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Michigan Legalizes Recreational Marijuana: What it Means for Small Business Owners

The last election cycle may have added to the number of states with legalized marijuana, but is your business ready for it? Michigan became the 10th state to legalize recreational marijuana this past midterm election, ushering in the creation of the Michigan Regulation and Taxation of Marihuana Act (MRTMA). As more states adopt these measures, it’s a good time to consider how legal marijuana affects your business and what you can do to protect yourself.

A small business owner and an employee reviewing marijuana policies in the employee handbook. 

What Does Legalized Marijuana Means for Small Business Owners?

While MRTMA does legalize the use of recreational marijuana, it doesn’t do so at the expense of business owners. In fact, the new law doesn’t change much in terms of an employer’s ability to maintain the same drug and alcohol policy that was in place before the law. Per the MRTMA itself, the act still allows employers to do the following:

  • Ban conduct allowed by this act in any workplace or on company property
  • Discipline, discharge, or take other adverse employment actions against an employee for violations of a workplace drug policy or for working while under the influence
  • Refuse to hire a person after failing a pre-employment drug test or take adverse action against an existing employee in terms of tenure, terms, conditions, or employment privileges for working under the influence

There’s also the fact that recreational marijuana is still illegal in terms of federal law, which has generally trumped state laws in marijuana-related cases so far. While Michigan’s new law and federal law in general doesn’t reign in an employer’s ability to maintain a drug-free workplace, that doesn’t mean that you shouldn’t takes steps to protect your business. It’s up to you to set clear guidelines that make your company’s policies are clear to your employees.

What You Can Do to Protect Your Company

Institute a Drug-Free Workplace Policy

Regardless of whether you’re in a state like Michigan that has legalized recreational marijuana or not, it’s good to establish a written drug-free workplace policy (DFWP). This policy should make it clear that employees should never have any illicit substances on company grounds.

Consider Drug Testing

If you plan to test your employees for drug use, you need to have your policy carefully outlined to make sure that your employees have a clear understanding of your drug testing policy. This includes expectations and rules associated with each type of test, such as when they can happen, testing timelines and steps, and what’s expected of the employees. The types of drug test include:

  • Pre-employment tests for applicants
  • Probable cause tests for reasonable suspicion
  • Arbitrary tests on set dates (such as work anniversaries)
  • Random tests

Of course, how you administer these tests can vary depending on your state. For example, Michigan has no law addressing drug testing regulations for private employers if your policies are not found to be discriminatory or violate any other legal provision. Other states may have set regulations for what types of test can be done and how those tests and conducted. OHS, Inc. provides abstracts of each state’s workplace drug testing laws, although it’s good to check local laws yourself to make sure you’re in compliance with any necessary rules and regulations. 

Set Discipline Standards

In a way, marijuana can be treated the same way as alcohol; employees can’t come to work impaired, and they’ll be in trouble if they do. You’ll want to set firm policies to protect your business in case there are any incidents, but you should also consider whether your state has any protections in place for marijuana users, especially for places where medical marijuana is allowed. 

Of course, these potential protections can vary greatly based on your location. The Society for Human Resource Management notes that employers in Vermont and Minnesota “can't fire someone for the first failed drug test if the employee agrees to complete a rehabilitation program.” The Small Business Association of Michigan highlights a Maine law that “prohibits adverse actions against employees for using marijuana outside of work.” Federal law may generally prevail, but adjusting your discipline standards to fit local laws can help you avoid costly legal battles while still affording your company some protection.

It’s also crucial that, no matter how you decide to discipline employees for failed drug tests, you treat everyone equally. If you use a failed test as the basis for firing one employee but refrain from punishing a separate long-term employee, the fired employee could argue that your inconsistent application of your own rules was discriminatory. That could lead to litigation and a long, costly headache that could be avoided.

Another good item to include is some language involving what it means if an employee attempts to delay a test or outright refuses to take one. If you decide to drug test employees, you should include a clear definition of “refusing to test” to offer you some protection. If you find that an employee is too evasive about drug testing and should be dismissed.

Prepare Your Business for Marijuana Laws

It’s not going to get any easier trying to figure out how marijuana laws will impact your business. Between new states adding legal marijuana and various regulations, it can be an absolute headache to keep track of everything your business should do to protect itself unless you’re an expert. If an employee gets hurt while under the influence of marijuana, the process can be even more complicated. Because of that, it’s best to turn to an expert to make sure you stay on top of federal and state marijuana laws.

A Professional Employer Organization like GMS can help you navigate through confusing, ever-changing regulations and update your handbooks to protect your business. We have experts in multiple locations across the country, including at our Detroit officeContact us today to talk to one of our experts about how we can help you prepare for marijuana regulation and strengthen your business in other ways.

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