Appellate Division Relies on Hager to Uphold Reimbursement of Medical Cannabis

The New Jersey Appellate Division recently upheld a worker’s compensation court decision ordering Pepsi Bottling Group to reimburse a one-time employee for his work injury-related medical cannabis costs...

The New Jersey Appellate Division recently upheld a worker’s compensation court decision ordering Pepsi Bottling Group to reimburse a one-time employee for his work injury-related medical cannabis costs. The appeals court relied on the Supreme Court of New Jersey’s recent decision in Hager v. M&K Construction.

NJ Supreme Court Ruled in Hager Employer Must Cover Cannabis Costs

As discussed in a prior article, the New Jersey Supreme Court unanimously held in as reasonable or necessary treatment under the New Jersey Workers’ Compensation Act (WCA). The court further concluded that the provision of the New Jersey’s Jake Honig Compassionate Use Medical Cannabis Act (Compassionate Use Act) stating that reimbursement for medical marijuana costs is not required of “a government medical assistance program or private health insurer” did not exempt employers like M&K.

“If the Legislature sought to depart from that general definition and treat workers’ compensation and private health coverage in the same manner under the Compassionate Use Act, it could have expressly included workers’ compensation insurance in its exhaustive list or broadened the exception more generally, as other states have explicitly done,” Justice Lee Solomon wrote.

The New Jersey Supreme Court also interpreted Congress’s appropriations actions of recent years as suspending application of the Controlled Substances Act (CSA) to conduct that complies with New Jersey’s Compassionate Use Act. Accordingly, it further found that the Act is not preempted, and that M&K did not face a credible threat of federal criminal aiding-and-abetting or conspiracy liability. As Justice Solomon explained, “The Compassionate Use Act does not currently present an obstacle to Congress’s objectives as articulated in the recent appropriations riders, and so the CSA does not preempt the Compassionate Use Act as applied to the Order.”

Appellate Division Relies on Hager to Uphold Worker’s Comp Court

In Calmon v. Pepsi Bottling Group, the Appellate Division relied on Hager to uphold a workers’ compensation court order directing Pepsi to reimburse petitioner Brian W. Calmon for the medical marijuana prescribed to treat his work-related back injury. In reaching its decision, the Appellate Division directly cited Hager, which was decided a day before the court was scheduled to hear oral arguments in the appeal.

As the Appellate Division noted, the New Jersey Supreme Court addressed the exact issues Pepsi raised on appeal: that New Jersey’s Jake Honig Compassionate Use Medical Cannabis Act is preempted as applied to a workers’ compensation order directing reimbursement for medical marijuana by the federal Controlled Substances Act, or alternatively, that employers should be treated like private health insurers under the Compassionate Use Act, making them exempt from reimbursement under N.J.S.A. 24:6I-14. The Appellate Division went on to further explain how the New Jersey Supreme Court resolved both issues:

The Court held “the Legislature clearly did not intend for workers’ compensation insurers to be treated as private health insurers . . . under the Compassionate Use Act” and that M&K could abide by both the Controlled Substances Act and the Compassionate Use Act, “that the latter does not currently create an obstacle to the accomplishment of congressional objectives,” and thus “the Compassionate Use Act is not preempted” by the Controlled Substances Act as applied to a workers’ compensation court order directing reimbursement for prescribed medical marijuana.

Noting that the case proceeded on a stipulated factual record and the only issues presented were the legal questions the Court addressed in Hager, the Appellate Division affirmed. “Having considered the record and the parties’ arguments, we affirm the December 2, 2019 order issued by Supervising Judge of Workers’ Compensation Eugene Mulvaney based on the court’s controlling opinion in Hager,” the Appellate Division held.

With the decision in Calmon, both the New Jersey Supreme Court and the New Jersey Appellate Division have now issued decisions requiring employers to reimburse employees’ medical cannabis costs resulting from work-related injuries.  While every work injury situation is fact-specific, these decisions indicate a growing acceptance by New Jersey’s highest courts of medical cannabis use as legitimate and reimbursable treatment in certain circumstances.  New Jersey employers should remain aware of this trend in New Jersey jurisprudence and review their workplace safety, employment, and human resource structures and protocols accordingly.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Dan McKillop, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.

This article is a part of a series pertaining to cannabis legalization in New Jersey and the United States at large. Prior articles in this series are below:

• US House Passes Cannabis Banking Reform Legislation
• Ninth Circuit Reject Cannabis Company’s 280E Tax Arguments
• With the CRC Operational, When Will Recreational Cannabis Licenses Be Available in New Jersey?

Disclaimer: Possession, use, distribution, and/or sale of cannabis is a Federal crime and is subject to related Federal policy. Legal advice provided by Scarinci Hollenbeck, LLC is designed to counsel clients regarding the validity, scope, meaning, and application of existing and/or proposed cannabis law. Scarinci Hollenbeck, LLC will not provide assistance in circumventing Federal or state cannabis law or policy, and advice provided by our office should not be construed as such.