Quick view: Employment issues relating to cannabis use (USA)

Introduction

This Quick view provides information for in-house counsel, human resource professionals, and private practitioners about employment-related issues regarding cannabis use. It outlines both federal and state laws relating to the use of cannabis and cannabis-derived products. It also outlines issues related to cannabis use that are particularly relevant in the workplace context and provides readers with a better understanding of the complex and continually evolving legal landscape around cannabis use in the United States.

This Quick view covers:

Overview of cannabis regulation in the USA
Decriminalization/legalization
Employment issues

This Quick view can be read in conjunction with Checklist: Employee drug testing.

1. Overview of cannabis regulation in the USA

The term ‘cannabis’ refers to the dried leaves, flowers, stems, and seeds of cannabis plants, which contain, along with many other compounds, the mind-altering chemical tetrahydrocannabinol (THC) and other active compounds, such as cannabidiol (CBD). The terms ‘cannabis’ and ‘marijuana’ are often used interchangeably.

The definition of cannabis technically also covers hemp, which contains very low concentrations of THC and is cultivated for use in a wide range of products, including foods and drinks, personal care products, and fabrics. Federal and state laws now tend to treat hemp separately from marijuana/cannabis.

Cannabis has long been subject to both federal and state prohibitions. At the federal level, cannabis has been classified as a Schedule I controlled substance since 1970. A schedule I controlled substance is one deemed to have ‘no currently accepted medical uses and a high potential for abuse.’

State laws have also historically criminalized the use and possession of cannabis. However, this began changing as early as the 1970s. In the 1990s, a movement began to legalize or, at least, decriminalize cannabis for medical uses, and medical use was made legal in many states. More recently, starting in 2012, states have begun to legalize the recreational use of cannabis. The result of these two trends has been a diverse, potentially confusing, and constantly evolving patchwork of rules.

2. Decriminalization/legalization

2.1 Federal law

2.1.1 Controlled Substance Act

As noted above, cannabis has long been classified as a Schedule I controlled substance under the Controlled Substances Act (CSA). This means it is considered as one of the most dangerous and addictive of the substances covered and falls into the most restrictive category of such substances. Hemp, which contains a very low concentration of cannabis’s psychoactive component, is now exempt from coverage.

The Biden administration favored changing cannabis’s classification to Schedule III – drugs with a moderate to low potential for physical and psychological dependence (See US Department of Justice (DOJ), Statement from President Biden on Marijuana Reform). In May 2024, the DOJ initiated a formal rulemaking process that would consider this reclassification. The reconsideration process provides for an opportunity to comment and an administrative hearing. The process will be overseen by the US Drug Enforcement Administration. President Trump’s administration is currently reviewing the issue, but President Trump has previously stated that he endorses a state adult-use legalization campaign. Reports suggest that President Trump is considering reclassifying cannabis and moving cannabis to a lower drug schedule, a change that would categorize it as a less dangerous substance.

Meanwhile, under federal law, as well as under the laws of many states, it remains illegal to manufacture, distribute, dispense, and possess cannabis, except in approved government research studies. It is also illegal to transport cannabis in interstate commerce, through the US Mail, or to possess it on federal property. The CSA does not distinguish between medical and recreational uses of cannabis.

Federal penalties relating to cannabis vary, ranging from up to one year in federal prison for unauthorized simple possession, to 10 years or more imprisonment or a life sentence, and fines up to $10 million for individuals who traffic in large quantities of cannabis. The DOJ tends to focus on trafficking charges, and on prosecuting criminal networks, over pursuing individual, simple possession offenses. However, violators who are convicted of even a simple offense that does not result in jail time may also face other consequences, such as being barred from buying firearms or working for the federal government. Property used to grow cannabis is subject to confiscation through forfeiture proceedings.

As further outlined below, various cannabis-related activities are now legal under many states’ laws. Congress has therefore taken steps to limit federal prosecutions of violations of the CSA, though only where these would undermine a state’s medical cannabis laws. For almost a decade, Congress has included in its annual appropriation acts (which allocate federal funds) provisions that forbid the DOJ from using appropriated funds to prevent states from implementing their own medical cannabis laws, such as by taking direct legal action against states. For an example of such a provision, see the Consolidated Appropriations Act of 2023 section 531. Some federal courts have concluded that these provisions also prohibit federal prosecutions of private individuals or organizations that produce, distribute, or possess cannabis in accordance with applicable state medical cannabis laws.

2.1.2 Other relevant federal laws

Prosecution under the CSA is not the only threat to cannabis-related businesses. Even when operating legally under state law, they must also contend with other relevant federal laws. For example, section 280E of the Internal Revenue Code limits tax deductions claimed by businesses that ‘traffic’ in Schedule I and II substances. This can significantly affect an organization’s ability to do business.

In addition, federal laws such as anti-money laundering (AML) laws and the Bank Secrecy Act (BSA)can trigger serious civil and criminal penalties for financial services organizations that handle proceeds generated by cannabis-related business as, from a federal perspective, such proceeds are derived from unlawful activities. As a result, cannabis businesses often struggle to obtain affordable bank accounts and loans, further undermining their profitability.

The US Food and Drug Administration (FDA), which has to approve a drug before it can legally be marketed in the United States, has not approved the marketing of cannabis for any medical treatments (see FDA and Cannabis: Research and Drug Approval Process). Instead, it has approved only a couple of cannabis-derived and cannabis-related prescription drugs used for patients with rare forms of epilepsy; as well as drugs containing synthetic substances that are similar to those contained in cannabis, often used to treat chemotherapy side effects and HIV-related loss of appetite.

2.2 State and territorial laws

At the state level, laws that impose a full prohibition of cannabis have become the exception rather than the norm. Exact approaches vary. Some states make exceptions for cannabis that contains low levels of THC, while others permit a broader medical use of cannabis. A growing number of states now also permit recreational uses. However, the drug is still fully criminalized in a handful of states. Finally, some jurisdictions have opted to decriminalize rather than fully legalize the drug (or particular uses thereof), which makes possession of a small amount of cannabis for personal use a minor offense akin to a parking violation.

2.2.1 Recreational and medical use

As of June 26, 2025, a total of 24 states, the District of Columbia, and three U.S. territories have legalized or regulate cannabis for non-medical adult use. For example, in Connecticut, it is legal for adults (aged 21 or over) to possess and use up to 1.5 ounces (around 42 grams) of cannabis. Residents are also allowed to store up to five ounces in a locked container at home, or transport that amount in a locked glovebox or the trunk of a car.

Montana permits adults to own or use up to one ounce of cannabis. California similarly permits the possession by an adult of 28.5 grams (but only eight grams if ‘concentrated cannabis,’ defined as ‘the separated resin, whether crude or purified, obtained from cannabis’ is involved). Other states that permit adult recreational possession and use include Arizona, Missouri, Minnesota, Illinois, and Virginia.

Around six states officially permit only medical uses of cannabis but have also decriminalized its recreational use. This generally means that adults who possess small amounts will be subjected to only minor penalties and no criminal record, with violations treated like minor traffic offenses. For example, Mississippi imposes a maximum fine of $250 for the first offense of simple possession (possession without the intent to sell or transfer the cannabis) of up to 30 grams of cannabis. In New Hampshire, a fine of $100 applies to both first and second offenses (for possessing up to three-quarters of an ounce of cannabis).

2.2.2 Medical use only

As of of June 26, 2025, 40 states, three territories and the District of Columbia allow the medical use of cannabis products. In some states, a prescription or registration is required. For example, in Arkansas, users must apply for a Medical Marijuana ID card, which requires a physician’s certificate and is valid for up to one year. It is only granted to individuals with specific medical conditions, such as cancer, Crohn’s disease, or severe arthritis. Similar requirements and limitations are imposed in Florida and Pennsylvania.

By contrast, other states permit, even for medical use, the use only of cannabis-derived products (such as oils) that contain low percentages of THC. For example, in Georgia, registered patients may possess up to 20 ounces of CBD oil containing at most 5 percent of THC. Possession beyond that amount is subject to penalties, including imprisonment. However, hemp-derived CBD that contains less than 0.3 percent THC is legal for all adults. Texas permits physicians to prescribe the use only of ‘low-THC cannabis’ (defined as containing at most one percent by weight of THC).

2.2.3 Illegal use

In two states, cannabis use remains illegal regardless of the type of use but has also been decriminalized. Nebraska treats the first offense of possessing an ounce or less of cannabis as an infraction subject to a $300 fine and in 2024, voters overwhelmingly approved a measure to legalize up to 5 ounces of medical cannabis with a physician’s recommendation. In North Carolina, possession of small amounts have also been decriminalized, but such ‘small amounts’ are strictly defined, with the lowest fines applying only in situations when at most half an ounce of cannabis is involved.

Finally, in about five states, cannabis use or possession remains fully illegal. In Idaho, for example, only the very specific cannabis-derived medications that have been approved by the FDA are legal. In South Carolina, it is possible to be imprisoned for up to 30 days for possessing up to one ounce of cannabis. Wyoming and Kansas have also so far declined to decriminalize cannabis.

3. Employment issues

The ever-evolving legal landscape around cannabis adds complexity to a number of employment law issues.

3.1 Drug testing

Employers sometimes subject job candidates to drug testing during the job application process or conduct random or targeted drug tests on current employees, usually with the aim of promoting safe, productive, and professional working conditions. Deciding whether to conduct such tests, and how to deal with positive results, have become gray areas for employers due to the move towards legalization of cannabis by many states.

For more detailed information about employee drug testing, see Checklist: Employee Drug Testing.

3.2 Drug testing policies

Drafting workplace policies relating to drug testing can be particularly complex given that test results for cannabis use are notoriously difficult to interpret. Unlike tests for alcohol consumption, tests that show THC in the blood do not necessarily indicate that someone is currently intoxicated, nor is it possible to determine when the drug was actually consumed, given that results can be positive multiple weeks after use.

In some industries, such as transportation and construction, drug testing is required by law. When not required by law, drug testing can create problems for employers. State law may limit, or even prohibit, employee drug testing unless required by law, or in some cases the exact meaning of the relevant laws may be unclear or difficult to apply in practice.

For example, Nevada prohibits employers from refusing to hire someone based on a positive cannabis test, unless the candidate is applying for a specified post such as an emergency medical technician or firefighter; or if the employer determines that the safety of others could be adversely affected.

In New Jersey, where the recreational use of cannabis is legal, employers are permitted to conduct drug tests (pre-employment and on-the-job) but are not permitted to refuse to hire someone or to terminate an employee’s employment solely because they use cannabis items. Although the related rules are still being fleshed out, it appears that employers need to use a particular kind of drug test and combine the results of this test with a physical evaluation to determine whether the person is actually impaired by their drug use. The evaluation needs to be carried out by a properly certified individual. Employers may decide that these requirements are unmanageable and, where safety is not clearly an issue, decide to avoid drug testing that would include testing for cannabis.

3.3 Labor impacts

Testing for cannabis can also cause more practical issues. With cannabis use increasing across the US, excluding those candidates or employees who test positive may make it difficult to cover all open positions - a legitimate concern, particularly in areas hit by labor shortages. Amazon, for example, officially excluded cannabis from its pre-employment drug screening program (for positions where such screening is not legally required) in 2021, citing, among others, the need to expand their applicant pool.

If an employer feels strongly about carrying out drug testing that includes cannabis, they should study the laws in the specific jurisdictions relevant to their organisation. It will also be vital to clearly spell out the reasons for carrying out such testing in the employer’s drug testing policy or an employee handbook, as some form of justification may be required.

3.4 Medical versus recreational cannabis use

State laws generally permit employers to insist on drug-free workplaces, regardless of whether cannabis use is fully or partly legal in a given state. For example, the Connecticut Act that legalizes the recreational use of cannabis allows employers to adopt and implement policies ‘prohibiting the possession, use or other consumption of cannabis by an employee.’ However, exactly what this means will depend heavily on the specific state - or even locality - involved. When drafting workplace policies that relate to drug use, employers will likely need to keep in mind, and distinguish between, recreational and medical uses of cannabis. These uses raise different issues for employers.

3.4.1 Recreational use

In states where the recreational use of cannabis is now legal, employers should be aware that state laws that prohibit discrimination based on lawful non-work activities may now also cover cannabis use. This is the case, for example, in New York and Montana. This does not mean that employers must tolerate ‘impaired’ employees at work. However, it does mean that a traditional drug test is unlikely to be sufficient to justify adverse action, given that someone could test positive even if they used cannabis only outside of working hours.

Employers should follow developments regarding available testing, as well as related rules. California, for example, has, as of January 2024, due to the passage of Assembly Bill 2188, which amended the California Fair Employment and Housing Act (FEHA), distinguished what kind of action is permitted by employers, depending on whether the drug test used is one that shows merely that someone has non-psychoactive cannabis metabolites in their hair, blood, urine, or other bodily fluids, or a test that shows the presence of psychoactive chemical compounds.

Employers should adjust their policies and practices to ensure that, where impairment due to cannabis use is suspected, any physical evidence of impairment, and the nature and extent of the impairment, are clearly identified and documented. It will likely also be necessary to provide training in detecting signs of cannabis-related impairment to relevant personnel, such as HR and line managers.

3.4.2 Medical use

The growing use of cannabis to treat various medical conditions, and the widespread legalization of such uses across US states, means that employers will need to think proactively about how to approach the issue. To date, employers are not strictly required in any state to let medical cannabis users do so during working hours, even in states that allow medical cannabis use. However, exceptions are starting to emerge.

For example, in Nevada employers must try to reasonably accommodate the medical needs of employees who use medical cannabis if they hold a valid cannabis registry card, and the accommodation would not:

pose a threat of harm or danger to persons or property;
put undue hardship on the employer; or
prohibit the employee from fulfilling any of their job responsibilities.

In New York, certified medical cannabis users are considered to have a ‘disability’ under the state’s human rights law. Accordingly, organisations subject to the law’s requirement may not, among other things, terminate employment or otherwise discriminate (in terms of compensation or employment conditions) against someone based on their status as a certified medical cannabis patient. Case law on the subject suggests that this would mean, for example, that employers must engage in good faith in an interactive process with an employee to consider whether an accommodation is available, before simply terminating an employee’s employment due to their medical cannabis use.

With cannabis-related laws and regulations constantly evolving, further changes are inevitable. For individuals responsible for guiding relevant workplace policies and procedures, it will be vital to regularly check jurisdiction-specific developments to avoid contravening both evolving norms and rules.

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Laws

Controlled Substances Act (USA)