Medicinal marijuana users in Michigan who are lawfully terminated by their employer for failing a drug test are, according to the Michigan Court of Appeals, entitled to receive unemployment benefits.

The state of Michigan legalized the use and possession of marijuana for medicinal purposes in 2008, Michigan Medicinal Marihuana Act (“MMMA”).  The law makes clear that private employers may prohibit employees from using marijuana at the workplace or from working while under the influence of marijuana.  In 2012, in Casias v. Wal-Mart the Sixth Circuit held that the MMMA does not to impose any restrictions on private employers and upheld Wal-Mart’s discharge of a registered medicinal marijuana user for failing a drug test.  For the past two years, Casias has provided some measure of comfort for employers to apply no tolerance policies in Michigan.

A few days ago the Michigan Court of Appeals decided three companion cases addressing, for the first time, the question whether a registered medicinal marijuana user who is terminated by his employer for testing positive for marijuana is disqualified from receiving state unemployment benefits.  Ordinarily, an employee who is discharged for failing a drug test would be disqualified from receiving unemployment benefits under Michigan state law.  In this case, however, the Court found that registered patients who used marijuana for medicinal purposes consistent with the requirements of the MMMA and are terminated from employment for failing a drug test due to such use are entitled to receive unemployment compensation benefits.  The Court characterized the grant or denial of unemployment as state action and found that denial of benefits is a “penalty” prohibited by the MMMA.  The Court was unpersuaded by the defendants’ argument that the increased contributions employers will be required to pay as a result of the marijuana user’s receipt of unemployment benefits was a penalty to the employer.  It is expected that this case will be appealed to the Michigan Supreme Court.

Interestingly, in reaching its decision the Court of Appeals noted that the Sixth Circuit’s decision in Casias – though interpreting Michigan state law – is not binding on the state courts.  Ultimately, the Court of Appeals did not directly address the same issue as the Sixth Circuit; however, it will be interesting to see whether this recent decision is a signal that the Michigan state courts would reach a different conclusion than the Sixth Circuit in a future case.