In a much anticipated decision, the Colorado Supreme Court confirmed an employer’s right to fire employees for drug use — even state-licensed use of medical marijuana. The court ruled in a unanimous decision that Dish Network did not violate state employment laws by firing a quadriplegic employee for using medical marijuana off the job. While the case highlights the growing tension between state and federal marijuana law, it is also welcome relief for employers who have or are considering a zero-tolerance drug policy based on federal law’s continued classification of marijuana as an illicit drug.

Brandon Coats, a Colorado resident and customer service representative, was fired from Dish Network after testing positive for marijuana in a random drug test in 2010. Coats, who was paralyzed in a car crash when he was 16, is a registered medical marijuana user in the state and used the drug to soothe pain from muscle spasms resulting from the accident. Colorado is one of 23 states that allows medical or recreational marijuana, and is one of four states to legalize recreational use by adults. The District of Columbia also allows both medical and recreational use. Meanwhile, the federal government still classifies marijuana as a Schedule I controlled substance and prohibits use under the federal Controlled Substances Act.

Coats filed a wrongful termination claim, arguing that his marijuana use was protected by the state’s lawful activities statute, which bans employers from “terminat[ing] the employment of any employee due to that employee’s engaging in any lawful activity off the premises of the employer during nonworking hours.” The trial court dismissed his complaint, the intermediate appellate court affirmed that dismissal, and the Colorado Supreme Court agreed. The Colorado Supreme Court’s decision ultimately hinged on the word “lawful,” which the state statute does not define. While Coats contended that the term should mean activities “lawful under state law,” the court disagreed. According to the opinion, “lawful” in the statute is used in a “general, unrestricted sense, indicating that a ‘lawful’ activity is that which complies with applicable ‘law,’ including [both] state and federal law.” Since Coats’ marijuana use was not legal under federal law, it did not fall under the state’s protection for lawful activities.

In sum, while Colorado has legalized the use of marijuana, the state statute that protects an employee who engages in “lawful activity” outside of work nevertheless does not protect a medical marijuana user because marijuana use remains unlawful under federal law. Thus, an employer policy that prohibits use of the drug will, at least in Colorado, not subject the employer to liability for wrongful termination when an employee is discharged for violating the employer’s drug policy.

The decision highlights the complex legal landscape that exists given marijuana remains illegal under federal law. Business owners, marijuana suppliers and distributors, financial institutions, and investors all face similar challenges in trying to take advantage of the new and growing marijuana market in certain states, while at the same time, avoiding the potentially draconian penalties for violating federal criminal laws. While that landscape remains unclear and employees and former employees bring test cases throughout the country, employers should look to the state’s wrongful termination statute and the state’s specific medical marijuana statute before drafting a policy that calls for firing an employee for using medical marijuana away from work and outside of work hours.