What Employers Need to Know about the DOJ’s Reclassification of Certain Marijuana Products
Over the last three decades, 40 states have legalized the sale and use of medical marijuana in one form or another. Last week, the federal government followed suit, and the policy change could have significant repercussions on employers. For example, if an employer fires, or refuses to hire, a worker after a drug test shows the worker used marijuana, could that create liability under the Americans with Disabilities Act (ADA)?
On April 23, 2026, the U.S. Department of Justice (DOJ) issued an order reclassifying FDA-approved drug products containing marijuana and state-regulated medical marijuana to Schedule III of the Controlled Substances Act (CSA). Marijuana had previously been classified as a Schedule I drug (along with heroin, LSD, and ecstasy) and was not recognized to have any accepted medical use in the United States. The reclassification marks a significant shift and shows the DOJ finds these products do, in fact, have a medical use, along with a lower risk of dependence than Schedule I or II drugs.
The reclassification is limited to medical marijuana and FDA-approved products; it does not broadly legalize recreational marijuana under federal law, nor does it apply to synthetic THC. It is also important to note that the DOJ’s reclassification does not apply to employees working in safety-sensitive positions regulated by the U.S. Department of Transportation (DOT), such as truck drivers and airline pilots.
Nevertheless, employers should be aware of how this reclassification could change their obligations under federal employment laws with respect to non-DOT-regulated employees.
The Duty to Accommodate
Of particular importance, the reclassification is expected to impact employers’ obligations to accommodate employees with disabilities under the ADA. Historically, the ADA’s exclusion of employees engaging in the “illegal use of drugs” has excused employers from accommodating an employee’s off-duty use of medical marijuana. Because lawfully obtained medical marijuana is now a Schedule III drug (like Tylenol with codeine), it is no longer categorically "illegal" under federal law. This means employers will be expected to engage in the interactive process and accommodate off-duty use of lawfully obtained medical marijuana by employees who have state-issued medical marijuana cards, just as they may be required to accommodate the off-duty use of other lawfully prescribed medications.
It should be noted, however, that employers are still able to prohibit employees from working under the influence, especially in safety-sensitive positions.
Drug Testing
While the reclassification does not prohibit an employer from testing employees for THC, (the psychoactive agent in marijuana), such tests are now considered “medical examinations” under the ADA that may only be conducted when job-related and consistent with business necessity. As a result, pre-employment tests for THC may only be conducted after extending a conditional offer of employment; the results of any tests for THC must be maintained separate from an employee’s personnel file and kept confidential; and employers conducting tests for THC must comply with the requirements of the Genetic Information Nondiscrimination Act (GINA) by instructing testing personnel not to collect any genetic information from employees and informing employees both that the employer is not seeking genetic information and that the testing personnel should not collect genetic information. Positive test results, however, should now trigger a discussion to determine if the employee is lawfully using medical marijuana off-duty to treat a disability. This may sound funny to some, but the legal obligations are no laughing matter.
Drug-Free Workplace Obligations for Federal Contractors
The reclassification does not alter federal contractors’ obligations under the Drug-Free Workplace Act, which requires a workplace free of drugs without prohibiting drug use outside the workplace. Because medical marijuana is now permitted under federal law, employees of federal contractors who lawfully use medical marijuana should be treated the same as any other employee using a Schedule III drug.
Tax Implications for State Licensees
As a further consequence of the reclassification, state medical marijuana licensees will no longer be subject to the deduction disallowance imposed by Section 280E of the Internal Revenue Code. As a result, state medical marijuana licensees may now be able to deduct standard “ordinary and necessary” business expenses, such as rent, payroll, marketing, and utilities.
Conclusion
Employers should use this reclassification as an opportunity to proactively review their drug testing policies, ADA accommodation practices, and disciplinary protocols, as well as the potential tax implications of the reclassification. If you have questions about how this development may impact your workplace, please contact your Miller Canfield attorney or one of the authors of this alert.
