To speed up Portland’s beleaguered permitting process, the city is offering to help people interested in starting new marijuana-focused businesses save multiple trips through the Permit Center.

The city already offers personal sit-downs with prospective applicants for fees determined by the scope of each proposed project. What’s new is that times will now be set aside for marijuana businesses, said Ross Caron, spokesman for the Bureau of Development Services.

Along with adhering to building code requirements, which are overseen by BDS, marijuana businesses have the added burden of maintaining a marijuana business license, which is administered through the Office of Neighborhood Involvement. Because two offices are involved, Caron said, the city wants to do more to assist marijuana businesses.

The assistance meetings will be staffed by professionals specializing in fire prevention and other life safety issues, plans examination and mechanical engineering. They’ll be on hand to assist applicants with submitting completed project applications and preventing costly slip-ups.

Two tiers of meeting will be offered – one for simpler, retail-only shops, and one for more complicated projects involving production, processing and wholesaling.

Tier 1 meetings will cost $511, with the option of having a structural engineer attend for $152. Participants must complete a preliminary packet prior to the meeting and submit all materials for review five days ahead of time. If a Tier II meeting requires zoning and infrastructure professionals on hand, the fee is $2,074.

Caron said the move is intended to help streamline the city’s overworked permit process, which has struggled to hit performance measures in recent years.

BDS is rapidly staffing up after operating shorthanded for most since the recession hit in 2008. More than 160 employees have been added in the last two years (the average time to train a BDS employee is considered nine months). Over a recent 12-month period, only 56 percent of permits taken for review by BDS were returned on time.

The post BDS offers permit help for cannabis industry appeared first on Daily Journal of Commerce.

Portland may be about to see what the next generation of marijuana facilities looks like.

A group of entrepreneurs is proposing to build an indoor and outdoor marijuana growing facility, a retail storefront, a research and development building and a bed-and-breakfast on what is now a 3-acre auto-wrecking yard in North Portland.

“The idea out there that the business owners have is to create more of a lifestyle center for cannabis,” said Rahim Abbasi, an Abbasi Design Works principal who is designing the project.

The project, Saints Cloud, is designed for cannabis users to lounge, take classes on marijuana-related topics and even exercise. Several yoga studios already combine vinyasa and cannabis.

Visitors could watch marijuana being grown in the cultivation facility through a window in the retail shop to showcase the plants. They could then take a class on growing their own before staying overnight on the property.

“They’re thinking the McMenamins of the cannabis industry,” Abbasi said, referring to the pioneering Portland-based chain of brewpubs, restaurants and hotels.

Abbasi has requested an early assistance meeting with Bureau of Development Services staff to hash out some issues such as limits on retail space in the heavy industrial zone.

Saints Cloud is part of a boom in marijuana cultivation that is beginning to affect the industrial market in the Portland area.

Marijuana growers are in many cases competing with other industrial users for older, cheaper warehouse properties. Cannabis business owners have avoided newly constructed industrial properties because of their higher price and the difficulty of securing a loan because of their association with marijuana.

Another proposal was submitted in February for an indoor growing facility at 7916 S.E. Foster Road. The proposal came from 6D LLC, an entity registered to a Damascus address. The Foster Road parcel is occupied by a 50,000-square-foot retail building.

“A lot of the marijuana growers are swooping up the older, cheaper industrial product and they’re kind of pricing out these sole proprietors who might be running a different type of business,” said Brian Mitchell, a broker at Macadam Forbes.

Financing is another obstacle for marijuana growing facilities.

“They obviously have to pay cash if they’re buying it,” Mitchell said. “You can’t have a loan on a building or the bank will call the note due because it’s federally illegal.”

Saints Cloud’s Jesce Horton, one of three partners in the venture, said they’d had a tough time finding an appropriate property in the city.

“We’ve been searching for quite a while to find somewhere to cultivate,” Horton said. “Ultimately, an old attorney friend reached out and said there was an owner who was interested in selling.”

The property, at 1040 N. Commercial Ave., is currently Rose City Auto Wrecking. Raoul Calderon of West Linn is listed as the property owner in city records. The Saints Cloud team has an agreement in principle to purchase the property, Abbasi said.

The three partners have one major investor and are seeking to raise more money for the project, Horton said.

The partners want to allow customers to use marijuana on the property.

“There are not very many places where consumption is allowed, so hopefully we’ll be able to develop a property where that won’t be a problem,” Horton said.

The property is adjacent to railroad tracks and 14-acre Farragut Park. If the property is developed as envisioned, guests will have views of the park in their eyes and the scent of cookies in their nostrils.

“There’s a Nabisco factory right across the street that has the whole area smelling like cookies every day,” Horton said.

Saints Cloud targets recreational marijuana users. The development would be phased, with the cultivation facilities in place first. A greenhouse would be erected along with the warehouse.

The property tells a story of industrial Portland. It appears to have once been a cattle barn, Abbasi said, before the auto-wrecking yard took over. Cattle were likely transported on the adjacent railroad tracks. Soon, perhaps, it will be a marijuana-themed resort.

Horton is no stranger to the cannabis business. He’s part-owner of Panacea Valley Gardens, a marijuana grow facility in the Columbia River Gorge; and a Portland dispensary, Panacea, at 6714 N.E. Sandy Blvd.

Horton is also chairman and co-founder of the Minority Cannabis Business Association, a nonprofit that seeks to lower barriers to entry in the industry.

Abbasi said he’s seen an increase in design work from the marijuana industry, but nothing like the Saints Cloud proposal.

“The whole goal in their minds was to be the first one to do something like this,” he said.

In many cases, Abbasi’s clients are new to property development and its many complications, such as seismic upgrades and sprinkler installations.

“It’s been an interesting environment to work on because a lot of these guys have no experience with development or building,” he said.

The regulatory environment means marijuana entrepreneurs are forced to be flexible, Abbasi said.

“Their operations are constantly changing because the rules are constantly changing in terms of what they can and can’t do,” he said.

Some rules, such as allowing businesses to operate without a certificate of occupancy as long as they’re working toward one, have eased, he said.

Yet the specter of marijuana’s federal status continues to loom over the burgeoning industry. U.S. Attorney General Jeff Sessions has been a vocal opponent of marijuana legalization, describing the drug as “slightly less awful” than heroin.

The post A lifestyle project for the cannabis crowd appeared first on Daily Journal of Commerce.

With the recent passage of Measure 91, the sale of marijuana for recreational use will soon be legal in Oregon under state law. As when any new market emerges, even businesses with no existing connection to the marijuana industry will be eager to identify new ways to make money. Some landlords, for example, will be interested in leasing property to marijuana producers or distributors, who may be attractive lessees with steady cash flow and few tenant improvement requirements.

Banks and private lenders may find marijuana growers and dispensaries, with high profit margins and a ready market for their product, to be worthwhile credit risks. However, doing business with marijuana producers or distributors necessarily involves unique risks and considerations, including the fact that marijuana remains an illegal controlled substance under federal law. As a result, certain creditors’ remedies created by federal law – such as involuntary bankruptcy proceedings and federal court receiverships – are unlikely to be available to creditors of marijuana businesses. Landlords and lenders should seek competent counsel to fully understand these special risks involved, and others, before leasing or providing financing to a marijuana business.

As a general rule, when businesses experience financial difficulties, one of the first considerations for debtors and creditors alike is the possibility of bankruptcy. However, the emerging trend among bankruptcy courts (federal courts that apply federal bankruptcy laws) is to refuse to allow marijuana-related businesses (including those that lease property to marijuana operations) to avail themselves of bankruptcy protection on this basis.

For example, a federal bankruptcy court in Oregon recently refused to confirm a bankruptcy plan that would have relied on rental income from a medical marijuana business as well as profits from its own marijuana grow operation to pay creditors. In Colorado (which also has legalized recreational marijuana), a federal bankruptcy court took an even harder line, summarily dismissing both a business and an individual bankruptcy case because the debtors in each instance derived income from marijuana operations (one was a landlord, and the other was a grower).

Other federal remedies are also likely foreclosed.  For example, although no federal courts seem to have addressed the issue yet, creditors are unlikely to be able to place marijuana debtors into federal receiverships, for the same reasons that bankruptcy courts are unwilling to preside over such cases.

Landlords and lenders (and any other parties owed money by marijuana businesses) are therefore probably unable to force marijuana business debtors into involuntary bankruptcy proceedings or federal receiverships. Landlords whose tenants are engaged in marijuana businesses may also find themselves barred from seeking relief in federal bankruptcy courts. Thus, doing business with a marijuana producer may limit not only a landlord’s remedies against that party, but may also have far-reaching consequences for a landlord’s own ability to file for federal bankruptcy protection, should the creditor seek to do so.

Creditors will need to look to options in state courts and through self-help remedies available under state law with options in federal court limited. One option available to a secured creditor is to foreclose on the business’ assets and liquidate them, or even operate the business itself. Oregon’s new marijuana law explicitly provides for foreclosure of security interests in marijuana, and for the operation of a marijuana-related business for a secured party for a “reasonable period” after a debtor’s default.

Most secured creditors are not likely to want to take possession of the marijuana-related business because of the numerous potential risks, including knowingly engaging in a business that is illegal under federal law. Alternatively, a creditor may seek to reorganize or liquidate an insolvent marijuana business by suing for appointment of a state court receiver.

Until the Oregon Liquor Control Commission (which will regulate marijuana businesses) provides specific rules for marijuana licenses, it is unclear what conditions would have to be satisfied to appoint a receiver for a marijuana-related business. Even after such rules are established, however, it still is not clear whether many receivers and turnaround managers will be willing to take the risks associated with operating marijuana businesses or if their insurance and bonding companies will permit them to do so. But it seems likely that if enough landlords and lenders need their services in this context, some receivers will find a way to serve those needs.

It is also not clear whether state court judges will be willing to oversee marijuana receiverships, notwithstanding the passage of Measure 91, but clear rules from the OLCC or amendment to the law could provide state court judges with the necessary guidance to do so.

Another strategy that may provide some measure of protection to a landlord is to create a special purpose entity to engage in marijuana-related business. However, doing so will not expand the remedies available to such an entity in the event of the lessee’s default.

Finally, any secured creditor should keep in mind that civil forfeiture of the debtor’s collateral under federal law is also a possibility. The Justice Department has provided guidance as to when it will pursue federal charges against businesses selling or distributing marijuana in ways that are otherwise legal in the laws of their states. But that guidance expressly states that it is subject to change at any time, and there is no guarantee that this administration, or any subsequent one, will continue the present policy.

In sum, lenders and landlords considering entering into business relationships with marijuana producers or distributors must understand that, in addition to the potential benefits of such business relationships, there are significant and unique risks in the event the marijuana business falters – especially in terms of available remedies. Based on the complexity and relatively untested-nature of this area of the law, and the likelihood for additional developments on both the state and federal levels, it is extremely important to consult with competent legal counsel before entering into any business relationship involving marijuana.

Victor J. Roehm is a partner in Sussman Shank‘s business group with more than 10 years of experience in finance, real estate and corporate transactional work. Contact him at 503-227-1111 or vroehm@sussmanshank.com.

Timothy A. Solomon is an attorney in Sussman Shank’s bankruptcy and creditors’ rights group with more than 12 years of experience in bankruptcy, corporate restructuring and receivership matters. Contact him at 503-227-1111 or tsolomon@sussmanshank.com.

The post OP-ED: What will happen when pot businesses go up in smoke? appeared first on Daily Journal of Commerce.

Oregon voters earlier this month delivered a blunt message when they legalized recreational marijuana use. But for landlords and developers, the future is hazier.

Though passage of Measure 91 makes marijuana legal in the state, it is still classified by the federal government as a Schedule I drug punishable with jail time and property confiscation. This disparateness creates a problem for cannabis producers and distributors seeking banks willing to do business with them, landlords willing to rent to them and developers willing to work with them.

“I was inundated with calls from developers the day after the votes were in wanting to know how the bank feels about leasing to tenants (in the cannabis industry),” said Charlotte Boxer, director of commercial real estate markets for Pacific Continental Bank. “From a lender’s viewpoint, it’s still considered illegal.”

Boxer said that most marijuana dispensary owners are willing to pay considerably more than market rate to lease space. Some landlords find the extra money tempting, but she said people willing to rent to marijuana dispensaries are placing themselves at risk.

“Leasing to those types of businesses could cause some of the other tenants to move out,” she said. “Some don’t like the possibility of the HVAC system blowing the smell – it can be pungent – into their businesses. Or they don’t like the clientele, or the constant traffic in and out.”

Meanwhile, federally insured lending institutions are worried about transactions that could generate attention from government authorities.

“Any time we get a deposit of more than $10,000 per day, we have to file a S.A.R. – a suspicious activity report – with the Treasury to inform about possible terrorist activity or money laundering,” Boxer said. “The federal government is probably going to turn a blind eye, like they’ve done in Washington and Colorado, but we all know policies can change with each different administration.”

Jeff Baker, president and CEO of Portland-based MBank, said the risks associated with lending to business owners in the marijuana industry are high. However, if those risks could be mitigated, MBank would be open to working with legitimate cannabis businesses, he said.

“We’re trying to figure out how to serve what is an underserved industry,” he said. “We’d like to be able to help because the only financing that’s been available for them comes from private lenders with a different risk appetite and is very expensive.”

Baker said that if landlords were protected from having their property confiscated by the government in cases where tenants were deemed participants in illegal activity, his bank would be more confident doing business with them.

Steve Malany, owner of P&C Construction, said he’s been approached by marijuana dispensary owners who are interested in renting space in one of his commercial buildings. He turned them down, he said, because his lending institution told him it would revoke financing if one of his tenants was committing a federal crime.

The shady legal standing isn’t scaring all developers away. Just this week the Portland Bureau of Development Services received a commercial building permit application for a proposed renovation of an existing Northeast Portland building to hold five grow rooms.

Portland-based Perlo Construction specializes in large-scale industrial buildings, but owner Jeff Perala said it’s unlikely his company would get involved in the marijuana industry because of uncertainty about legal conflicts and their possible consequences.

At a recent breakfast forum held at The Nines hotel in downtown Portland, the subject of legalized marijuana was met with stifled snickering from the audience after panelist Brian Glanville said that his firm, Integra Realty Resources, had been hired to assess a property with a building associated with the marijuana industry.

“The market for industrial space is already pretty tight,” said Vanessa Sturgeon, president and CEO of TMT Development. “We all giggle about it, but marijuana legalization is going to affect the industrial market.”

Jones Lang LaSalle reported recently that the vacancy rate for industrial space in the Portland area dropped below 5 percent in the third quarter of 2014. That is the lowest rate the area has seen in 20 years.

Marijuana grow facilities generally are concrete tilt-ups, which are inexpensive to build, Sturgeon said.

“They struggle to find financing, but people are finding creative ways to do it,” she said. “It’s not Beavis and Butt-head that are putting up these buildings.”

The post Oregon’s pot production future is hazy appeared first on Daily Journal of Commerce.

Last month, the New York Times’ editorial board declared that it was “high time” to end federal prohibition of marijuana. The announcement was newsworthy as the latest social indicator of changing public attitudes about marijuana usage and criminalization. However, for the Times’ human resources department, the editorial stance in favor of marijuana legalization arguably has created more headaches than anything else.

Within 24 hours of the editorial board’s announcement, the Huffington Post and other Internet sites ran stories about the Times’ company policy of subjecting all new hires to a pre-employment drug screening that includes testing for marijuana metabolites. Additionally, a petition on change.org, urging the Times to make its internal policy consistent with its editorial board’s views on the need to “end legal discrimination against people who use marijuana” has received over 5,000 signatures.

I mention this anecdote not to criticize the company’s drug policy or to suggest that a newspaper’s editorial board has any business dictating a large media company’s personnel policy, but rather as an example of the way in which an employer can find itself pulled in mutually exclusive directions on the issue of marijuana.

Another example of the same phenomenon can be seen in the New Mexico Court of Appeals’ 2014 decision in Vialpando v. Ben’s Automotive Services. In the case, the court affirmed the decision of an administrative law judge ordering an employer to reimburse an injured worker for the cost of medical marijuana.

The court rejected the employer’s argument that the administrative decision was illegal because the employer “would be required to violate federal law in reimbursing (the) worker for his medical marijuana expenses.” Instead, the court reasoned, in light of the federal decision not to challenge Washington’s and Colorado’s voter-initiated decisions to legalize and regulate marijuana possession, production and distribution, it was appropriate to enforce the state’s Compassionate Use Act by requiring the employer to reimburse the employee’s medical marijuana expenses.

As states continue to relax marijuana laws, and public acceptance of marijuana continues to grow, these incongruous and internally inconsistent results will only become more common on the employment landscape.

Currently, 22 states and the District of Columbia allow for some form of medical marijuana. In November, Oregon is likely to become a state that allows for and regulates the production and sale of recreational marijuana. Other states are likely to follow suit. Indeed, according to the Pew Research Center, 54 percent of Americans favor legalization of marijuana.

So, how is an employer to respond? Unfortunately, there is no one-size-fits-all answer.

For many employers, if not most, compelling operational needs to strictly maintain a drug-free workplace will remain unchanged.

For example, employers that service federal contracts within the United States are subject to the federal Drug-Free Workplace Act; any relaxation in employer policy could jeopardize the contract. Similarly, employers that have employees performing safety-sensitive functions risk, among other things, potential liability on claims of negligent hiring or retention, were those employers to relax their marijuana policies and a workplace injury involving a marijuana-impaired employee were to occur.

Nonetheless, anecdotal reports suggest that in certain less-skilled industries and geographic areas, employers have challenges finding sufficient eligible applicants who can pass a pre-hire marijuana screening. In such circumstances, where there is not a specific safety or other operational need to safeguard against off-duty marijuana usage, it may make sense for an employer to tailor its policies on marijuana usage to capture on-duty impairment, but leave that employee to his or her own devices when off the clock.

As the law in this area is in a state of flux, employers are well-served to seek guidance from an employment attorney who can help develop a policy that meets the unique operational needs of the employer but also complies with operable laws.

José Klein is an attorney with Barran Liebman LLP. He advises and represents employers on a wide range of labor and employment law matters. Contact him at 503-276-2199 or jklein@barran.com.

The post OP-ED: Changing marijuana laws challenge employers appeared first on Daily Journal of Commerce.

The nascent legal marijuana industry in Washington state is posing legal, financial and logistical issues for contractors.

For Longview, Wash.-based JH Kelly, ethical concerns exist. It was contacted by a developer to build in Longview two facilities for marijuana production, but participation on such projects would contradict the contractor’s in-house policies, said Rob Harris, vice president of business development. The company also does not want to run afoul of relationships with some of its Fortune 500 customers, including Weyerhaeuser and BP.

“Our position on it is we’re committed to a drug-free (workplace),” he said. “Just because it’s legal doesn’t mean we can work on it. How do you build a marijuana facility with a clear conscience?”

Brendan Kennedy, CEO of Seattle-based Privateer Holdings, has a different perspective. His private equity firm invests exclusively in the legal cannabis industry. A Privateer Holdings subsidiary, Arbormain, is in the process of completing a $20 million, 60,000-square-foot medical cannabis production facility in Canada.

Kennedy compared the process in Washington to going through a giant funnel. Projects fail, he said, because developers cannot obtain a license, a property or financing.

A build-out also can come with huge risks. Large warehouse projects, which require massive amounts of security, electricity and mechanical systems, are more akin to large pharmaceutical or hospital buildings than developers realize, Kennedy said.

“It’s far more complicated than people think,” he said. “People have this crazy assumption that because they know how to design a grow in a basement that they can design a large grow in an industrial warehouse. That’s just not the case.”

Meanwhile, regulations of cities and counties sometimes vary, said Jamie Howsley, a land use attorney with Jordan Ramis.

“Given some of the regulatory challenges from local governments, there is not going to be the bonanza that was expected because some local municipalities have zoned it out of existence,” he said.

The city of Vancouver came up with a map of compliant and noncompliant sites that excluded numerous areas because they were within 1,000 feet of a school, park or other area where children may congregate.

“For the grow side and the production side, that puts you into industrial zoning,” Howsley said. “For the retail side, you go into the commercial (zoning), but it’s harder to comply with the 1,000-foot rule because commercial zoning tends to be located close to those uses.”

Clark County commissioners prohibited marijuana production in unincorporated areas altogether because it does not comply with federal law, Howsley said.

Unlike Colorado, which also legalized marijuana in 2012, Washington has limited larger grow operations because they are more likely targets for federal law enforcement officials, Howsley said.

“If you are under certain plant numbers, you are less likely to get raided,” he said. “You are not likely to see big warehouses. They will more likely be a couple thousand (square) feet.”

Brian Stroh, owner of Cannaman Farms in Vancouver, started a 2,000-square-foot operation this past September.

“Property is the number one issue based on a number of factors that continually restrict the supply,” he said. “You have to find something that meets the zoning requirements.”

Alternatively, developers have to find an amenable landlord or own the land where the warehouse is built, Stroh said. So, a list of potential sites for developers can be small.

“I know of projects that would like to be under construction, but it’s not happening,” he said. “There are a lot of people with big ideas, but no money. And there are very few people with licenses.”

Financing those projects also is a big hurdle for developers and something a contractor should consider before taking on a project, said Jeremy Vermilyea, a Portland-based attorney for Schwabe, Williamson & Wyatt.

“I don’t see a huge amount of risk for putting up a building itself,” he said. “But on the financing side, most of the uncertainty is how the feds are going to look at financial transactions.”

Contractors should be wary of deals where they are paid directly or lenders are because they are subject to a higher degree of scrutiny and possibly an audit, Vermilyea said.

“A contractor would be wise to do due diligence because it raises red flags,” he said.

Traditional lenders or state-chartered banks could be safer routes, Vermilyea said. Payments made monthly by check or direct deposit also would carry less risk. He suggests that contractors contact the Washington State Liquor Control Board or an attorney to get answers.

“Even if we’re not talking about cash, the question is: Are you deriving your profit from illegal enterprises?” Vermilyea said. “Those are the questions contractors need to be asking. There is more risk than the nature of the work itself.”

The post Legal marijuana business, construction not a good fit appeared first on Daily Journal of Commerce.

People must have been stoned, according to a retired senior deputy district attorney for Multnomah County, when they crafted Measure 80 – a marijuana legalization initiative that will go before Oregon voters next month.

“It sounds like a group of college freshmen got together, (smoked) some bongs and dreamed this up,” said Mark McDonnell, who headed up the county’s drug-related prosecutions. “They threw everything they could think of in this measure.”

The problem, McDonnell said, is that they didn’t provide oversight.

“It will be a free-for-all in the growing of marijuana,” he added.

Plus, marijuana would still be considered a prohibited controlled substance by the federal government. Oregon could become the country’s marijuana connection.

“In a large sense, it already is,” McDonnell said, noting that police in many other states automatically think someone with Oregon plates or an Oregon driver’s license is transporting marijuana.

That concerns leaders of Oregon’s trucking industry because its members routinely cross state lines. Debra Dunn, the president of the Oregon Trucking Association, said allowing drivers to smoke marijuana recreationally in Oregon puts them and their employers at risk in other states.

“It would put us in a position of making our jobs more difficult,” Dunn said.

It definitely would, said Ron Guerra, an attorney who specializes in employment law as a partner in the firm of Jordan Ramis PC in Lake Oswego.

“I would see that as a major problem for the trucking industry, especially here in Portland where truckers are going back and forth across state lines all the time,” he said.

Putting aside the issues of crossing state lines, Guerra said commercial trucking licenses often require random drug testing.

“Legalized marijuana would throw that whole process right out on its ear,” he said.

Paul Stanford, a marijuana activist and one of the chief petitioners behind the ballot measure, dismisses such talk as reactionary and fear-mongering. Employers can ban their workers from smoking marijuana just as they can ban them from smoking cigarettes. If workers were smoking marijuana only at home, he said, employers would have to focus on specific performance issues.

“When it’s not prohibited, it will be about actual impairment,” Stanford said.

The measure would legalize, regulate and tax marijuana for personal use, he said – just like the Oregon Liquor Control Commission does with alcohol.

“There is no difference,” Stanford said.

Well, McDonnell said, there is one difference.

“You don’t have the right to distill your own alcohol for private use,” he said.

Stanford and others say the measure would stop the illegal drug trade and the nefarious and often dangerous characters involved.

But McDonnell said it wouldn’t. The price of marijuana could skyrocket with legal growers and dealers having to pay workers minimum wage and incurring all the other costs of doing business.

Smokers would continue to turn to the criminal element for black-market, low-cost marijuana, McDonnell said.

“The system will never work with private growing operations,” he added.

Stanford insists the measure would remove the criminal from the process. It also would create healthier workers for employers, he said.

“Once the science kicks in, they’ll realize employees who smoke marijuana don’t have the same health problems as people who smoke cigarettes,” he said.

The post Legalized marijuana raises concerns for industry appeared first on Daily Journal of Commerce.

An employee suffers an accident on the job. Company policy requires that the employee be tested for illegal drugs. The employee tests positive for marijuana. The employee has a big problem.

However, who would have the problem if marijuana were as legal as alcohol?

It could be the employer, said lawyer Ron Guerra, who specializes in employment law as a partner in the Lake Oswego office of . Legalized marijuana could create a huge problem for business in Oregon, he said.

If Measure 80 were to successfully legalize the drug, Guerra said it would be much harder for employers to pin impaired behavior on marijuana use and then respond accordingly. He added that it is unclear how far employers could go to prohibit employees’ use of marijuana away from the workplace.

A lot of the possible consequences of the ballot measure are unclear, Guerra said. In particular, how would employers determine whether a worker is affected by marijuana?

“It’s an open question right now as to these issues of impairment,” he said.

Backers of the measure claim legalization of marijuana in Oregon would solve a lot of problems. However, critics in business and industry say it would create more problems than it would solve.

Regardless of what Oregon voters decide in November, the federal government still considers marijuana an illegal controlled substance. Federal construction contracts often require Oregon employers to guarantee drug-free workforces.

Paul Stanford, a marijuana activist and one of the chief petitioners behind the ballot measure, said that isn’t a problem. Employers could ban their workers from smoking marijuana just as they can ban them from smoking cigarettes.

If workers were to smoke marijuana only at home, he said, employers would have to focus on specific performance issues.

“When it’s not prohibited, it will be about actual impairment,” Stanford said.

“Impairment” is a tricky issue, said John Killin, president of .

Determining whether a worker is functionally impaired becomes more difficult when workers are free to smoke marijuana at home, he said.

“The measure creates issues across many industries dealing with whole problem of impairment and showing up to work impaired,” Killin said. “It throws out a lot of policies and procedures that apply when people show up at work impaired.”

Debra Dunn, president of the , noted that truck drivers often cross state lines. Allowing drivers to smoke marijuana recreationally in Oregon puts them and their employers at risk in other states, she said.

“It would put us in a position of making our jobs more difficult,” Dunn said.

That might be an understatement, Guerra said.

“I would see that as a major problem for the trucking industry, especially here in Portland where truckers are going back and forth across state lines all the time,” he said.

Putting that issue aside, Guerra said commercial trucking licenses often require random drug testing.

“Legalized marijuana would throw that whole process right out on its ear,” he said.

Killin said the initiative is a major concern in the construction industry.

“Safety comes first, so we are looking at this from the same lens we always have,” he said. “It is a matter of preventing impairment on the job through drug-free policies and procedures. This initiative creates a burden on a hard-hit industry.”

Stanford said it is hard to speak to employers’ concerns.

“We don’t address the employment issue directly,” he said, but added that employers – and everyone else – would benefit from legalization of marijuana.

The traditional argument is that legalization would free up court time and jail space for more serious offenders while letting state authorities control and tax sales of the drug. Beyond that, according to Stanford, employers will actually see a healthier workforce. They just have to look beyond the myths of marijuana, he said.

“Once the science kicks in, they’ll realize employees who smoke marijuana don’t have the same health problems as people who smoke cigarettes,” Stanford said.

Also, sophisticated screening methods can be used to determine whether people are actually impaired by marijuana use, he said. Traces of marijuana can stay in a person’s body for weeks, so testing should focus on current, rather than recent, marijuana use, he added.

Stanford said he fully expects Oregon voters to legalize marijuana and a federal court challenge to follow.

“We wrote our initiative to be upheld in federal court,” he said, adding that Oregon would prevail.

But marijuana supporters did not prevail in 2010, when Oregon Supreme Court justices ruled 5-2 that the state’s medical marijuana law does not protect workers from being fired for using the federally illegal drug.

Measures to legalize marijuana are also on ballots in Colorado and Washington. In a dispute between a Colorado medical marijuana grower and a dispensary, Arapahoe County District Court Judge Charles Pratt ruled this month that Colorado’s entire medical marijuana law is invalid because it is trumped by federal law.

In a similar case in Arizona, Maricopa County Superior Court Judge Michael McVey ruled in May that state decisions provide no protection against federal drug laws.

Stanford said he is unfazed by such precedents, especially as they relate to the marijuana initiative on the November ballot. Colorado and Washington may well see more problems than Oregon, he said.

“They don’t deal with the issue of federal supremacy the way we do,” he said.

Killin, meanwhile, stressed that marijuana is by no means a “safe” drug, especially for people on the job.

“It affects a lot of workers – not just people operating heavy machinery,” he said. “Like roofers not quite thinking things through. That’s a dangerous job. Or electrical guys not wiring something quite right because their heads are in a fog.”

Guerra said employers raise legitimate points about the measure.

“It could cause a lot of problems for employers,” he said. “It raises a lot of questions.”

The post Industry employers see trouble with legalized marijuana appeared first on Daily Journal of Commerce.