Governor Gavin Newsom signed Assembly Bill 45 (“AB 45”) into law on October 6, 2021.  AB 45 is landmark legislation for the Cannabidiol (“CBD”) and hemp infused product industry in California.  CBD and hemp infused products became widely available across the country following the federal government’s adoption of the Agriculture Improvement Act of 2018.  Recreational marijuana use has also been legal in California since 2016 after the Control, Regulate and Tax Adult Use of Marijuana Act became law.  AB 45 extends these recent advances of the cannabis industry by formally authorizing the inclusion of CBD and hemp extracts or derivatives in dietary supplements, food, beverages, cosmetics, and other products sold in California.

What Does AB 45 Do?

AB 45 specifically allows the inclusion of CBD and hemp in a variety of products in California so long as their tetrahydrocannabinol (“THC”) concentration levels remain below 0.3%.  This requirement aims to bring manufacturers and distributors of such products into compliance with existing California law under the Sherman Food, Drug, and Cosmetic Law, and federal statutory law, which is discussed in more detail below.  AB 45 requires that any product sold or distributed in the state have documentation certifying that an independent laboratory confirmed the final form of the product does not exceed a THC concentration of 0.3%.  (Health & Saf. Code, § 111925.2.)  The bill also establishes a state regulatory scheme over such products and prohibits untrue health statements on product labels, among other things less relevant to the employment context.

Are All CBD Products Now “Legal” in California?

We have previously provided guidance, in a February 2020 Blog Post, on whether CBD products are legal.  As was the case then, the short answer to this question is “strictly speaking, no; but it is complicated.”

Uncertainty under Federal Regulators

The legal landscape at the federal level remains largely unchanged since our prior blog post.  Federal law draws a sharp distinction between cannabis products based upon their THC concentration level.  The federal government and executive agencies, such as the Drug Enforcement Agency (“DEA”), consider any cannabis product at or above 0.3% THC concentration to be marijuana.  Marijuana is considered a Schedule 1 drug under the Controlled Substances Act.  (21 U.S.C. § 812, subd. (c)(10).)  Any product below the 0.3% THC concentration threshold is considered “industrial hemp,” which is legal to produce.

Despite that distinction, the Food and Drug Administration (“FDA”) has signaled in non-binding guidance, “It is currently illegal to market CBD by adding it to a food or labeling it as a dietary supplement.” As a result, the FDA does not regulate currently regulate such products.  In May of 2021, United States Senators Ron Wyden, Rand Paul, and Jeff Merkley introduced proposed legislation on this issue.  The stated goal of the “Hemp Access and Consumer Safety Act” is to “ensure hemp-derived CBD products are regulated by the U.S. Food and Drug Administration (“FDA”) like other legal products used in dietary supplements, foods and beverages” and to resolve the current “regulatory gray zone” that exists for these products.  Until this or similar legislation is acted upon by Congress or until the FDA changes its course, the regulatory gray zone remains at the federal level.

AB 45 only complicates matters further.  Due to the FDA’s position on CBD products, the published THC concentrations of CBD and hemp infused products have widely been considered unreliable in the past.  AB 45’s requirement that all CBD or hemp infused products contain less than 0.3% THC concentration—and that an independent laboratory verify that concentration level—aims to bring all such products into compliance with federal statutory law and existing state laws (such as the Sherman Food, Drug, and Cosmetic Law).  California’s requirements, however, now lie in tension with federal regulators like the FDA.

AB 45 passed as urgency legislation, meaning that it went into effect immediately upon signature by the Governor on October 6, 2021.  As a result—in theory—all CBD and hemp infused products sold and distributed in California must comply with AB 45’s requirements at this time and therefore comply with other relevant state laws.  Nonetheless, a risk remains that such products currently sold in California do not yet comply with state law given the short time span since AB 45 went into effect.

Should Employees Avoid CBD Products if They Must Submit to Employer-Mandated Drug Testing?

The short answer to this question is, “it depends upon the type of test and who is administering it.”  For example, employees subject to Department of Transportation (“DOT”) drug testing should carefully weigh whether to use CBD or hemp infused products.  DOT does not specifically test for CBD, but it issued a “CBD Notice” on February 18, 2020.  The CBD Notice warns, “Since the use of CBD products could lead to a positive drug test result, Department of Transportation-regulated safety-sensitive employees should exercise caution when considering whether to use CBD products.”  The Notice continues, “CBD use is not a legitimate medical explanation for a laboratory-confirmed marijuana positive result.”

Employers may receive inquiries from employees about whether using CBD or hemp infused products will generate a positive drug test.  Employers are generally not obligated to advise their employees on whether a certain substance will register on an employer-required drug test.  Employees bear the responsibility of passing employer-required drug tests as a condition of employment.  If employers are inclined to provide any advice to their employees in this scenario, they should advise them to evaluate the reliability of the product’s reported THC concentration, and, in certain situations, consult with their health care provider(s) prior to consumption.  Employers should also advise employees if use of CBD or hemp infused products will violate employer policies irrespective of whether employees are drug tested.

What Other Issues Should Employers Consider Related to Employee CBD Product Use?

Employer Policies

First and foremost, employers should examine their current drug use policies to determine whether CBD and hemp infused products are covered by that policy’s provisions.  If they are, supervisors should be aware of what the policy states about CBD and hemp infused products.  If they are not, employers should consider defining CBD and hemp infused product use and consider establishing rules relating to such use.  We recommend that any employer consult with legal counsel should they wish to revise their current drug use policy to address these products.

The Disability Interactive Process

The second major area where the use of CBD and hemp infused products is likely to arise is processing disability accommodation requests.  It is clear under California law that employers are not obligated to accommodate marijuana use and can take adverse employment actions against employees for such use, and for possession or consumption of marijuana at the workplace.  (See, e.g., Ross v. RagingWire Telecommunications, Inc. (2008) 42 Cal.4th 920; Health & Saf. Code, § 11362.45 (f).)  The central holding of the Ross decision was that, despite the existence of the Compassionate Use Act, “[t]he FEHA does not require employers to accommodate the use of illegal drugs.”  (Id. at 926 [emphasis added].)  The law is far hazier on whether an employer is obligated to accommodate an employee’s off-duty use of CBD or hemp infused products as treatment for an underlying health condition.  This is especially true considering the fact that AB 45 was drafted to ensure that all CBD and hemp infused products sold in California comply with other state laws and federal statutory law.

Under the Americans with Disabilities Act (“ADA”) and the Fair Employment and Housing Act (“FEHA”), employers are generally obligated to consider modifying employment policies as a potential reasonable accommodation for a disability.  (See 42 U.S.C. §§ 12111, subd. (9)(b); 29 C.F.R. § 1630.2, subd. (o)(2)(ii).)  However, one federal district court recently cast doubt on whether an employee’s request to revise her employer’s drug use policy to allow for CBD as treatment for a medical condition could support a failure to accommodate claim under the ADA.  (See Hamric v. City of Murfreesboro (M.D. Tenn., Sept. 10, 2020, No. 3:18-CV-01239) 2020 WL 5424104, at *5.)  Some states, such as Virginia, have passed legislation that expressly forbids employers from disciplining employees for lawful CBD use if the employee possesses documentation from a health care provider that states such use is part of the employee’s treatment plan.  However, even Virginia’s law allows employers to take adverse action against employees that are impaired on the job from such use.  Given the wide array of situations an accommodation request can arise in, employers should consult with legal counsel and tread thoughtfully when responding to an employee accommodation request involving CBD or hemp infused products as a potential treatment for a disability.

There are a number of unresolved legal issues surrounding the use of CBD and hemp infused products in California.  Employers should continue to monitor this fast-moving legal space for further guidance.