NJ Appellate Court Recognizes Private Right of Action Under CREAMMA for Cannabis-Related Employment Claims

In a significant decision for employers operating in New Jersey, the Appellate Division of the Superior Court of New Jersey held that the Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (CREAMMA) provides applicants and employees with an implied private right of action to challenge adverse employment decisions based on lawful cannabis use.

The decision in Sanders v. The Levari Group, LLC is the first New Jersey appellate opinion addressing whether individuals may sue employers directly under CREAMMA’s employment protections and the opinion expressly rejects the contrary conclusion reached by the United States Court of Appeals for the Third Circuit in Zanetich v. Wal-Mart Stores East, Inc., 123 F.4th 128 (3d Cir. 2024).

BACKGROUND

Plaintiff Darlene Sanders alleged that defendant The Levari Group, LLC, d/b/a First Choice Freezer rescinded her offer for a customer service representative position after a pre-employment drug test revealed the presence of cannabis metabolites. According to the complaint, Sanders had lawfully used cannabis recreationally but was not under the influence at the time of the drug test or during the hiring process.

Sanders asserted that the employer violated CREAMMA’s anti-discrimination provisions, which generally prohibit employers from refusing to hire or taking adverse action against an individual because of lawful cannabis use or solely due to the presence of cannabinoid metabolites. She also asserted claims for negligence, invasion of privacy, breach of contract, and wrongful discharge in violation of public policy.

The trial court dismissed the statutory claims, concluding that CREAMMA did not provide a private right of action and that any remedy lay with the Cannabis Regulatory Commission (CRC).

APPELLATE DIVISION’S DECISION

The Appellate Division reversed in substantial part.

Applying the three-factor test established by the US Supreme Court in Cort v. Ash, 422 U.S. 66 (1975), and adopted by New Jersey courts for determining whether a statute implies a private right of action, the Appellate Division concluded that CREAMMA permits applicants and employees to sue employers directly for alleged violations of its anti-discrimination provisions.

Under Cort, courts consider:

1. Whether the plaintiff is a member of the class for whose especial benefit the statute was enacted;
2. Whether there is evidence that the legislature intended to create a private cause of action; and
3. Whether implying a private cause of action is consistent with the underlying purposes of the legislative scheme.

The Appellate Division found that all three factors weighed in favor of recognizing a private right of action under CREAMMA.

1. Applicants and Employees Are the Intended Beneficiaries of the Statute

The Appellate Division first found that applicants and employees are the specific class of individuals CREAMMA’s anti-discrimination provisions were designed to protect. The provisions do not prohibit discrimination generally; rather, they specifically prohibit employers from refusing to hire, terminating, or otherwise taking adverse action against individuals because of lawful cannabis use or the presence of cannabinoid metabolites resulting from conduct permitted under CREAMMA.

2. The Statutory Scheme and Legislative Intent Support a Private Right of Action

The court next determined that the structure and language of CREAMMA support private enforcement.

Although CREAMMA does not expressly create a cause of action, the Appellate Division found that the statute contains “rights-creating” language directed at protecting employees and applicants. The Appellate Division also emphasized that neither CREAMMA nor the CRC’s regulations establish an administrative process through which an aggrieved applicant or employee may seek relief.

The court noted that the CRC’s enforcement authority is largely limited to regulating licensed cannabis businesses and industry participants. Because the legislature did not provide an alternative enforcement mechanism for employment-related violations, recognizing a private right of action was consistent with the legislature’s apparent intent that these protections be meaningful and enforceable.

The court also distinguished the Opportunity to Compete Act, another New Jersey statute enacted alongside CREAMMA, which expressly provides an administrative remedy and expressly disclaims a private cause of action. According to the Appellate Division, the legislature’s decision not to include similar limiting language in CREAMMA supported recognizing an implied private remedy.

3. A Private Right of Action Furthers CREAMMA’s Purpose

Finally, the Appellate Division concluded that allowing private lawsuits advances CREAMMA’s broader objectives. The legislature sought to eliminate many of the collateral consequences historically associated with cannabis use, including barriers to employment. According to the Appellate Division, denying a private remedy would effectively render CREAMMA’s employment protections unenforceable because no governmental agency has been authorized to enforce them on behalf of applicants or employees.

NJ APPELLATE DIVISION REJECTS THIRD CIRCUIT’S INTERPRETATION

The Appellate Division’s ruling creates a split between New Jersey state appellate courts and the Third Circuit regarding the availability of a private cause of action under CREAMMA.

In Zanetich v. Wal-Mart Stores East, Inc, the Third Circuit held that a job applicant could not bring a claim against Walmart under CREMMA because the statute does not explicitly or implicitly create a private cause of action for applicants. The Appellate Division expressly disagreed, noting that New Jersey courts are not bound by federal courts’ interpretations of state law.

The Appellate Division also observed that Zanetich focused exclusively on NJSA 24:6I-52(a)(1), which addresses employment-related protections and prohibits employers from refusing to hire, discharging, or otherwise taking adverse action against individuals because of lawful cannabis use or the presence of cannabinoid metabolites.

By contrast, Sanders analyzed both NJSA 24:6I-51 and NJSA 24:6I-52 in concluding that the legislature intended to permit private enforcement of CREAMMA’s anti-discrimination provisions. Section 51 is broader and prohibits schools, landlords, and employers from refusing to enroll, lease to, or employ individuals based on the presence of cannabinoid metabolites resulting from conduct permitted under CREAMMA. The Appellate Division viewed these provisions together as evidence that the legislature intended to create enforceable protections for individuals who lawfully use cannabis.

TAKEAWAYS FOR EMPLOYERS

The decision increases litigation risk for New Jersey employers that rely on positive cannabis test results when making employment decisions.

Employers should consider the following actions:

• Review pre-employment and employee drug-testing policies.
• Reevaluate hiring practices that may rely on positive cannabis test results, particularly where there is no evidence of workplace impairment.
• Train human resources personnel and hiring managers regarding New Jersey’s cannabis-related employment protections.
• Review offer-letter, onboarding, and conditional-employment procedures that include drug-testing requirements.

The decision creates uncertainty regarding the scope of employer liability under CREAMMA because it directly conflicts with the Third Circuit’s 2024 decision in Zanetich. Employers should expect continued litigation over the issue and monitor whether the New Jersey Supreme Court grants review to resolve the split between state and federal interpretations of New Jersey law.

CONCLUSION

The Appellate Division’s decision establishes that applicants and employees may pursue civil litigation against employers for alleged violations of CREAMMA’s anti-discrimination provisions. Unless reversed or limited by further appellate review, Sanders is likely to become a significant factor in employment litigation involving workplace drug testing and cannabis use in New Jersey.