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Risk managers are waiting for guidance on cannabis



As more states legalize medical cannabis and cannabis for leisure activities, risk management professionals in municipal and educational environments face many new problems but have received some guidance on how to deal with them.

Concerns about the use of cannabis by vacant police officers may affect their service performance are a major concern.

In addition, cannabis is still illegal under federal law, classified as a drug under Schedule 1 by the Drug Enforcement Administration, creating additional uncertainty for risk managers in states where the drug has been decriminalized.

In 2012, Colorado and Washington were the first states to decriminalize cannabis for recreational activities. On April 22 this year, New Jersey became the latest state to allow cannabis use by people over 21

, and granted so-called recreational licenses to 13 existing medical pharmacies in the state.

“It’s a real challenge,” said Mark Turkalo, head of national education and public operations for Marsh LLC in New York. “How do you work? How do you react to something you literally have two opinions about?”

From land use and environmental issues to policies for municipal employees, many municipalities struggle with new and unanswered issues.

“Our communications have instructed customers to be very careful until further clarification is provided,” said Edward Cooney, partner, senior account executive, underwriting manager of public operations, for Conner Strong & Buckelew in Parsippany, New Jersey. Mr. Cooney is the insurance manager for New Jersey’s municipal deductible insurance fund, which covers nearly 700 municipal units in the state.

Sue Sharpe is a senior associate with Dorsey & Semrau LLP, a law firm in Boonton, New Jersey, working with MEL. The current situation is like being in “an attitude pattern and hoping for further guidance. We just assume there will be further guidance.”

Some guidance on how to deal with the use of cannabis by municipal employees may come in the form of New Jersey Senate Bill 2656, said Paul Shives, vice president, security services, with JA Montgomery Consulting in Parsippany.

The bill, which “concerns the use of cannabis by certain law enforcement officials during non-working hours”, is sponsored by Senator Paul Sarlo, a Democrat, and was introduced in May. It has been referred to the Senate Law and Public Safety Committee.

“Under the provisions of this bill, an employer is prohibited from taking any action that results in prohibiting an employee from using cannabis items during non-working hours, except when the employee is a law enforcement officer and the employment duties require possession of firearms”, it says in the legislation.

In addition to employee concerns, there are environmental issues associated with the growing cannabis industry, says Rich Erickson, senior associate with First Environment Inc., a consulting firm in Butler, New Jersey. “These are large facilities in small towns,” he said, bringing with it problems, including those surrounding odor, water and solid waste disposal.

Neighbors of cannabis plants may dislike the odor or activity associated with them, which can lead to land use problems in court.

“It’s a world of unintended consequences. You have legislation that comes into force and there are a lot of consequences that you do not realize until they are in front of you,” says Sharpe at Dorsey & Semrau.

Given the value of the crops, disputes over land use issues, which could cause a company to stop or change its operations and lose revenue, could be costly, Cooney said.

Together with municipalities, educational institutions are also struggling with emerging cannabis legislation and the legalization of the drug.

Ike Jenkins, head of risk management at the University of Delaware and chair of the RIMS 2023 Annual Conference Programming Committee, said: “Receiving federal research grants requires compliance with federal regulations” and that such criteria “may be incompatible with recently enacted legislation. Universities will need to carefully evaluate their position and policies in the light of conflicting federal and state laws. “

Mr Turkalo said such federal funding was often “the key to the operation of many institutions” which could be directly affected by the economic consequences of non-compliance with federal guidelines.

Mr Jenkins added that higher education institutions continue to be bound by the 1989 Federal Law on Drug-Free Schools and Communities and federal law continues to ban marijuana. “No matter what state laws say, many universities will continue to ban marijuana use on campus,” he said.


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