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New Jersey: Medical Marijuana Costs Reimbursable in Workers’ Compensation Scenario

By Rebecca Alperin & Mamta K. Shah on May 5, 2021
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Q: Is medical marijuana an expense reimbursable by the employer?

A: For New Jersey employers, the answer is likely yes. Weednews reports that as of January 9, New Jersey and 34 other states have legalized marijuana for medical use, although it remains a Schedule 1 controlled substance at the federal level. As a result, patients have had to pay out of pocket for medical marijuana, as insurers contend that covering the cost would violate the federal prohibition on marijuana under the Controlled Substances Act (CSA). Recently however, the New Jersey Supreme Court unanimously affirmed the ruling in Hager v. M&K Construction, 462 N.J. Super. 146 (App. Div.), that an employee injured in the workplace is eligible to have medical marijuana costs reimbursed by his/her employer under New Jersey’s state workers’ compensation laws.

Vincent Hager (Hager), an employee of M&K Construction, sustained multiple injuries resulting in chronic pain when a truck dumped cement on him. In 2016, Hager was prescribed medical marijuana as therapy to ease his pain and wean him from the use of opioids. M&K appealed a workers’ compensation order, asserting that it was not responsible for reimbursing Hager’s expenses for medical marijuana because the CSA preempts the New Jersey Compassionate Use Medical Marijuana Act (MMA) and that reimbursement of medical marijuana expenses would, in fact, constitute aiding and abetting illegal activity. Further, the company argued that despite the legalization of medical marijuana use in 2010 under the MMA, the MMA does not require private health insurers or government medical assistance programs to cover the costs of medical marijuana.

Noting that a recent congressional budgetary provision has effectively suspended the CSA with respect to the MMA, the New Jersey Supreme Court disagreed with M&K’s arguments, and affirmed the appellate court’s decision upholding the workers’ compensation order for reimbursement of Hager’s medical marijuana expenses. “Because we conclude the order does not require [employers] to possess, manufacture or distribute marijuana, but only to reimburse petitioner for his purchase of medical marijuana, we discern no conflict between the CSA (federal Controlled Substances Act) and MMA (the New Jersey Compassionate Use Medical Marijuana Act).” The Court further determined that the plaintiff’s use of medical marijuana was “reasonable and necessary,” and rejected M&K’s claim that reimbursing Hager would subject it to potential criminal liability. “Reimbursing Hager under court mandate can hardly be interpreted as M&K ‘elect[ing]’ to aid in Hager’s possession of marijuana, contrary to federal law … . Rather, it is being compelled to do so by the order.” Vincent Hager v. M&K Construction (A-64-19) (084045).

In an attempt to codify the Hager decision, New Jersey lawmakers have advanced a bill (A1708) that would require workers’ compensation and personal injury protection (PIP) auto insurance benefits to cover medical marijuana expenses under certain circumstances.

With the vast majority of states already having legalized medical marijuana use, the implications of Hager may be widespread, and other states may follow New Jersey’s lead. Further, state courts will need to determine to what extent the CSA does not preempt state medical marijuana laws and the job protections afforded employees who use marijuana for medical treatment.


Our Cannabis Practice provides advice on issues related to applicable state law. Cannabis remains an illegal controlled substance under federal law.

Photo of Rebecca Alperin Rebecca Alperin
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Photo of Mamta K. Shah Mamta K. Shah
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  • Posted in:
    Insurance
  • Blog:
    Hiring To Firing Law Blog
  • Organization:
    Troutman Pepper Locke
  • Article: View Original Source

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