Background. Ohio s New Medical Marijuana Law and Its Impact on Townships. Overview 4/24/2017. Susan M. Bungard Walter Haverfield, LLP

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1 Ohio s New Medical Marijuana Law and Its Impact on Townships Susan M. Bungard Walter Haverfield, LLP Overview Background on new state law, HB 523 Information on previous efforts to legalize marijuana in Ohio Economic implications Banking and security considerations Criminal penalties may require revision Municipalities may regulate through zoning Impact on employers is minimal Background 1

2 Legalization of Medical Marijuana On June 8 th, Ohio became the 25 th state to enact medical marijuana legislation. DOJ no longer attempts to prosecute medical marijuana distributors. DOJ also will not challenge state laws. But who knows what will happen after the election? Qualifying Diagnoses (a) Acquired immune deficiency (m) Pain that is either of the following: syndrome; (i) Chronic and severe; (b) Alzheimer's disease; (ii) Intractable. (c) Amyotrophic lateral sclerosis; (n) Parkinson's disease; (d) Cancer; (o) Positive status for HIV; (e) Chronic traumatic encephalopathy; (p) Post traumatic stress disorder; (f) Crohn's disease; (q) Sickle cell anemia; (g) Epilepsy or another seizure (r) Spinal cord disease or injury; disorder; (s) Tourette's syndrome; (h) Fibromyalgia; (t) Traumatic brain injury; (i) Glaucoma; (u) Ulcerative colitis; (j) Hepatitis C; (v) Any other disease or condition (k) Inflammatory bowel disease; added by the state medical board under section of the Revised (l) Multiple sclerosis; Code. General Provisions Bill went into effect on September 8, Permitted uses: Vaporization, tinctures, edibles, patches, plant materials, and oils Smoking marijuana is not permitted. Affirmative defense available for drug charges. 2

3 Medical Marijuana Control Program Must be fully operational by September Will include state licensure of medical marijuana cultivators, processors, retail dispensaries, and testing laboratories as well as the registration and certification of physicians who may recommend treatment with medical marijuana. Medical Marijuana Advisory Committee to enact regulations for medical marijuana. Apart of the State Board of Pharmacy and the Department of Commerce. Municipalities are not entitled to a member on the Committee. Reciprocity agreements between Ohio and other States which have legalized Medical Marijuana Medical Marijuana Control Program Continued Ohio Medical Board has discouraged physicians from recommending marijuana until the physician has obtained a certificate to recommend from the Medical Board Such certificate is still in development. Rep. Kyle Koehler introduced HB 597 on Sept. 20 which would amend the law to restrict reciprocity agreements to states with restrictions similar to Ohio s. Potential to decrease access to medical marijuana before Ohio dispensaries are operational. Referred to Government Accountability and Oversight Committee on November 10. Medical Marijuana Control Program Continued Announced proposed cultivator rules on November 2 Limits number of cultivator licenses issued before September 8, level 1 and 6 level 2, no more than one of each in a territory. Level I is permitted to operate up to 15,000 square footage» License Fee is $180,000 and the application fee is $20,000» Must have at least $500,000 in liquid assets Level II is permitted to operate up to 1,600 square footage» License fee is $18,000 and the application fee is $2,000» Must have at least $50,000 in liquid assets Quality assurance and security plans must be submitted at the time of application Must pass inspection and be prepared to cultivate medical marijuana within nine months of the issuance of the provisional license Employees are required to receive a state issued medical marijuana employee ID card 3

4 Medical Marijuana Control Program Continued We can anticipate additional proposed rules in the near future. for updated information. Previous Efforts to Legalize Marijuana in Ohio Independent polls from October 2015 showed that 90% of Ohioans supported legalized medical marijuana (9% opposed), but only 53% supported legalizing small amounts of marijuana for personal (recreational) use. Ohio Marijuana Legalization Initiative or Issue 3 was defeated in 2015 with over 63% voting down the Initiative, which would have legalized all forms of uses of marijuana. Lobbying Efforts Marijuana Policy Project proposed an amendment to the Ohio Constitution in March 2016 to legalize medical marijuana. Amendment would have permitted: Home grown medical marijuana; All products and methods of consuming products; Additional qualifying conditions; Recommendations by physician assistants and nurse practitioners, as well as physicians. Supporters needed 305,591 valid signatures by July 6 to put the Constitutional Amendment on the November ballot. 4

5 HB 523 a Response to Initiative Effort HB 523 was passed on May 25, 2016 and the petition drive for the Constitutional Amendment was immediately suspended. We still have much work ahead of us to improve this imperfect law while holding state lawmakers and regulators to the promises contained in HB 523, but we are proud of the role that we played in getting this law enacted. We plan on working to better this program, utilizing our amendment as a roadmap for those improvements. Spokesman for Ohioans for Medical Marijuana Economic Implications Designation: Recommendation Under the new law, registered physicians can give patients recommendations to use medical marijuana. These recommendations are not prescriptions. Municipalities may levy sales tax on marijuana recommendations, but Townships are limited by the law from imposing sales taxes. 5

6 Leverage In Illinois, local governments have cashed in on dispensaries desire to operate within their borders. Must have community benefit, donations. Connecticut dispensaries and farms give large community benefit plans. Cashless Payment System Banks and lenders hesitant to service marijuana businesses due to uncertainty in federal regulation. HB 523 creates a closed loop payment system (similar to prepaid debit cards or gift cards) run by the Ohio Department of Commerce. Medical Marijuana and Professional Ethics The Ohio Rules of Professional Conduct prohibit attorneys from knowingly counseling or assisting a client to break the law and from committing an illegal act that reflects adversely on the lawyer s honesty or trustworthiness. Advisory Opinion published on August 6, 2016: A lawyer cannot provide legal services... To establish and operate a medical marijuana enterprise or to transact business with a... medical marijuana enterprise. Supreme Court of Ohio amended the Ohio Rules of Professional Conduct on September 20, 2016, which creates an exception for counselling regarding medical marijuana. A lawyer may counsel or assist a client regarding conduct expressly permitted under Sub. H.B. 523 of the 131st General Assembly authorizing the use of marijuana for medical purposes and any state statutes, rules, orders, or other provisions implementing the act. In these circumstances, the lawyer shall advise the client regarding related federal law. 6

7 Opportunities for Local Regulation Dispensary Security Security is important due to the amount of cash on hand. Some entities have enacted ordinances requiring dispensaries to have cameras, security guards, safes, and other security measures. 7

8 Criminal Municipalities/Townships cannot pass ordinances/resolutions criminalizing medicinal marijuana. Patients may not be criminally prosecuted for: (1) Obtaining, using, or possessing medical marijuana; (2) Possessing certain marijuana paraphernalia. Criminal ordinances may require amendment to conform to new state law. Zoning Dispensaries must be at least 500 feet from any church, public school, public library, public park, or public playground. Unlike liquor establishments, this is mandatory. Zoning Continued Townships can further regulate the location of medical marijuana facilities. Townships can pass resolutions to prohibit or limit the number of cultivators, processors, and retail dispensaries. May entirely prohibit cultivators, processors, and dispensaries from being located in the township. Agricultural use zoning limitations that apply to townships do not prohibit a township from regulating the location of retail dispensaries or prohibiting the dispensaries from being located in the unincorporated territory of the township. 8

9 Possible Zoning Restrictions Number of establishments Signage Security Guards, safes, cameras, lighting, etc Operations Use on Premises Hours Cultivation area and height limitations: Arcata, CA Cultivation cannot exceed 1,500 square feet and ten feet in height. Hamilton Zoning Ordinance Hamilton, Ohio preemptively banned the sale of medical marijuana in their zoning code last year. 1108: Medical Marijuana Sales: shall mean any business, building, structure, or land used for the sale of Medical Marijuana. (OR ) Medical Marijuana Sales are not a permitted use in any zoning district. Hamilton Zoning Ordinance 9

10 Temporary Bans in Other Municipalities Lakewood, Beavercreek, Troy, and Piqua have all passed six month moratoriums on licensing medical marijuana businesses. Rocky River, Lancaster, Lima, and Liberty Township are also working on similar ordinances/resolutions. Lakewood Moratorium Council hereby imposes a moratorium on the granting of building permits or certificates of occupancy for any building, structure, use or change of use that would enable the cultivation, processing, or retail sale of medical marijuana for a period not to exceed six months from the effective date of this resolution. Johnstown Accepts Medical Marijuana Johnstown, on the other hand, issued a resolution permitting medical marijuana operations within its limits. Apeks Supercritical, a manufacturer of marijuana equipment, already operates in Johnstown. 10

11 Impact on Employers Accommodation and Adverse Employment Action Employers are not required to permit or accommodate an employee's use, possession, or distribution of medical marijuana. Law regarding ADA accommodations is likely to evolve as use becomes more prevalent. Employer may refuse to hire, discharge, discipline, or take an other adverse employment action due to an employee s marijuana use, or possession or distribution or medical marijuana. Employees and applicants may not sue employers for adverse action based on medical marijuana use; Employers may establish and enforce drug free workplace policies; DOT and workers compensation may be enforced; 11

12 Drug Free Workplace Programs Employers may establish or maintain a formal drug free workplace program. Just cause if discharged for violating drugfree workplace policy by using medical marijuana. Ineligible for unemployment compensation. Worker s Compensation The Administrator of Workers' Compensation may still grant rebates and discounts to employers with a drug free workplace program. BWC will not be required to pay for patient access to marijuana. An employer may defend against workers' compensation claims when medical marijuana contributes to or results in injury. Workers Compensation (con t.) Rebuttable presumption: positive drug test defeats claim only if drug not prescribed by healthcare provider. Argument medical marijuana prescribed Causation drug use proximate causation; usually evidenced by high level of drug in the employee s system; difficult with marijuana 12

13 Next Steps for Employers Review and update drug free workplace programs. Define illegal drugs to include drugs illegal under federal, state, or local law. Employers may treat the use of medical marijuana similar to use of legally prescribed drugs. Careful disability Is it illegal drug use? Do you have to engage in the interactive process? Do you have to reasonably accommodate? How might you reasonably accommodate? PLAN have a policy in writing Notify employees how you will handle medical marijuana Stay abreast of changes in the federal law, workers compensation decisions, other administrative decisions and case law OSHA Rule Employer cannot use drug testing, or threat of drug testing, to retaliate against reporting, or to deter reporting. New OSHA Regulations Included in OSHA s new final rule regarding electronic reporting requirements. Issued May 12, 2016 Effective on November 1, 2016 Originally rules were set to become effective on August 1, 2016, but OSHA pushed back the date to allow additional time to publish guidance after industry groups filed lawsuits. 13

14 New Requirements for Employers Reporting procedures must be reasonable and not deter or discourage employees from reporting. New Requirements for Employers 2) Employers are expressly prohibited from retaliating against employees for reporting workrelated injuries and illnesses. Enforcement OSHA says it can issue citations for: Alleged retaliatory or discriminatory conduct in the absence of an employee complaint and Implementing policies and procedures that could reasonably discourage an employee from reporting a workplace injury or illness even when there was no retaliation or discrimination; no failure to report; and no injury (Sound like the NLRB?) 14

15 Blanket Post Accident Drug Testing Blanket, automatic post injury drug testing is considered a form of adverse action that can discourage reporting. Blanket policy presumed retaliatory. Should not use post injury drug tests if an injury or illness is very unlikely to have been caused by employee drug use, or if the method of drug testing does not identify impairment. Bee sting, injury caused by long term strain, injury caused by a malfunctioning tool, etc. Urine test for illegal drug use unlikely to determine impairment NO IMPACT on random testing What is reasonable policy? Report immediately, within 8 hours, or before the end of the shift? Incentives or rewards for keeping workplace injuries down could be construed as encouraging employees not to report illness and injuries or could be viewed as retaliation (pressure from coworkers or supervisors) Next Steps for Employers Revise blanket post injury drug testing policies. Limit post accident testing to instances when drug impairment is suspected, and/or could have reasonably contributed to the injury, and where the test could indicate impairment, rather than general drug use. Train staff and supervisors on the new policy. 15

16 The Real World Connecticut Supreme Court reinstatement of University of Connecticut employee who was caught smoking marijuana during working hours. Termination was not the only appropriate disciplinary action. Arbitrator found that termination was too harsh a penalty. High level of deference to arbitration awards. New Mexico No reasonable accommodation required Employers are not affirmatively required to provide reasonable accommodations for use of the prescribed marijuana, according to Garcia v. Tractor Supply (2016). The court in Garcia held that an employer permissibly fired an employee legally using marijuana for medical conditions because federal law prohibited the use of the controlled substance The employee, Garcia, was diagnosed with HIV/AIDS and prescribed medical marijuana pursuant to New Mexico s Compassionate Use Act Hired by Tractor Supply, after informing it of his diagnosis and use of medical marijuana. Upon hiring, the employee failed a required drug test, testing positive for cannabis metabolites. Tractor Supply terminated the employee based on the positive test. The former employee sued in the District Court for the District of New Mexico, claiming that his discharge violated the state law prohibiting disability discrimination, because his medical marijuana use was treatment for his medical condition and the employer should have reasonably accommodated his use. The employer argued that it was not required to provide any accommodations for use of a substance that remains illegal under federal law. The New Mexico court agreed with the employer and found that an employer is not required to accommodate an employee s illegal drug use because it would be permitting conduct that the Controlled Substances Act expressly prohibits. 16

17 Conclusion Municipalities/townships cannot prohibit the use of medical marijuana within their borders. However, significant control over medical marijuana cultivation and distribution is in the hands of municipalities/townships. Although uncertain at this time, municipalities stand to benefit greatly from tax revenue and other incentives. QUESTIONS???? 17