By CCN Markets: 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…
By CCN Markets: 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.
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.
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.
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.
This article was edited by Josiah Wilmoth.