Medicinal cannabis, a catch-all term referring to medical products containing Tetrahydrocannabinol (THC) and/or Cannabidiol (CBD), was made legal in Australia in 2016.  For the purpose of this article, we are focussing on medicinal cannabis which contains THC, which is the psychoactive component that gives rise to potential impairment. It is generally accepted that medicinal cannabis solely containing CBD does not give rise to such a risk.^[1]

Since then, there has naturally been an increased use of and access to medicinal cannabis in our communities. Its impact on the workplace has begun to cause consternation amongst employers, who have had to grapple with how to approach this emerging issue: by adopting a perspective in which marijuana is lumped in with other illicit drugs, or by taking a more pharmacological approach, in which it is treated in the same way as any prescription medicine that has the potential to cause impairment.

Employers have traditionally managed cannabis use via the former i.e. no-tolerance AOD policies. This was simpler before cannabis was able to be lawfully prescribed to treat disabilities and other chronic illnesses and pain.

Now, there are pitfalls and legal risks to employers if they adopt a strict no-tolerance policy that does not account for medical exceptions, or the changing sentiment to cannabis use in Australia, particularly among the Courts and the medical community. One misconception is that medicinal cannabis is a narrow issue which only affects a handful of employers. In reality, the use of medicinal cannabis is growing across all walks of life and affecting more and more employers every day.

Changing regulation around medicinal cannabis

Medicinal cannabis is made a lawful substance via federal law (and in Victoria by state law).^[2] Small quantities of recreational cannabis are also lawful in the Australian Capital Territory. It is still highly regulated, but there is a push in various States, including South Australia, to legalise cannabis on a State level or to reduce its regulation.^[3]

Further, in all States and territories, road traffic legislation, and other industry-specific safety legislation,^[4] prohibits engaging in certain conduct, such as driving a car on a public road, with the presence of THC in a person’s system, without discriminating whether that THC derives from lawful or unlawful cannabis use.^[5]

Cannabis is being used for medicinal purposes both through lawful prescription medication and non-prescribed medication. In 2021, it became easier to have cannabis prescribed from a treating practitioner and the amount of lawfully obtained prescribed cannabis has increased significantly. This has flowed from medical practitioners becoming more familiar with the processes (and becoming licenced), as well as targeted campaigns to encourage its use and reduce stigma.^[6]

Medicinal cannabis dispensaries or ‘green pharmacies’ are also becoming more prevalent, as are doctors who openly advertise their speciality in prescribing medicinal cannabis, both with a mandate to provide medicinal cannabis in an accessible manner. This is making it easier to obtain medicinal cannabis, but it also reflects the changing social attitude towards its use.

There has been a steady increase each year of the number of authorised prescribers (being practitioners that have been approved and hold the licence to prescribe medicinal cannabis) and the approvals they hold to issue prescriptions (noting a prescriber may hold multiple approvals) by the Therapeutic Goods Authority:^[7]

This trend is likely to continue as more people seek access to prescription cannabis to manage chronic pain, anxiety disorders, cancer and other conditions.^[8]

The main risk of cannabis use by employees, similar to alcohol, is that it gives rise to a risk of impairment, or otherwise may affect employees’ fitness for work. However, unlike alcohol, there is an absence of definitive medical evidence directly correlating medicinal cannabis use with impairment, based on a particular concentration of THC in a person’s system. Detectable concentration is also significantly affected by a number of factors, including testing methodology (oral swab vs urinalysis, with the latter detecting the presence of THC for a longer period after use), individual pathology (such as weight), and use patterns (for example, longer-term users may have detectable THC in their systems for a long period after they cease using).

This uncertainty makes it difficult to determine fitness-for-work and enforce no-tolerance drug policies on the basis of impairment, even in safety-critical industries. As such, there is debate over what is ‘impairment’ and whether the presence of THC in a person’s system can actually predict impairment.

The Therapeutic Goods Administration (TGA) observes that:

• patients should not drive or operate machinery while being treated with medicinal cannabis;
• measurable concentrations of THC can be detected many days after the last dose is taken; and
• negative effects will differ upon the person taking the medicinal cannabis, with patients with neurological conditions being more likely to experience negative effects.

However, the TGA notes further that there is simply insufficient research or information about the impairment effects of medicinal cannabis and more research is required to fully understand it.^[9] That is, measuring cannabis-related impairment is challenging, because THC can remain in the system long after its psychoactive effects have subsided. Standard workplace drug tests can detect THC metabolites but do not necessarily indicate real-time impairment, leading to concerns over fairness in the workplace.

In this light, a South Australian Report advocates that the mere presence of THC in the bloodstream does not indicate impairment and should not justify a restriction on a person’s capacity to drive or otherwise engage in activities.

Testing in the workplace

Drug testing in the workplace is generally conducted via oral or urine tests. There are, of course, differences between oral fluid testing and urine testing in terms of their detection methods and ability to indicate recent use, which has significant implications for assessing employee impairment.

Oral testing is useful for identifying recent drug use, aligning more closely with periods of potential impairment. For instance, the detection window for marijuana in oral fluid covers the entire window of likely impairment, which can extend for 10 hours or longer. On the other hand, urine tests have a broader detection window, identifying drug metabolites from approximately 24 hours up to several days post-use. This makes them effective for detecting historical drug use but less indicative of current impairment levels.^[10]

Given its shorter detection window, oral fluid testing is more adept at identifying recent use, making it a more reliable indicator of potential impairment. This is particularly important in safety-critical industries where immediate detection of substance use is critical. In contrast, while urinalysis can reveal past drug use, it doesn’t necessarily correlate with an employee’s current state of impairment, as metabolites can linger in the system long after impairment effects have subsided.

Unions often advocate for oral fluid testing over urine analysis due to its shorter detection window, which they argue better reflects current impairment (rather than past usage).^[11] This approach reduces the likelihood of penalising employees for off-duty conduct that doesn’t affect workplace safety or productivity. Oral fluid testing is also less invasive and more convenient – factors that resonate with both employees and their representatives. Employers in safety-critical industries who prefer urine testing often point to it as a better indicator of historic, and chronic, substance use.

A recent guide was issued by the New Zealand Drug Foundation regarding the use of medicinal cannabis and it suggested practical changes to workplace policies and procedures to manage disclosure of medicinal cannabis in the workplace. It emphasised the importance of focussing on ‘impairment’ rather than drug use and posited the idea of using apps which assess impairment rather than drug tests, claiming the use of cannabis is not relevant but rather the level of impairment on the individual.^[12] While this exact approach may be premature for the Australian market, it shows that companies may be more innovative and creative with how they address these issues.

What are the legal issues facing employers and how can they be managed?

Overview of potential legal issues

Like any new technology or social development, existing regulation of this issue is a step behind, and there are unintended consequences with applying the law as it currently stands.

The various legal issues with medicinal cannabis which we are currently seeing, or expect to see, include:

1. Work health and safety – like in relation to any prescription drug, an employer must ensure that an employee’s usage of medicinal cannabis does not result in such impairment as to create an unsafe working environment, for both the employee themselves, or to others in the workplace to whom the employer owes workplace health and safety duties under law. Where an employee’s capacity to perform their duties safely is impacted, this must be managed.
2. Discrimination laws – in many situations where a person is taking medicinal cannabis, this will be directly related to an illness or injury, and via legitimate prescription. Any adverse or damaging action to the person for taking medicinal cannabis may breach disability discrimination laws. Disability discrimination laws require the employer to make reasonable adjustments to accommodate an employee with a disability. Employers must ensure that policies do not unfairly penalise or disadvantage employees lawfully using prescribed medication. This extends to pre-employment situations, as discrimination laws extend to cover the refusal to engage a person for a discriminatory reason.
3. Privacy obligations – employees’ medical information is sensitive health information covered by privacy laws. Employers must be careful they do not breach privacy laws in the way they deal with employees using medicinal cannabis. Many employers require disclosure of medicinal cannabis use for safety reasons, but employees have privacy rights regarding their medical conditions. Striking the right balance is crucial to avoid legal pitfalls. Employers need to ensure that data collection, use and disclosure comply with legal requirements. Central to this is safeguarding the health information of employees and ensuring it is only used for legitimate purposes.
4. Impairment laws – States’ traffic laws and other similar laws (rail laws, civil aviation laws, construction laws) require persons not to operate vehicles or other machinery while having THC or other drugs in their system, or otherwise impaired. Employers should ensure that any employee that is taking medicinal cannabis is not operating vehicles or other heavy machinery while impaired (noting this interrelates with work health and safety obligations). Given the absence of definitive medical evidence correlating medicinal cannabis use with impairment, this is difficult.
5. Industrial Relations – organisations may have enterprise agreements in place which address AOD policies, drug testing and processes. Any testing processes must be compliant with these agreements and be able to hold up to union scrutiny. The enforcement of AOD policies, and any changes to these policies or related matters (such as testing practices), are common areas of disputes with employees, both during and outside of bargaining. In relation to bargaining specifically, given the rise in use of medicinal cannabis, we expect to see unions start to include claims designed to protect employees’ ability to use medicinal cannabis products without being exposed to disciplinary action or classified as unfit to work.
6. New regulatory requirements – As the law develops in this area, there will likely be new regulations, including for specific industries. For example, the South Australian Report indicates they are looking to impose specific regulations in relation to driving while taking medicinal cannabis. Other States are also reviewing their positions in relation to medicinal cannabis use and testing in a variety of areas.^[13]
7. Productivity and performance – employees that are taking medicinal cannabis, or other prescription drugs, may experience side effects which affect their productivity or performance. These will need to be managed in a careful manner to avoid breaching employment laws (such as discrimination, general protections and other laws).There are also practical issues that operate alongside these legal issues. For example,
8. Type of testing – It’s crucial for employers to understand the differences between oral fluid testing and urine testing as these testing methods differ in their detection methods and their ability to indicate recent use, which has significant implications for assessing actual or potential impairment. Employers should consider these differences when selecting a testing method, especially when evaluating the use of prescription medications like medical cannabis. Oral fluid testing may offer a more accurate assessment of an employee’s present fitness for duty, thereby enhancing workplace safety and compliance.
9. Notification of prescription drug use/awareness – Employees should be required to continuously disclose and update their use to their employer, because if an accident occurs in the workplace, the employer may be held liable for failing to ensure a safe workplace, especially if they were aware of the employee’s drug use and did not implement precautions. The employees must be aware of any obligation to notify of their prescription drug use – this should be linked to the employees own obligations under safety legislation.

How to manage these issues, including conflicting obligations

Managing the various legal issues above is not an easy task for any employer.

For example, there is difficulty reconciling work health and safety obligations with an employee’s right to privacy: this includes where a supervisor might need to know, in order to ensure work is carried out safely, that an employee may be impaired by medicinal cannabis, which in turn may conflict with an employer’s privacy obligations.

Further, employers must balance safety obligations with anti-discrimination laws. If an employee is legally prescribed medicinal cannabis, an employer cannot automatically terminate their employment for its use without risking engaging in unlawful discrimination. However, if the job requires a level of cognitive function or sobriety that cannabis use affects, the employer may have a valid reason to place restrictions or require alternative work arrangements to ensure the safety of its workforce as a whole (WHS laws require employers to mitigate impairment risks), with dismissal being a fair and reasonable option where such mitigations are not reasonably practicable (for example, because of the fundamental requirements of the role). Failure to consider reasonable accommodations could expose the employer to discrimination claims, and an outright ban on medicinal cannabis may lead to claims of discrimination against employees lawfully using prescribed medication.

There is no perfect solution and every situation will need to be assessed taking into consideration the nature of the employee’s role, the circumstances of the employee, any medical information available (from the employee’s treating practitioner or an independent medical practitioner) and any other unique factor to the situation, such as the working environment and inherent safety hazards. An employer will then need to balance the competing legal interests to ensure a safe working environment, which does not breach discrimination, privacy or other employment laws.

Response to cannabis use by Courts and Tribunals

There has been a number of cases lately which have considered the issue of medicinal cannabis in the workplace. We provide a quick snapshot of these decisions below:

1.  Adam Mills v Glamorgan Spring Bay Council [2025] FWC 116 (15 January 2025)

Mr Mills was a Works Officer who was involved in construction and maintenance work, which involved operation of heavy machinery and other dangerous duties. Due to a chronic injury, sustained from a historical work incident, Mr Mills took medicinal cannabis. Mr Mills had alerted his employer he was taking medicinal cannabis, but did not alert them to it containing THC. Mr Mills was stood down and ultimately terminated following a failed drug test which found THC in his system. The employer, following an independent medical examination, believed he could not safely perform the inherent requirements of his role because of the THC. Mr Mills had no history of unsafe work and there were no complaints of his capacity. Mr Mills also claimed he would cease taking the THC based medicinal cannabis to keep his job.

The Commission found there was a valid reason for dismissal because Mr Mills breached the employer’s drug and alcohol policy’s notification requirements. He had alerted them to taking medicinal cannabis, but did not advise them that it contained THC (they believed it only contained CBD). However, despite the valid reason, the dismissal was ultimately unfair because of his personal circumstances (single parent of 4 children), he had no history of unsafe incidents, he had indicated he would ‘push through the pain’ which he did before taking the medicinal cannabis, he had no malevolence in failing to comply with the notification requirements, and the employer failed to consider alternatives to manage the situation.

Mr Mills was reinstated with backpay of 31 weeks (less payments made on termination).

2.  Sheldon Haigh v Platinum Blasting Services Pty Ltd [2023] FWC 2465 (26 September 2023)

Mr Haigh worked as a Mobile Processing Unit Operator for Platinum Blasting Services. This involved the preparation and delivery of explosives. He initially disclosed his use of medicinal cannabis to manage anxiety and insomnia. He ceased using it for a period and, once he recommenced, he did not disclose this to his employer. Mr Haigh only used the medicinal cannabis when he was on his off-swing and not actively working. After a safety incident at work, he was required to undergo drug testing, during which he informed the onsite paramedic about the potential presence of THC in his system due to his prescription. The test came back clean; however, he had not disclosed that he was continuing to use medicinal cannabis to his employer (despite clear directions from the company to disclose all prescription medication in both regular emails and the drug and alcohol policy).

Mr Haigh failed to disclose his ongoing use of medicinal cannabis as required by the company’s drug and alcohol policy, which stated that employees must inform their supervisor of any medication that could impair their judgement or ability to work safely. Although Mr Haigh had passed multiple drug tests in the past, the Fair Work Commission determined that he had a valid obligation to disclose his prescription. The company had a reasonable basis for dismissing Mr Haigh, as his non-disclosure posed a potential safety risk in his role, which involved handling explosives.

The dismissal was not deemed harsh or unreasonable despite the impact on Mr Haigh’s mental health and employment prospects, as he had been clearly informed of his responsibilities regarding medication disclosure. Mr Haigh’s application for unfair dismissal was dismissed, affirming the validity of his termination based on the breach of the company’s policy.

3. Millar v FQM Australia Nickel Pty Ltd [2022] FCA 1331 (2 November 2022)

Mr Millar, a mechanical fitter employed by FQM Australia Nickel, was placed on unpaid leave on 27 July 2022 and subsequently terminated on 21 September 2022 after he began using medical marijuana containing THC to manage his Crohn’s disease symptoms. FQM’s strict drug testing policy required employees to pass urine tests, which Mr Millar could not do while taking his prescribed medication. Mr Millar argued that FQM failed to make reasonable adjustments to its drug testing procedures, thereby discriminating against him due to his disability. He lodged a complaint with the Australian Human Rights Commission, claiming unlawful discrimination.

The Federal Court found that while FQM had a valid reason for its drug testing policy based on safety concerns, it did not adequately consider Mr Millar’s medical needs or the possibility of adjusting the policy to accommodate him.

The court granted an interim order for Mr Millar to be reinstated on unpaid leave until the complaint process was resolved, preserving his employment rights while the discrimination complaint was being investigated. These proceedings are still on foot.

The takeaway from these decisions is that the way employees’ medicinal cannabis use should be managed depends on the specific circumstances of that employee. There is no one glove fits all approach and employers should be cautious in terminating employees simply because they are using medicinal cannabis.

What should employers do now?

While this is an evolving space, with an absence of binding court or regulatory guidance and ongoing parliamentary efforts to adapt the laws to the current environment, bearing in mind the competing risks and issues outlined above, our advice to all employers is that they should:

• Review AOD Policies: Have clear AOD policies in place which address prescription drugs (including medicinal cannabis). AOD policies are increasingly recognising medicinal cannabis as a prescription medication, requiring a shift in mindset from some traditional AOD approaches. The policies should require employees to notify their manager or other relevant person when they are using prescription drugs or varying their use. The policies should align with legal obligations, be practical and enforceable, and be reviewed and updated regularly. The policy position taken should be underpinned by an evidence-based analysis of the workplace and the types of work required for particular roles. For example, where specific roles are designated as ‘safety-critical’, this should be supported (in a manner in which evidence can be led if a challenge is later brought) by a documented consideration of the particular safety risks inherent in that role and the potential impact of impairment as a result of those risks. Ideally, this analysis would be supported by (preferably external and independent) medical evidence.
• Consider assessment processes: Implement, if not already, clear and consistent processes and procedures to help facilitate the use of medicinal cannabis in the workplace, including when fitness for work assessments and independent medical assessments are required to be conducted, particularly for safety-critical roles. This should also be addressed in relevant policies.
• Provide training: Provide training to managers and employees, as this is a critical aspect of policy implementation. Training should revolve around reporting obligations (including consequences of not reporting medicinal cannabis use), how to manage the workplace with prescription drugs/medicinal cannabis, and should facilitate a cultural shift which is more accepting of medicinal cannabis.
• Ensure awareness and undertake consultation: As with any change to policies and procedures, but particularly those with a potential to result in disciplinary action or impacts to employment, employers should conduct an education campaign to ensure that employees are aware of the changes and any new obligations on them (particularly around disclosure obligations). Similarly, employers will need to be conscious of any applicable consultation obligations (for example, in an award or enterprise agreement), and ensure that these are followed.

Key takeaways?

The legal and practical complexities surrounding medicinal cannabis require employers to take a balanced and informed approach. By proactively reviewing policies, implementing clear procedures, and educating employees, employers can navigate the evolving regulatory landscape while ensuring workplace safety and legal compliance.

Please contact any of our Employee Relations and Safety lawyers if you would like assistance regarding the AOD policies or managing medicinal cannabis use in the workplace.