What is “Budding” in Virginia’s Cannabis Industry?

While Virginia became the first southern state to legalize the adult use of cannabis through the Cannabis Control Act (“Act”) on July 1, 2021, progress in that newly created industry has slowed substantially. While it is now legal for adults 21 and older to possess up to one ounce of cannabis and to cultivate up to four cannabis plants per household for personal use at their place of residence, the November 2, 2021 election saw Republicans sweep the offices of Governor, Lieutenant Governor, Attorney General and now hold a majority in the House of Delegates. While Senate leadership remains the same, the shift of power in House leadership has resulted in a virtual standstill regarding cannabis legislation.

In addition to the above provisions, the Cannabis Control Act also created the Cannabis Control Authority (“Authority”), an independent agency of the Commonwealth tasked with regulating all aspects of cannabis production, distribution, sale and possession. Under the Authority, full commercial sale of cannabis was to begin on July 1, 2024. However, citing fears of an illicit market, Sen. Adam Ebbin, D-Alexandria, sponsored SB 391 as an attempt to, among other things, reenact legislation passed last year and accelerate the creation of the recreational cannabis market to September of this year. However, the bill, which passed the Senate, was voted down by a House of Delegates subcommittee with House Republicans voting to wait until 2023 to re-visit the matter. Therefore, at this time, it is entirely unclear if Virginia will see the commercial sale of cannabis in 2024 or at all.

In other legislation and in response to the Joint Legislative Audit and Review Commission’s (JLARC) finding that Virginia was the only state that had legalized small amounts of cannabis but did not include a criminal misdemeanor for amounts above the legal limit, Gov. Glenn Youngkin (R) proposed increasing the penalty for personal possession of cannabis. Under the proposal, personal possession of more than two ounces of cannabis would result in a Class 2 misdemeanor while possession of more than six ounces of cannabis but under a pound would result in a Class 1 misdemeanor. This proposal, to essentially recriminalize what had been decriminalized in 2020, was struck down. The law regarding possession of cannabis by adults 21 and over remains as it was when it went into effect on July 1, 2021: possession of 1 to 16 ounces (or 1 pound) of cannabis is a $25.00 civil penalty while possession of over 16 ounces of cannabis is a felony. There are no misdemeanor charges between these two levels of possession.

Finally, the General Assembly has recently passed a bill that eliminates the requirement that patients register with the Board of Pharmacy in order to obtain medical cannabis. Patients, however, will still need a written certification from a registered practitioner for medical cannabis. This means that medical cannabis users can purchase products from dispensaries as soon as they receive a written certification from a registered provider. Of course, it is too early to see what effect this legislation may have on employer. There could be an uptick in the number of medical marijuana users or that number could decrease given the ongoing difficulties of finding a licensed practitioner, getting a written certification and finding a dispensary, as there are currently only 11 across the Commonwealth. The new law goes into effect on July 1st of this year.

Employers should expect to see cases where an injured worker is a medical marijuana cardholder. While cannabis remains a Scheduled I controlled substance, medical marijuana cardholders are afforded the greatest employment protections under the new law. If an employee discloses they have a medical marijuana card and a drug test comes back positive, employers may not terminate or discipline the employee solely on the basis of the positive test. Employers can, however, prohibit working while impaired and prohibit possession during work hours. Further, employers are not required to do anything that would result in violation of a federal law or would result in losing a federal contract.

It is important for employers to understanding the interplay between the new law and Virginia Code § 65.2-603. That provision provides that, for “[a]s long as necessary after an accident, the employer shall furnish or cause to be furnished, free of charge to the injured employee, a physician . . . and such other necessary medical attention.” Further, “[s]o long as a causal relationship between the industrial accident and the complaints which are the subject of the referral is shown, the employer is financially responsible for the medical attention which the attending physician deems necessary, subject to review by the Commission.” Jensen Press v. Ale, 1 Va. App. 153, 159 (1985).

If a treating physician has prescribed cannabis oil for a compensable injury, the burden shifts to the employer to show that the medical treatment is unreasonable or unnecessary. Sheffer v. Flint Ink Corp., VWC File No. 209-31-73 (Aug. 14, 2006) Given that the new law is still in its infancy, there is not much case law on the issue. In Lifsey v. DBHDS/Central State Hospital, JCN No. 149677 (Oct. 1, 2021), the Commission found that CBD oil was not reasonable and necessary treatment for the claimant’s compensable injuries. Evidence presented regarding the medical necessity of CBD oil was that it was medication “not FDA approved for pain relief,” that it was “not prescribed by a licensed healthcare professional” and that there was “a lack of medical evidence or human studies supporting the effectiveness of CBD oil for pain relief.” Id.

These are all valid arguments an employer can make when faced with a situation when an injured worker is a medical marijuana cardholder and has been prescribed medical cannabis. Just because CBD oil is prescribed by a treating physician, that physician must be a registered practitioner for medical cannabis, the claimant must have a written certification and the treatment prescribed must still be reasonably, necessary and causally related to the claimant’s accident.

While not entirely “up in smoke,” Virginia’s cannabis industry will have to wait until 2023 to see what its future holds.

Should you have any questions about the issues discussed here or other legal issues, please do not hesitate to contact the lawyers at Ford Richardson.

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