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Supreme Court of New Jersey Affirms Appellate Court’s Medical Marijuana Decision

New Jersey
November 17, 2021
April 16, 2021

This is an update on a previous article, Case Law and Statutory Updates on the Legalization of Marijuana in New Jersey, published February 26, 2021.

This week the Supreme Court of New Jersey affirmed a decision of the Appellate Court finding that an employer was required to reimburse an injured employee for medical marijuana. This recent decision is Hager v. M &K Construction, A-64 September Term 2019 084045 (NJ Supreme 2021). At issue in Hager was an order entered in the worker’s compensation court requiring the employer (M&K) to reimburse the injured employee for ongoing medical marijuana costs.

The employer argued that New Jersey’s Compassionate Use Act was preempted by the federal Controlled Substances Act (CSA) as applied to the Order of the Judge of Compensation and that compliance with the order would subject it to federal criminal liability for aiding and abetting or conspiracy. Further, the employer argued that medical marijuana is not reimbursable as reasonable or necessary treatment under the New Jersey Workers’ Compensation Act. The employer also argued that it fits within an exception to the Compassionate Use Act and was thus not required to reimburse the medical marijuana costs.

The court first discussed the intent of the Compassionate Use Act, which was enacted by the New Jersey Legislature to recognize the beneficial uses of marijuana and to protect authorized individuals from criminal and civil penalties. Per the Compassionate Use Act, reimbursement of costs of medical marijuana is not required of a private health insurer or government medical assistance program. M&K argued it was exempt from reimbursing the costs of medical marijuana under this provision. The court indicated that if the Legislature intended to include workers' compensation coverage, it would have specifically done so as other states have. Thus, M&K was not exempt from the reimbursement for medical marijuana under this provision of the Compassionate Use Act.

The employer also argued that medical marijuana is not a “reasonable and necessary treatment” covered by the Workers’ Compensation Act. The court noted that treatment must be shown to be reasonable and necessary to cure or relieve the injured worker, not simply that he/she would benefit from the treatment. However, it also noted that palliative care may be properly authorized. The court found that medical marijuana may be found to constitute reasonable and necessary care under the Workers’ Compensation Act subject to competent medical testimony. In Hager, several physicians had testified, and the Judge of Compensation found that marijuana was the best option for the injured employee, based on all the testimony heard. The court stated that competent evidence showing medical marijuana’s ability to restore some of a worker’s function or to relieve symptoms such as chronic pain and discomfort, as in Hager’s case, was sufficient to find such a treatment course appropriate. Because sufficient medical evidence before the Judge of Compensation supported the order, the court indicated it would not disturb same.

As the court found M&K was obligated to reimburse the employer under the Compassionate Use Act and the Workers’ Compensation Act, it then discussed if the federal CSA would prevent M&K from having to reimburse for the medical marijuana as marijuana is classified as a Schedule I drug. The court acknowledged the current changes in New Jersey regarding marijuana laws, with voters in the state voting to legalize recreational marijuana by constitutional amendment in November 2020. Further, the court noted Governor Murphy signed three bills into law in February 2021, giving practical effect to New Jersey's marijuana legalization. The question the court then addressed in detail was whether the federal CSA preempts the Compassionate Use Act.

The court discussed the importance of the intent of Congress and noted it had deprioritized prosecution for possession of medical marijuana at the same time as leaving the CSA otherwise unchanged. Specifically, in a rider to the most recent federal Appropriations Act, Congress prohibited the Department of Justice (DOJ) from using allocated funds to prevent states, including New Jersey, from implementing their medical marijuana laws. Similar such riders were noted to have been used dating back to the 2015 federal budget with the lists of states expanding over the years. The court indicated that the riders reflect the intention of Congress to limit the role of federal policy in matters of criminal justice. Per the court, it found that the clear Act of the appropriations law takes precedence over the earlier legislation. Additionally, the court indicated that because DOJ enforcement of the CSA may not interfere with activities compliant with the Compassionate Use Act, that there is no positive conflict and the CSA and Compassionate Use Act may coexist as applied to the order in question in Hager. The court noted that "[q]ualified patients may continue to possess and use medical marijuana, and related compensation orders may be entered while federal authorities continue to enforce the CSA to the extent that Congress permits.”  The court found it is possible for M&K to abide by both the Compassionate Use Act and the CSA and that the Compassionate Use Act “does not currently create an obstacle to the accomplishment of congressional objectives.”  Therefore, the court found that the Compassionate Use Act is not preempted by the CSA as applied to the order in question in Hager.

Of importance, the court stressed the “temporal nature” of issue before it and noted its dependence upon the future acts of Congress. Specifically, it was indicated that funding to support federal prosecution of those acting within the scope of the Compassionate Use Act could be restored and that the appropriations rider on which the court relied was of a limited lifespan that could be changed within the year.

Finally, the court addressed M&K’s argument that compliance with the Judge of Compensation’s Order would subject it to aiding and abetting liability due to assisting in the employee’s possession of marijuana contrary to the CSA. As M&K was being compelled to reimburse Hager pursuant to an order and had made clear by its appeals, it did not want to participate in the Act; this was indicated to show it did not have the requisite intent. Further, the court found that M&K’s compliance with the order did not put it at risk for conspiracy liability as it was not participating intentionally but rather was being compelled.

The Appellate Division was affirmed, and M&K was “ordered to reimburse costs for, and reasonably related to, Hager’s prescribed medical marijuana.”

While the court noted that future acts of Congress could impact whether the Compassionate Use Act is preempted by the CSA, this recent decision has significant implications for employers in New Jersey. There are likely to be other such orders entered compelling employers to provide reimbursement for medical marijuana if the Judge of Compensation finds that there is competent evidence presented by an employee showing its ability to restore some of the worker’s function or to cure or relieve the effects of the injury. This is likely to become more prevalent, particularly in cases where there is a question of medical marijuana also being used to wean off opioids, as was seen in the Hager case.