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General Outline of the Cannabis Regulation and Tax Act

Illinois enacted the Illinois Industrial Hemp Act (“IIHA”) in 2018 (505 ILCS 89/1 et seq.), which modified existing law and includes legislation relating to CBD, or cannabidiol. The IIHA includes all CBD products to be sold to the public including topical creams, cosmetics, foods, beverages and health supplements. The IIHA provides that federal law preempts the IIHA in conflicts, including when CBD products would be limited per provisions the FDA will publish pursuant to the 2018 Farm Bill. Combined with the bill to legalize the recreational use of cannabis, CBD products are perfectly legal to purchase and consume in Illinois, but remain illegal on the federal level.

The bill to legalize recreational use of cannabis, the Cannabis Regulation and Tax Act, HB-1438 (“the CRTA”), passed in the Illinois General Assembly on May 31, 2019. The CRTA was signed into law by Governor J.B. Pritzker on June 25, 2019, and will take effect January 1, 2020. This law creates massive changes in the cannabis industry, including both the medical field and the industrial growing industry. With its legality, recreational cannabis should now be treated the same as medicinal cannabis in the workplace.

Similar to how other states have been handling the legalization of cannabis for recreational use, Illinois will regulate marijuana akin to the alcohol regulations. Persons will have to provide proof of age before purchasing any cannabis, and selling, distributing, or transferring cannabis to any minors under the age of 21 will remain illegal. Consumption will typically be limited to the user’s residence. Furthermore, driving under the influence of cannabis will remain illegal, and only legitimate, taxpaying businesses may sell cannabis.

Cannabis will also be tested for quality and subjected to additional regulation, including but not limited to, informing consumers of known health risks as concluded by evidence-based, peer-reviewed studies.

The Illinois Right to Privacy in the Workplace Revisions, Section 10-50

It is important to note that this does not remove any existing substance abuse policies in workplaces. However, the CRTA provides employers with strong workplace protections, more than any other state that has legalized cannabis use. First, the CRTA explicitly permits employers to adopt “reasonable” zero tolerance or drug free workplace policies, or employment policies concerning drug testing, smoking, consumption, storage, or use of cannabis in the workplace,” so long as the policy is applied in a nondiscriminatory manner. Second, the CRTA amends the Illinois Right to Privacy in the Workplace Act and prohibits employers from taking disciplinary action against employees for lawfully using cannabis outside of work.

The CRTA allows employers to prohibit the use of cannabis at work as well as prohibit an employee from being under the influence of cannabis while on call. When “on call”, an employee is given at least 24 hours’ notice to be on standby or otherwise responsible for performing tasks related to his or her employment.

The employer can also discipline or terminate employee for violating a workplace drug policy. This only applies when the employers possesses a “good faith belief that the employee manifests specific, articulable symptoms while working that decrease or lessen the employee’s performance” due to the influence of cannabis.

Compliance with the CRTA and Federal Law

The CRTA does not impede or interfere with any federal, state, or local restrictions on employment or impact an employer’s ability to comply with federal or state law or cause it to lose any kind of state or federal contract or funding. The employer may also take action if an employee could cause the employer to violate USDOT regulations or provisions of the Drug-Free Workplace Act. If the employer’s business requires compliance with federal laws or regulations concerning employee drug testing, the CRTA is not intended to restrict or interfere with its compliance. The CRTA also does not diminish the State’s duties to seriously ill patients registered under the Compassionate Use of Medical Cannabis Pilot Program Act.

“Good Faith” Basis

Specific symptoms are laid out in the CRTA as indicators of lessened performance that an employer may look for. This includes signs related to the employee’s speech, physical dexterity, coordination, demeanor, irrational or unusual behavior, disregard for his or her own safety or the safety of other employees, or involvement in a workplace accident causing injury or serious damage to machinery or property. If an employee disciplines or discharges an employee because the employee is under the influence of cannabis, the employer must give the employee reasonable opportunity to contest the basis of the determination. However, “reasonable opportunity” is not defined in the bill, so it is unclear exactly what employers must offer the employees when there is reasonable suspicion of impairment at work.  One would expect that existing case law interpretations will be used for this assessment.

The CRTA also protects employers from liability for drug testing employees or applicants under the employer’s workplace drug policy. This applies where the employer possessed a good faith belief that an employee used or possessed cannabis in the workplace while performing job duties or while on call in violation of the employer’s policies. The legislature explicitly stated that the intent of the bill is to protect employers from litigation for disciplining or discharging an employee for failing or refusing a drug test, including a random drug test.

In reality, proving a “good faith” standard is difficult to prove because many cannabis users will not demonstrate the extreme symptoms identified in the CRTA, especially obvious physical and emotional changes.

Employer Precautions

The CRTA makes it clear that employers should not use drug tests as conclusive proof that the employee worked while under the influence of cannabis. The results cannot conclusively establish the employee was under the influence while at work or on call. The employer’s good faith basis is significantly more effective when the employer combines the drug test with evidence that the employee demonstrated those symptoms explicitly laid out within the CRTA.

Employers can train supervisors to document symptoms that demonstrate cannabis use if an employer suspects an employee’s performance has dipped due to cannabis use. Employers may want to restrict determinations that an employee is under the influence to instances that are extremely obvious so as to show there is no doubt that the employee is impaired. It is also a good practice to adopt procedures where managers and supervisors must review and document any possible symptoms of drug use following a workplace incident.

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Related Items:

Illinois Medical Marijuana Act and Illinois Employers

The Workplace Just Got More Complex to Manage In Illinois

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Violating these employee protections can be costly to employers. Employees that had their rights violated under Right to Privacy Act are entitled to actual damages, attorney’s fees, costs, and statutory penalties. Furthermore, the media exposure could result in negative consequences from a business standpoint. Thus, it is important for employers to possess strong support for their good faith basis that an employee is under the influence of cannabis during the prohibited times. However, this does not create an independent cause of action under the CRTA.

Overall, the employer must take precautions regarding cannabis use in the workplace. It is not easy to properly meet the “good faith” standard required to discharge an employee for being under the influence while at work or on call. The employer should ensure that they document and acquire enough factual evidence that an employee was under the influence of cannabis in the workplace. More interpretive regulations and help with navigating the law should come from state agencies, such as the Illinois Department of Labor, should follow in the coming months. This follows 820 ILCS 55/5.

Personal Cultivation and Use

Personal use of cannabis will no longer be illegal. For Illinois citizens, this includes possession, consumption, use, purchase, obtaining, or transporting of up to 30 grams of cannabis flower, 500 mg of THC in a cannabis infused product, and 5 grams of cannabis concentrate. For non-Illinois citizens, the limits are half of that, or up to 15 grams of cannabis flower, 250 mg of THC in a cannabis infused product, and 2.5 grams of cannabis concentrate.

Citizens can also cultivate cannabis within the requirements of the CRTA. Regular citizens may not cultivate cannabis of any kind; they must be an adult registered qualifying patient under the Compassionate Use of Medical Cannabis Pilot Program Act. The limit is 5 plants that are more than 5 inches tall per household without a cultivation license. They must be closed in a locked space, and seeds may only be purchased from dispensaries. Plus, the plants must not be in public view.

Prohibited Uses

  • Consumption of cannabis in any “public place.” A “public place” is defined as “any place where a person could reasonably be expected to be observed by others” but excludes private residences
  • Consumption of cannabis on school grounds
  • Consumption "in close physical proximity" to persons under 21
  • Smoking cannabis in any location where smoking is prohibited by the Smoke Free Illinois Act (410 ILCS 82), including hospitals, restaurants, retail stores, offices, commercial establishments, etc.
  • Sale of cannabis to minors under the age of 21
  • Home delivery of cannabis to a consumer by a cannabis business
  • Possession and consumption by a minor under the age of 21 (other than for legal medical purpose)
  • Possession of cannabis in motor vehicle unless the cannabis is in a “sealed, odor-proof, child-resistant, tamper-evident cannabis container” and “reasonably inaccessible”
  • Driving under the influence of cannabis (DUI)

Taxes

The CRTA also authorizes taxes on all cannabis products. They are as follows:

  • 10% tax on cannabis flowers or products with less than 35% THC
  • 20% tax on products infused with cannabis, such as edibles
  • 25% tax on any product with THC higher than 35%

This is all a base tax that is added in addition to state, county, and local sales taxes. Non-home rule counties are authorized to impose a tax of up to 0.75 percent in incorporated areas and 3.75 percent on sales emanating from unincorporated areas. Cook County, the only home-rule county in the state, is authorized to impose a tax of 3 percent regardless of whether the sale occurs in an incorporated or unincorporated area. Municipalities are likewise authorized to impose a 3 percent retailer occupation tax on final sales to consumers.

The author would like to thank Law Clerk Samuel Gomolinski for his research and editorial contributions to this article.