jan. 5, 2018) (unpublished).

In Kenney, the Court refused to accept the employer’s argument that it was exempted from complying with the FLSA for the sole reason that its primary business violated federal law. Id. at 6. Judge Arguello favorably discussed the U.S. District Court of Oregon opinion in Greenwood v. Green Leaf Lab LLC, noting that the facts pled in Green Leaf were almost identical to those in Kenney. See Id. at 5 (citing Green Leaf, No. 3:17-cv-00515-PK, 2017 WL 3391671, 1 (D. Or. July 13, 2017), adopted at 2017 WL 3391671 (D. Or. Aug. 7, 2017) (rejecting defendant-employer’s argument that the court lacked jurisdiction to hear plaintiff’s FLSA claim because the employer’s medical-marijuana business was illegal under federal law, and finding that defendant was challenging the legal sufficiency of plaintiff’s FLSA claim pursuant to F.R.C.P. 12(b)(6)). Pointing out that unlawful commercial activity has never prevented an offender from being subjected to tax burdens on ill-gotten gains, the Court found it had federal-question jurisdiction over the plaintiff’s FLSA claim and permitted the action to proceed. Id.

Impact of Sessions’s Memo on Colorado Employers

We do not believe that Attorney General Sessions’s recent pronouncement would modify Colorado precedent that maintaining and enforcing drug-free workplaces is lawful. Colorado courts continuously have upheld the preemption of federal law over state law in marijuana matters.

Other jurisdictions have similarly followed the Colorado Supreme Court. See, e.g., Lambdin v. Marriott Resorts Hosp. Corp., No. 16-00004 HG-KJM, 2017 U.S. Dist. LEXIS 149570, at 24–25 (D. Haw. Sep. 14, 2017) (“[Hawaii’s] state law decriminalizing marijuana use does not create an affirmative requirement for employers to accommodate medical marijuana use.”); Roe v. Teletech Customer Care Mgt. (Colorado) LLC, 171 Wn.2d 736, 760, 257 P.3d 586 (2011) (holding that Washington State's medical marijuana law did not create a private right of action and did not proclaim a public policy prohibiting the discharge of an employee for medical marijuana use).

The Sessions Memo indicates that the federal government continues to maintain the belief that marijuana is an illegal substance and drug-free policies can prevent entanglement with federal law. The extent to which federal law will be enforced in Colorado remains uncertain at this time. Workplaces in Colorado that elect not to have a zero-tolerance policy in regard to marijuana because it is legal under state laws may therefore wish to reconsider such policies until there is more clarity based on the actions, not the words, of the DOJ.

© 2023 Wilson ElserNational Law Review, Volume VIII, Number 23

About this Author

Wilson Elser’s Cannabis Law practice assists growers, processors, distributors and vendors within the legalized cannabis industry as well as organizations outside the industry impacted by cannabis legalization. Collectively, our attorneys command the experience to tackle the legal issues of greatest importance in this space, such as corporate formation and governance, commercial transactions, product liability, professional liability, labor and employment, intellectual property, licensing and regulatory issues, tax assistance and insurance coverage analysis.

Whether representing...