Marijuana Is Legal in Your State, Do the Employer and Insurer Have to Pay for It?

With no clear direction and with medical marijuana being a reasonable and necessary treatment, the states have to decide for themselves.

October, 2022  | By Barry D. Bernstein

Originally published in The Legal Intelligencer 

Many injured employees believe that because marijuana is legal in their state, it means that the employer and insurer will have to pay for it. This is not correct.  The Controlled Substance Act is a federal law that prohibits the use of marijuana as a scheduled I controlled substance. Therefore, the question that needs to be decided is whether the federal law that prohibits the sale of marijuana preempts the state law that requires an employer to provide an injured employee with medical treatment. Does the Workers’ Compensation Commission have the jurisdiction to even decide this issue? This article will discuss how various jurisdictions have dealt with these issues and to provide the reader with the information necessary to handle these cases in their jurisdiction.

The U.S. Supreme Court has yet to grant writ of certiorari to any case submitted for review regarding the issue of whether an employer and its insurer are required to pay for marijuana in workers’ compensation cases.

Most recently the state of Minnesota addressed these two issues of whether federal law preempts state law and whether a workers’ compensation commission has jurisdiction to decide the issue. The Minnesota Supreme Court in Musta v. Mendota Heights Dental Center, 965 N.W.2d 312, 315–16 (Minn. 2021), cert. denied, 142 S. Ct. 2834 (2022), held the workers’ compensation commission did not have jurisdiction to determine the preemption issue because it is a legal question that requires the interpretation and application of federal law. It also held that the Controlled Substance Act preempts an order made under the state statute that obligates an employer to reimburse an employee for the cost of the medical cannabis because compliance with that order would expose the employer to criminal liability under federal law, for aiding and abetting a claimant’s unlawful possession of cannabis.

Workers’ compensation commissions are generally tribunals that are limited by statute to the application of the Workers’ Compensation Act in that jurisdiction. This does not restrict the commission from deciding questions that are ancillary to the claim, such as determining insurance coverage, awarding fees and costs and determining liability of a guaranty association. The commission is not authorized to consider questions of law arising under the workers’ compensation statutes of other states and the jurisdiction does not extend to applying or interpreting legislation designed to claims outside of the workers’ compensation system.

Nonetheless, the employer has a fact defense, where it was not obligated to aid and abet illegal possession of a schedule I substance under federal law. While the Musta v. Mendota Heights Dental Center court held workers’ compensation commissions cannot determine law, there is a fact argument available at the commission for “impossibility” of reimbursement, where it is impossible to comply with both state and federal law. The impossibility of reimbursement for reason of aiding and abetting can be framed as an affirmative fact defense.

The New Hampshire Supreme Court in Appeal of Panaggio, 174 N.H. 89, 260 A.3d 825, 833 (2021) held the employer lacked the requisite mens rea for an aiding abetting offense under federal law because the employer’s reimbursement is compelled by state law, rather, than voluntary participation in the offense, and therefore no “impossibility” of compliance with the Controlled Substance Act.

That New Hampshire decision distinguished itself from established precedent of what constitutes aiding and abetting, as a matter of law. The Supreme Judicial Court of Maine, in Bourgoin v. Twin Rivers Paper, 187 A.3d 10, 15 (2021) found a defendant can be convicted as an aider and abettor without proof that he participated in each and every element of the offense Thus, “a person is liable under [Section] 2 for aiding and abetting a crime if (and only if) he takes an affirmative act in furtherance of that offense, with the intent of facilitating the offense’s commission. (internal citations omitted).” In other words, all that is required for aiding and abetting is active participation with full knowledge of the circumstances.

The court in Bourgoin, found there was fact of impossibility (preemption doctrine) of compliance for insurer to provide reimbursement, explaining, “As these cases demonstrate, a person’s right to use medical marijuana cannot be converted into a sword that would require another party, such as [employer/insurer], to engage in conduct that would violate the CSA.”

The Massachusetts Supreme Court in Wright’s Case, 486 Mass. 98 (2020) held, even though the citizens voted to make marijuana illegal intrastate, the protections and safe harbors, as written, were not meant, written or able to shield insurers from federal criminal exposure. For example, Md. Code Ann., Health-General Section 13-3313 provides safe harbor only to qualified patients, licensed growers, a certifying provider, a caregiver, research facilities, processors, a medical facility, third-party vendors in the medical marijuana industry.

The New Jersey Supreme Court held in Hager v. M&K Construction, 247 A.3d 864, 870 (2021) held there was no conflict between federal law and state law, and the employer would have to pay for the marijuana. The court in Hager found no impossibility preemption doctrine because there was sufficient credible evidence to the compensation court to establish that the prescribed medical marijuana represented reasonable and necessary treatment. This finding rested on a determination that because the worker’s compensation commission is not a private health insurer, despite fact that its purpose is to order the scope and compensability to private health insurers, insurers are somehow shielded.

In the state of Pennsylvania, the Medical Marijuana Act does not require insurers to pay for medical marijuana for injured workers.

With no clear direction and with medical marijuana being a reasonable and necessary treatment, the states have to decide for themselves. Regardless of whether your state has ruled in favor for the employer or employee, the facts of each case may be different and need to be thoroughly discussed and investigated before issuing payment.

Barry D.  Bernstein is a principal and vice chairman of Semmes, Bowen & Semmes’ workers’ compensation & employers’ liability practice group. He represents employers and insurers in all phases of workers’ compensation claims in Maryland and the District of Columbia. He regularly represents clients before the Workers’ Compensation Commission and on the appellate level, including the Maryland Court of Special Appeals and Maryland Court of Appeals.