NJ Court of Appeals OKs Reimbursement of Employee Medical Marijuana Costs  

January 22, 2020

In a case of first impression, a New Jersey Appellate Division panel ruled on Monday, January 13, 2020, that an employee’s costs to use medical marijuana to treat his chronic pain caused by an on-the-job injury can legally be reimbursed by his employer. The case is yet another indication of the trend towards judicial acknowledgement of the legal use of marijuana under state law, despite the ongoing federal ban.

The employee, Vincent Hager, experienced a severe back injury while working for M&K Construction in 2001. M&K initially denied Hager’s workers’ compensation claim and it began a long and winding path through the workers’ compensation system. While the claim was pending, Hager began to treat his injuries/pain with marijuana, as made available by New Jersey’s Compassionate Use Medical Marijuana Act (MMA). Some 15 years later, Hager’s claim ultimately reached trial before the New Jersey Department of Labor (DOL) Division of Workers’ Compensation in November 2016.

At trial, the employer stipulated that Hager had, in fact, experienced a compensable injury, which left only the key issue before the trial court as to whether M&K should have to reimburse Hager for his costs associated with using medical marijuana as part of his pain management regimen. The trial court held that those costs were related to reasonable and necessary treatment of Hager’s on-the-job injuries, which under New Jersey’s workers’ compensation law were properly reimbursable. M&K appealed the trial court’s order.

On appeal, M&K fought the trial court’s ruling by asserting that (1) the federal Controlled Substances Act (CSA) preempts the MMA; (2) reimbursement of Hager’s purchase of medical marijuana would expose M&K to federal prosecution; (3) an employer/workers’ compensation insurer should be treated the same under the MMA as a private health insurer, which may not be required to cover the costs of medical marijuana; and (4) medical marijuana cannot be a “reasonable and necessary” treatment of a compensable injury because it is illegal under the CSA, and because there were other, legal means of treatment available.

The Appellate Division affirmed the trial court’s order by first finding that the CSA does not preempt the MMA because there was no “positive conflict” between the CSA and the MMA “so that the two cannot consistently stand together.” The court observed that the CSA, “only preempts a state law that requires the performance of an action specifically forbidden by the federal statute.” Since the CSA only prohibits possession, manufacture, and distribution of marijuana, the employer’s mere reimbursement of an employee’s purchase of medical marijuana is not one of those actions specifically forbidden under the CSA, and thus is not preempted.

M&K also argued that the MMA should be preempted because reimbursement would amount to aiding and abetting the employee in the commission of a crime. The Appellate Division disagreed, finding that reimbursing a person for the legal use of medical marijuana under the state’s law would not make M&K an active participant in the commission of a crime, which the court found was especially true in this case since the putative crime (purchasing marijuana) would have already occurred at the time of reimbursement.

The panel went on to note that the threat of federal prosecution was similarly unpersuasive in light of the various congressional appropriations riders that prohibit the DOJ from using funds to prevent a state from implementing their medical marijuana laws, and the abject lack of any federal prosecution against an employer or insurance carrier for its reimbursement for authorized medical marijuana treatment. The opinion also rejected M&K’s argument that it should be lumped in with private health insurers, based on the state’s statutory pronouncement that “[h]ealth insurance does not include workmen’s compensation coverage[ ].”

Finally, the court addressed M&K’s contention that other, legal means of treatment were available. The court carefully dissected the testimony and evidence presented at trial as to the efficacy of medical marijuana in Hager’s case, which included “competent medical testimony” on the benefits and dangers of medical marijuana as compared to the proposed alternative (opioids), as well as Hager’s history of opioid addiction. It concluded that, “medical marijuana was reasonable and necessary for the treatment of [Hager’s] chronic pain.”

This case is one of only a few known instances of a court considering whether a state’s medical marijuana law is preempted by federal law and serves as a poignant example of the nationwide trend towards broad acknowledgement of the peaceful coexistence of those two seemingly conflicting bodies of law.

The case is Hager v. M & K Constr., A-0102-18T3, 2020 WL 218390, at *1 (N.J. Super. Ct. App. Div. Jan. 13, 2020), and the opinion can be viewed here.


DISCLAIMER: Cannabis is still classified as a Schedule I controlled substance by the U.S. Drug Enforcement Agency, and as such it remains a federal crime to grow, sell and/or use cannabis. Any content contained herein is not intended to provide legal advice to assist with violation of any state or federal law.



Adam C. Gutmann



(832) 214-3919

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