• The legalization of recreational cannabis in Illinois will not prevent Illinois employers from adopting and implementing reasonable workplace policies precluding employees from being impaired by or under the influence of cannabis in the workplace or while "on call," including "zero tolerance" and "drug free workplace" policies.
  • The Cannabis Regulation and Tax Act (the Act) does not compel employers to come out of compliance with applicable federal rules or regulations, such as U.S. Department of Transportation restrictions, that require compliance with federal law, under which cannabis remains an illegal controlled substance.
  • Outside of the workplace, recreational cannabis is a lawful product under Illinois law, whose use during non-working hours in compliance with the Act is subject to the protections of the Illinois Right to Privacy in the Workplace Act.
  • Illinois employers should immediately review their workplace policies to confirm compliance with the Act.

The Illinois General Assembly adopted House Bill 1438, the Cannabis Regulation and Tax Act (the Act) on May 31, 2019, legalizing the sale, possession and use of marijuana for recreational purposes by adults age 21 and older. Gov. J.B. Pritzker is expected to sign the bill following the flurry of last-minute activity by the General Assembly that closed the spring legislative session. The Act will take effect on Jan. 1, 2020.

The Act amends multiple provisions of Illinois law, and this Holland & Knight alert focuses on how legalization under the Act will impact Illinois employers.

Overview of the Act

As of Jan. 1, 2020, Illinois residents age 21 and older will be allowed to possess up to 30 grams of raw cannabis, 5 grams of cannabis concentrate or cannabis-infused products containing up to 500 milligrams of tetrahydrocannabinol (THC). All permitted cannabis products must be purchased from a licensed dispensary. Adults 21 and over will be allowed to consume cannabis on private property away from minors and certain prohibited areas.

Although the sale and use of cannabis will be legal on Jan. 1, 2020, possession and consumption will still be regulated, including its use being prohibited in public places, on school grounds, "in close physical proximity" to persons under 21, and smoking cannabis where smoking is prohibited under state or local law. Recreational cannabis may be purchased only by adults age 21 and older, may not be purchased via home delivery, may not be possessed or consumed by a minor under age 21 except for legal medical purposes, and may not be transported in a motor vehicle unless sealed and reasonably inaccessible. Driving under the influence of cannabis (DUI) is prohibited and, as with alcohol-related offenses, the enforcement and prosecution of most cannabis offenses will be the responsibility of local governments.

Overview of Labor and Employment Impacts

The Act maintains important protections for employers building from those previously established under the Compassionate Use of Medical Cannabis Pilot Program Act of 2013 (the Medical Cannabis Act). Crucially, employers retain the ability to adopt and enforce reasonable workplace policies such as "drug free" or "zero tolerance" policies and to impose discipline up to, and including, termination if an employee is impaired or under the influence of cannabis while in the workplace or on call.

The Act includes significant protection for employees by designating recreational cannabis used in compliance with the Act as a "lawful product" subject to the protections against discrimination provided under the Illinois Right to Privacy in the Workplace Act. Thus, employers generally cannot take adverse employment action against an employee who lawfully uses cannabis outside of working hours and is not impaired or under the influence of cannabis during working hours, while on duty or while "on call." However, because cannabis remains an illegal controlled substance under federal law, and because the Act does not require employers who must comply with applicable federal rules and regulations – such as U.S. Department of Transportation regulations (U.S. DOT) – to become non-compliant, it is expected the Act will be interpreted to allow employers to continue to maintain employment policies prohibiting all cannabis use where necessary to comply with applicable federal law.

Employers May Continue to Enforce Reasonable Employment Policies

The Act's final language resolves ambiguity caused by earlier drafts that did not expressly authorize "drug free" and "zero tolerance" policies, which the Medical Cannabis Act specifically authorizes. The Act preserves employers' ability to adopt reasonable employment policies and apply them in a nondiscriminatory manner, including zero tolerance or drug free workplace policies, concerning drug testing, smoking, consumption, storage or the use of cannabis in the workplace or while "on call."

The employer's "workplace" under the Act is the employer's premises, including any building, real property and parking area under the control of the employer; an area used by an employee while in performance of the employee's job duties; and vehicles, whether leased, rented or owned. An employer may further define the "workplace" in its employment policies provided the policy is consistent with the Act.

An employee who is considered "on call" under the Act is an employee who is scheduled to be on standby with at least 24 hours' notice or otherwise responsible for performing work-related tasks either at the employer's premises or other previously designated location.

The ability to implement zero tolerance policies does not mean that an employer can terminate an employee who tests positive for THC based solely on the status of cannabis as an illegal controlled substance under federal law. Unless the employer's operations require compliance with federal rules or regulations that preclude all use of controlled substances by employees, the protections employees receive under the amendments to the Right to Privacy Act defining cannabis as a lawful product in Illinois likely preclude an employer from taking adverse action against employees solely because cannabis remains illegal under federal law. Evidence of impairment on the job or while on call seems to be required.

Prohibition on Working While Impaired or Under the Influence of Cannabis

Employers may prohibit employees from using or being under the influence of cannabis in the workplace, while performing the employee's job duties or while on call. An employer may consider an employee impaired by or under the influence of cannabis if the employer has a good-faith belief that the employee manifests specific, articulable symptoms that decrease or lessen the employee's performance of assigned duties or tasks, including the following symptoms:

  • speech
  • physical dexterity
  • agility
  • coordination
  • demeanor
  • irrational or unusual behavior
  • negligence or carelessness in operating equipment or machinery
  • disregard for the employee's own safety or the safety of others
  • involvement in any accident resulting in serious damage to equipment or property
  • disruption of a production or manufacturing process
  • carelessness that results in any injury to the employee or others

The Act describes symptoms of impairment or being under the influence of cannabis as "including" these examples, which suggests this list is not exhaustive and that an employer may identify additional symptoms of impairment if the employer determines in good faith that the symptoms exist and negatively impact the employee's job performance.

Discipline and Termination

The Act authorizes employers to discipline employees, up to and including termination, for violating the employer's employment policies or workplace drug policy. If an employer elects discipline for an employee based on being impaired or under the influence of cannabis, the employer must afford the employee a reasonable opportunity to contest the basis of the determination.

Intersection with Other Federal and State Laws

Recreational cannabis remains illegal under federal law, and the Act does not require employers who must comply with federal regulations to come out of compliance with federal law in order to comply with the Act. The Act expressly does not interfere with any federal, state or local restriction on employment, including without limitation U.S. DOT regulation 49 CFR 40.151(e) (concerning drug testing). Further, the Act expressly does not "impact" an employer's ability to comply with federal or state law or require an employer to lose a federal or state contract or funding to comply with its terms.

The Act also expressly does not "enhance or diminish" protections afforded to the use of cannabis under any other state law, including the medical cannabis statute (the Compassionate Use of Medical Cannabis Pilot Program) or the Opioid Alternative Pilot Program.

As discussed below, the Act does provide additional employee protections by amending the Illinois Right to Privacy in the Workplace Act.

Limitation of Causes of Action Against Employers

The Act precludes employees from asserting causes of actions against employers for taking the following actions:

  • subjecting an employee or applicant to reasonable drug and alcohol testing under the employer's workplace drug policy, including an employee's refusal to be tested or to cooperate in testing procedures
  • disciplining the employee or terminating employment, based on the employer's good faith belief that an employee used, possessed, was impaired by or was under the influence of cannabis in violation of the employer's workplace policies while in the employer's workplace, performing the employee's job duties or while on call
  • injury, loss or liability to a third party if the employer neither knew nor had reason to know that an employee was impaired

Employee Protections Under Illinois Right to Privacy in the Workplace Act

Use of recreational cannabis by an employee in compliance with the Act and while outside of working hours will constitute lawful activity subject to the protections of the Illinois Right to Privacy in the Workplace Act (the Right to Privacy Act). The Right to Privacy Act generally precludes employers from discriminating against employees for the use of lawful products off the premises of employers during nonworking hours.

The Act amends the Right to Privacy Act's definition of "lawful products" to mean "products that are legal under state law," including the Act. The Right to Privacy Act thus clarifies that it is unlawful for an employer to refuse to hire, discharge or otherwise disadvantage any individual, with respect to compensation, terms, conditions or privileges of employment because the employer uses lawful products (including recreational cannabis) off the premises of the employer during nonworking hours and non-call hours. These amendments to the Right to Privacy Act were not included in the Medical Cannabis Act, and reasonably are understood as a policy statement by the General Assembly that employers generally cannot consider legal recreational cannabis use outside of the workplace as the basis for an adverse employment action.

Nevertheless, because the Act does not require employers to deviate from federal law, it remains unclear whether an employment policy that reasonably precludes off-hours cannabis use to comply with federal rules and regulations is permissible. In other words, it remains uncertain whether an employee would have a claim under the Right to Privacy Act if disciplined for off-work consumption in violation of a policy requiring non-consumption to comply with applicable federal law. Holland & Knight will carefully monitor how courts will strike a balance between the competing rights of employers and employees.

Labor Impacts on Operators of Cultivation Centers and Dispensaries

In addition to the employment-specific provisions described above, the Act contains additional language concerning unions and organized labor, including specifically encouraging operators of cultivation centers or dispensaries to cooperate with unions. The Act expressly states that the "General Assembly supports and encourages labor neutrality in the cannabis industry." Such "labor neutrality" presumably would be evidenced by maintenance of a "labor peace agreement," which the Act defines as an agreement between a cannabis business establishment and any labor organization recognized under the National Labor Relations Act:

  • that prohibits labor organizations and members from engaging in picketing, work stoppages, boycotts and other economic interference with the cannabis business establishment
  • in which the cannabis business establishment has agreed not to disrupt efforts by the labor organization to communicate with, and attempt to organize and represent, the business establishment's employees
  • that provides labor organizations access at reasonable times to areas in which the cannabis business establishment's employees work for the purpose of meeting with employees to discuss their right to representation, employment rights under state law, and terms and conditions of employment, and
  • that does not mandate a particular method of election or certification of the labor organization as the representative of the cannabis business establishment's employees

Although earlier drafts of the Act appeared to require operators to adopt – or indicate their willingness to adopt – labor peace agreements as part of the licensing application and approval process, the final version of the Act appears to have significantly reduced the weight to be given to the existence of labor peace agreements when awarding cannabis-related business licenses. It specifically deleted provisions in the prior version of the Act that either 1) required applicants for cannabis-related business licenses to agree to enter into and maintain a labor peace agreement as a material condition of such license, 2) awarded bonus points to applicants who agreed to maintain a labor peace agreement, which could tip the scale in their favor when ranking the applications, or 3) at a minimum, required applicants to state whether they consented to a labor peace agreement. Under the final version of the Act, the clear, direct and significant preference for applicants who agree to maintain labor peace agreements is replaced with language that more subtly advances the General Assembly's express support for, and encouragement of, "labor neutrality" in the cannabis industry.

For example, the provisions of the Act dealing with applications for conditional adult use dispensing organization licenses provide that up to five points (out of a total possible 250) may be awarded based on the applicant's labor and employment practices. Specifically, the Act states that:

The applicant may describe its plans to provide a safe, healthy, and economically beneficial working environment for its employees, including, but not limited to, codes of conduct, health care benefits, educational benefits, retirement benefits, living wage standards, and entering into a labor peace agreement with employees.

The Act's provisions are somewhat different for applications for licenses for cultivation centers, craft growers, infusers, processors and transporting organizations. For each of these licenses, the Act requires applicants to submit information regarding their "proposed employment practices," which "demonstrates a plan of action to inform, hire, and educate minorities, women, veterans, and persons with disabilities, engage in fair labor practices, and provide worker protections." The specific requirements regarding consenting to and/or agreeing to maintain labor peace agreements as part of the application process have been deleted. The Act does not specify, however, what is required for an applicant to demonstrate that it is engaging in "fair labor practices" or providing "worker protections." Therefore, it remains to be seen whether a labor peace agreement could be included in either or both of those terms.

The Act also requires applicants for cannabis-related business licenses to submit "any other information required by rule." In addition, the Illinois Department of Agriculture is authorized to develop rules to 1) administratively rank applications for cannabis cultivation, grower, infuser, processor and transporting licenses based on the clarity, organization, and quality of the applicant's response to required information, and 2) have the applicant's labor and employment practices constitute "no less than 2% of the total available points." This also would open the door to consideration of the existence of labor peace agreements when awarding cannabis-related business licenses. So organized labor's influence remains evident, albeit somewhat subdued, in the final version of the Act.

Next Steps

The legalization of cannabis for recreational use will impact employers throughout Illinois. Holland & Knight attorneys are ready to advise you on all employment issues related to recreational cannabis use, including the review and modification of existing employment policies, developing strategies concerning drug testing, compliance with federal regulations and all other aspects of employment.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem. Moreover, the laws of each jurisdiction are different and are constantly changing. If you have specific questions regarding a particular fact situation, we urge you to consult competent legal counsel.