CBD Oil: A Primer for Employers

An employee approaches you and explains that his or her doctor instructed the employee to use “CBD oil” to help with an ongoing condition. You are unfamiliar with the term and turn to Google. You type, “What is CBD oil?” After following the most promising link, you read the words that CBD is “a naturally occurring cannabinoid extract,” making clear that you are dealing with a cannabis-derived product. What do you do? Should you allow the employee to follow the doctor’s recommendation, knowing now that CBD is derived from cannabis? As cannabis decriminalization continues on a state-by-state basis, and new and unfamiliar products hit the market, employers increasingly ask Employers Council for guidance on the nature of such products and whether they must or should be permitted for use by employees.

What is it?

If this is the first that you have heard of CBD, a brief explanation may help. As stated, CBD ( “cannabidiol”) is a naturally occurring cannabinoid extract, which comes from either marijuana or hemp plants. Generally, and as often advertised, the user does not experience the “high” that is caused by the chemical tetrahydrocannabinol (THC), which is the active substance found in marijuana and commonly tested for under drug testing policies. CBD oil has been claimed to help with a variety of medical problems including anxiety, inflammation, and sleeplessness. Further, the FDA has recently approved its use in medication used for epilepsy. Thus, many employees may consider CBD products, such as oils, to be medicine and therefore “legal.”

Although it is common to hear that CBD products do not contain THC, there are CBD products that do in fact contain traces of THC. THC is considered a controlled and illegal substance under federal law. Whether employers must tolerate its use for medical purposes depends on state law, but most states give employers broad discretion in banning it from their workplaces. Check with legal counsel to determine your accommodation requirements with respect to medical cannabis for the states in which you do business, as laws vary.

Is it legal?

On a state level, CBD use is decriminalized in states that have legalized the use of medical and/or recreational marijuana (including Colorado, California, Nevada, Montana, and Arizona). There are also some states, such as Utah and Wyoming, that have laws that specifically allow for the use of limited amounts of hemp (as opposed to marijuana) extracts, which includes CBD.

On a federal level, this question is a more difficult one and the answer is not entirely clear. In January 2017, the Drug Enforcement Agency (DEA) made a rule that included marijuana extract (which includes CBD) in the scheduling of marijuana, the illegality of which was reaffirmed at the end of that year. However, in 2018 the DEA released an internal directive stating that “products and materials that are made from the cannabis plant and which fall outside the Controlled Substances Act [CSA] definition of marijuana are not controlled under the CSA” and that such products may be sold and distributed “without restriction.” Although this memo is taken by some as confirming the legality of CBD, it does not definitively state that CBD is not included in the “CSA definition of marijuana,” which could still include CBD. This is especially the case in the instances where CBD may carry traces of THC.

Most recently, the 2018 Farm Bill, introduced into the Senate, could potentially remove all prohibitions from CBD that is derived specifically from hemp, since the bill would “legalize” hemp and its derivatives (as opposed to marijuana, a related but different plant). Some say that this could lead to the full-scale legalization of CBD. Whether the Farm Bill becomes law remains to be seen.

Can my company ban it?

Frequently, this question is asked in the context of whether or not an employer is required to allow for the use of marijuana as a reasonable accommodation under the ADA. Generally, employers do not have to accommodate the use of marijuana since the substance is illegal under federal law. However, there are some courts, such as in Massachusetts, that have declared that employers are required to at least consider the accommodation of off-duty use of medical marijuana. With the increased legalization of marijuana, it is possible that more courts will begin interpreting the ADA (and its state-specific equivalent laws) to require companies to consider an employee’s off-duty use of medical marijuana as a reasonable accommodation. However, one must bear in mind the requirements that the accommodation not (a) present an undue hardship or (b) present a direct threat to the employee or the other employees in the workplace.

In considering the use of CBD as a reasonable accommodation, there is insufficient guidance available to employers to reach a definitive conclusion. Therefore, the reasonableness of the accommodation will most likely depend on CBD’s legality under federal law, as it does with marijuana. Given current law, it is unlikely that an employer would be penalized for refusing to allow CBD as a reasonable accommodation unless a federal court has opined otherwise or a state law specifically requires employers to consider the use of CBD and/or medical cannabis as a reasonable accommodation for a disability. But it is important to keep in mind that future legal changes, such as passage of the 2018 Farm Bill, could effect this analysis. For example, if said Farm Bill legalizes hemp-derived CBD, companies may at least consider the use of CBD as a reasonable accommodation. Of course, if its use presents an undue hardship, or is a direct threat to the workplace, it would not be a reasonable accommodation under the ADA.

Should my company ban it?

At present, the decision resides with the business unless a federal court or state law indicate otherwise. However, employers may consider specifically prohibiting the presence of THC in the body rather than banning all cannabis-related products, including non-THC CBD oils. Because its legal status at the federal level is uncertain, it is possible that some courts may require that an employee’s use of CBD be considered as a reasonable accommodation under the ADA. Employers Council will continue to monitor developments in this regard and publish them for consideration by its membership.

In addition, in considering the use of CBD by employees, employers must consider how permitting the substance may affect employee drug testing. Currently, there are no common tests for non-THC CBD. However, because CBD may include trace amounts of THC, CBD could theoretically result in a false-positive test result for marijuana. Therefore, in order to avoid a potential dispute or conflict around a false-positive result for marijuana, if the true substance of concern for the employer is THC, an employer can specifically prohibit the presence of THC in the body (as opposed to “marijuana” or cannabis products, generally). Thorough employers may even go to the extent of warning the employees that the use of products containing traces of THC may also result in positive test results, which could result in a failed drug test.