New Jersey Supreme Court Rules that Employees can be Reimbursed for Medical Marijuana Expenses

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The New Jersey Supreme Court recently issued a significant decision in the area of cannabis law. In Hager v MK Construction, the New Jersey Supreme Court affirmed that medical cannabis prescriptions are lawful under workers compensation, but that buries the lede. The real impact of Hager is that the New Jersey Supreme Court addressed for the first time the friction between federal and New Jersey state cannabis law.

The employer in this case did not want to reimburse a worker for medical cannabis prescriptions for an injury that occurred on the job. MK Construction argued that the New Jersey Compassionate Use Act (the medical marijuana law in New Jersey) was preempted by the Federal Controlled Substances Act, setting up a showdown between state and federal law.

Hager is significant because the New Jersey Supreme Court found a way to reconcile the federal illegality of cannabis with New Jersey’s medical marijuana law. The Supreme Court reviewed congressional appropriations and noted that for seven straight years, the federal government declined to fund enforcement of the Controlled Substances Act in connection with state medical marijuana use. The New Jersey Supreme Court interpreted these congressional acts as a suspension of the Controlled Substances Act in the context of medical marijuana use as permitted by state law. It therefore rejected the employer’s argument that New Jersey’s Compassionate Use Act was preempted. The Supreme Court took care to limit its holding to the end of the 2021 federal fiscal year in case the next congressional appropriations bill reinstates funding to police medical marijuana usage permitted by state law.

The Supreme Court sent a loud and clear message in Hager that it would seek to protect cannabis users in New Jersey where appropriate because notwithstanding the thorny federalism question. While the court did not speak to recreational cannabis, it did at least note that New Jersey recently changed its laws to allow for adult use of recreational cannabis. It remains to be seen how the New Jersey Supreme Court would reconcile recreational cannabis use in New Jersey.

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