Can Injured Employees Receive Compensation Through Their Employers for Medical Marijuana Treatment?

Photo Credit: (last visited: Dec. 30, 2021).

Authored By: Ken Thompson

Member, American Journal of Trial Advocacy

          Minnesota recently addressed a question many medical marijuana patients have throughout the country with respect to their treatments: is treatment for a workplace accident covered by our employers?  On one hand, Minnesota legalized cannabis both recreationally and medicinally and, on the other, Federal Law still recognizes cannabis as a controlled substance.[i]  Such a question also holds pertinent questions for employers looking to find a cost efficient and productive form of treatment for its workers: if we provide medicines that are illegal at the federal level, are we aiding and abetting the use of a controlled substance so as to give rise to liability?

            One recent Minnesota Supreme Court decision found in favor of disallowing compensation for medical marijuana, leaving those who cannot afford it on their own with no real way forward.  Musta v. Mendota Heights Dental Center,[ii] began by addressing whether the Federal Controlled Substances Act preempts Minnesota’s statute that “requires an employer to reimburse an injured employee for the cost of medical cannabis used to treat a work-related injury.”[iii]  Musta worked at Mendota Heights and after suffering a workplace injury, attempted to receive compensation for her medicinal cannabis treatment.[iv]  After obtaining a court order requiring it to pay Musta, Mendota Heights appealed.[v]

            The court in Musta began by noting that this sort of preemption, one where the field being legislated is one “that the states have traditionally occupied,” is “generally disfavored.”[vi]  The court also realized that the preemption at issue was conflict preemption—preemption where compliance with both the state and federal statue is impossible or the state law is an “obstacle” to accomplishing what the federal statute purports to achieve.[vii]  Next, the court identified the federal objective here as “conquer[ing] drug abuse and control[ling] the legitimate and illegitimate traffic in controlled substances.”[viii]  In addition, the Controlled Substances Act lays out its reach—a state law is preempted by the act when the two are completely incompatible with one another.[ix]

            Musta argued that the Federal Government’s inconsistent approach to cannabis and the fact that the Department of Justice made a temporary decision to cease prosecuting cannabis users who comply with state statute meant that Congress intended to keep out of state medical marijuana programs.[x]  The court, while acknowledging the fluidity of the legality of cannabis in our country, rejected this argument.[xi]  Instead, the court noted the fact that congress has never rescheduled cannabis in our country, which means employers do—despite the fact the federal government has executed a temporary stay in prosecutions related to legal cannabis—run the risk of criminal liability. [xii]

            In addition, Musta contended that the state law piece of legislation compelled reimbursement, thereby negating the mens rea required for a successful prosecution.[xiii]  The court again rejected this claim finding that since possession of cannabis is unlawful and Mendota knew that fact, any finances given as compensation to Musta for her treatment “effectively facilitates future possession” of a drug prohibited by the Controlled Substances Act.[xiv] Musta’s final argument challenged that Mendota Heights could not aid and abet her possession of cannabis since she was already in possession of the cannabis at the time she would receive compensation.[xv]  Rejecting Musta’s argument for a final time, the court found that Mendota Height’s requirement to compensate Musta was not a one-time deal—Mendota Heights would continue to aid and abet future drug possession given the Minnesota State statute requiring them to do so.[xvi]

            In contrast to the Minnesota Supreme Court, the New Hampshire found in favor of a medicinal cannabis user in Appeal of Panaggio.[xvii]  Panaggio, an employer with a similar claim to the challenger in Musta, sought compensation through his insurer for medicinal marijuana treatment pursuant to a New Hampshire state statute.[xviii]  Like in Musta, the court began by addressing preemption principles.  However, unlike Musta,it found that no direct conflict existed between the Controlled Substances Act and the state statute since the act does not criminalize the “act of insurance reimbursement for an employee’s purchase of medical marijuana.”[xix]  The court rejected the insurer’s contention that it is impossible to comply with both the New Hampshire state statute and the act.[xx]  The employee in Panaggio put forward that the insurer in this case would lack the mens rea needed for criminal liability given the fact the compensation is compelled by statutory force and not under the “insurer’s own free will to participate in the prohibited activity.”[xxi]  The court agreed with Panaggio’s argument and next turned to whether obstacle preemption applied.[xxii]

            In addressing obstacle preemption, the court noted the “heavy burden” a party employing obstacle preemption faces given its rarity.[xxiii]  Specifically, the court addressed two areas where obstacle preemption applies when: (1) the legislation “involves a uniquely federal area of regulation” and there lies an inference of congressional intent “to preempt state laws that directly interfered with the operation of the federal program” or (2) when a federal statute “clearly struck a particular balance of interests that would be disturbed or impeded by state regulation.”[xxiv]  The court rejected the application of obstacle preemption in this instance by noting an absence of the two circumstances above and that “absent such circumstances, the Supreme Court has frequently rejected claims of obstacle preemption.[xxv]

            The court again reiterated the fact that the Controlled Substances Act is not in conflict with the state statute, since the state statute only governs the act of compensating the employee for the treatment.[xxvi]  Moreover, it found that the state statute did not impact the federal government’s ability to enforce the Controlled Substances Act since it can still prosecute the employees for simple possession of marijuana.[xxvii]  Finally, the court found that “[the Controlled Substances Act] does not purport to regulate insurance practices in any manner.”[xxviii]  Therefore, the court held both obstacle and impossibility preemption inapplicable to the case at hand and found in favor of the employee/patient.[xxix]  What is certain from the two decisions in Musta and Panaggio, is that the constitutional question surrounding compensation for medical marijuana treatment is all but clear.  However, the body of precedent surrounding that question is something to keep a watchful eye on as more and more states

[i] 21 U.S.C. §§ 801-971.

[ii] Musta v. Mendota Heights Dental Center, 2021 WL 4767978 (Minn. Oct. 13, 2021).

[iii] Id. at *1.

[iv] Id. at *2.

[v] Id. at *2-*3.

[vi] Id. at *6.

[vii] Id.

[viii] Id.

[ix] Id.

[x] Id. (citing 21 U.S.C. § 903).

[xi] Musta, 2021 WL 4767978 at *8.

[xii] Id.

[xiii] Id. at *9.

[xiv] Id.

[xv] Id. at *10.

[xvi] Id.

[xvii] Appeal of Panaggio, 2021 WL 787021 (N.H. March 2, 2021).

[xviii] Id. at *1.

[xix] Id. at *4.

[xx] Id.

[xxi] Id. at *5.

[xxii] Id. at *6.

[xxiii] Id.

[xxiv] Id. at *7 (quoting In re Volkswagen “Clean Diesel” Marketing, Sales Practices, and Litigation, 959 F.3d 1201, 1212 (9th Cir. Ct. App. 2020).

[xxv] Id. (quoting In re Volkswagen, 959 F.3d at 1213).

[xxvi] Panaggio, 2021 WL 787021 at *8.

[xxvii] Id. at *8.

[xxviii] Id.

[xxix] Id.

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