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Pot Stocks Won’t Get High on New Nevada Marijuana Law

Last Updated September 23, 2020 12:47 PM
Lawrence Meyers
Last Updated September 23, 2020 12:47 PM

By CCN.com: The state of Nevada has passed a new law  that prohibits the denial of employment to a prospective employee if a pre-employment drug screening test shows the presence of marijuana. At first glance, the Nevada cannabis law would appear to be a landmark victory for weed connoisseurs and pot stock investors.

Indeed, the law is a minor cannabis industry win, in that it represents another step in the removal of barriers to widespread legalized cannabis use.

A more considered interpretation of the law, however, yields less spectacular inferences.

Nevada Marijuana Law Isn’t a Green Light to Smoke Weed on the Job

For starters, the Nevada cannabis law simply prohibits an employer from denying employment based on a test prior to employment. That leaves plenty of wiggle room for an employer to deny a job to an applicant for some other manufactured reason.

It also doesn’t mean an employee can’t be fired for cannabis use if the drug shows up in a screening. The law actually states:

“If an employer  requires an  employee  to submit to  a  screening test  within  his or  her  first 30  days  of employment,  the employer is required to accept and  give  appropriate consideration  to the  results of an additional  screening  test to  which  the employee  submitted  at  his or  her own expense.”

So any employee can get a second bite at the apple by flushing the cannabis out of his system and submitting a new test. That still will not protect him in further tests.

Employees Won’t Be Lighting Up, and Pot Stocks Won’t Get High Either

Pot stocks, nevada marijuana law
Nevada’s new marijuana law is less bullish for pot stocks than investors might think. | Source: Shutterstock

The Nevada cannabis law also has certain exemptions. Employers do not have to hire the following individuals if they fail a pre-employment drug test: firefighters, EMTs, any job that:

“…requires an employee to operate a motor vehicle and for which federal or state law requires the employee to submit to screening tests; or that, in the determination of the employer, could adversely affect the safety of others.”

Despite the “fig leaf” elements of this law, pot stocks are likely to enjoy a few tailwinds, as it will be seen as the first step towards breaching employer prohibitions on cannabis use.

But that’s a speculative bump, not a fundamental one.

Cannabis Industry Faces Far Larger Challenges

There are possible setbacks that could also affect cannabis stocks. Employers in Nevada could sue to stop the law from taking effect. Case law in both the circuit courts and Supreme Court is still evolving .

Some states prohibit private sector drug testing, while others permit them in certain circumstances such as probable cause. There are legitimate questions in relation to the Fourth Amendment regarding permissible searches that remain unanswered.

As far as marijuana stocks go, the sector remains highly volatile. Big news like the Nevada cannabis law is more apt to create a disproportionate response in pot stocks than generate any real long-term momentum.