Seyfarth: Nevada Supreme Court Holds Recreational Cannabis is Not a “Lawful” Off-Duty Product

By  on 

In the last two years, more jurisdictions have passed laws providing employment protections to applicants and employees using cannabis on their free time, including in New YorkWashington, DC, and California. Recently, however, the Supreme Court of Nevada upheld dismissal of an employee’s lawsuit, which claimed that his termination for testing positive for recreational cannabis violated the state’s lawful off-duty product law. (Ceballos v. NP Palace, LLC, Aug. 11, 2022.)

The plaintiff worked as a table games dealer at a casino for more than a year without incident. After he slipped and fell in the employee breakroom, the employer required him to submit to a drug test, which came back positive for cannabis. As a result, the employer terminated the plaintiff.

The plaintiff sued, claiming a violation of the state’s law prohibiting employers from taking action against employees who engage “in the lawful use in this state of any product outside the premises of the employer during the employee’s nonworking hours, if that use does not adversely affect the employee’s ability to perform his or her job or the safety of other employees.” Because the state decriminalized recreational cannabis in 2017, the plaintiff argued that his employer could not terminate him for his off-duty use of the drug. He also sued for wrongful discharge. The district court dismissed the complaint in its entirety.

The Supreme Court of Nevada upheld the dismissal. The court framed the issue as whether “lawful use in this state” means “lawful under state law” or “generally lawful, under both state and federal law.” After analyzing the text of the statute, reviewing it in conjunction with other state cannabis laws, and citing to the Colorado Supreme Court’s 2015 decision in Coats v. Dish Network, LLC (which addressed a similar issue), the court disagreed with the plaintiff’s arguments. Specifically, it concluded that by using the phrase “in this state,” rather than “under state law,” the legislature intended for the law to require that the product be legal under both state and federal law. The court also rejected the wrongful discharge claim because it did not involve one of the “rare and exceptional cases” where Nevada courts have recognized such a claim. The court found it important in resolving both claims that the state’s decision to decriminalize cannabis in 2017 expressly preserved to employers the right to enforce workplace policies prohibiting or restricting employees’ recreational cannabis use:

If the Legislature meant to require employers to accommodate employees using recreational marijuana outside the workplace but who thereafter test positive at work, it would have done so.”

While the decision is somewhat favorable to Nevada employers concerned about maintaining a safe and drug-free workplace, Nevada employers must still be mindful of state laws that restrict their ability to test job applicants for cannabis, except in narrow circumstances, and arguably provide employment protections to medical cannabis users.

Nevada Supreme Court Holds Recreational Cannabis is Not a “Lawful” Off-Duty Product

Top 200 Cannabis Lawyers

We Support

Cannabis Law Journal – Contributing Authors

Editor – Sean Hocking

Author Bios

Matt Maurer – Minden Gross
Jeff Hergot – Wildboer Dellelce LLP

Costa Rica
Tim Morales – The Cannabis Industry Association Costa Rica

Elvin Rodríguez Fabilena


Julie Godard
Carl L Rowley -Thompson Coburn LLP

Jerry Chesler – Chesler Consulting

Ian Stewart – Wilson Elser Moskowitz Edelman & Dicker LLP
Otis Felder – Wilson Elser Moskowitz Edelman & Dicker LLP
Lance Rogers – Greenspoon Marder – San Diego
Jessica McElfresh -McElfresh Law – San Diego
Tracy Gallegos – Partner – Fox Rothschild

Adam Detsky – Knight Nicastro
Dave Rodman – Dave Rodman Law Group
Peter Fendel – CMR Real Estate Network
Nate Reed – CMR Real Estate Network

Matthew Ginder – Greenspoon Marder
David C. Kotler – Cohen Kotler

William Bogot – Fox Rothschild

Valerio Romano, Attorney – VGR Law Firm, PC

Neal Gidvani – Snr Assoc: Greenspoon Marder
Phillip Silvestri – Snr Assoc: Greenspoon Marder

Tracy Gallegos – Associate Fox Rothschild

New Jersey

Matthew G. Miller – MG Miller Intellectual Property Law LLC
Daniel T. McKillop – Scarinci Hollenbeck, LLC

New York
Gregory J. Ryan, Esq. Tesser, Ryan & Rochman, LLP
Tim Nolen Tesser, Ryan & Rochman, LLP
Cadwalader, Wickersham & Taft LLP

Paul Loney & Kristie Cromwell – Loney Law Group
William Stewart – Half Baked Labs

Andrew B. Sacks – Managing Partner Sacks Weston Diamond
William Roark – Principal Hamburg, Rubin, Mullin, Maxwell & Lupin
Joshua Horn – Partner Fox Rothschild

Washington DC
Teddy Eynon – Partner Fox Rothschild