Alliance Group Loses Drug Test Dismissal Case Over Medical Cannabis

ERA Rejects Employer's Summary Dismissal Motion

The Employment Relations Authority denied Alliance Group's application to strike out the worker's personal grievance claim, finding the employer failed to conduct a fair investigation before termination. The decision, issued by ERA Member Rachel Larmer, centered on whether Alliance met procedural fairness requirements under New Zealand employment law when it dismissed the worker following a positive drug test in early 2026.

Alliance argued the termination was justified because the worker violated company drug and alcohol policies by using cannabis, even with a prescription. The ERA found that argument premature. The Authority noted Alliance didn't investigate whether the worker's medicinal cannabis use posed an actual safety risk or whether reasonable accommodations could have been made.

Medical Cannabis Prescription at Center of Dispute

The worker held a valid prescription for medicinal cannabis to treat a chronic condition, a fact Alliance acknowledged but argued was irrelevant to workplace safety policies. New Zealand legalized medicinal cannabis in 2020 under the Misuse of Drugs (Medicinal Cannabis) Amendment Act, allowing patients to access cannabis-based products with a prescription. The law doesn't explicitly protect employees from termination for using prescribed cannabis, though.

A legal gray zone has emerged. Employers retain broad discretion to enforce zero-tolerance drug policies, but the ERA's decision signals that blanket terminations without individualized assessment may fail procedural fairness tests.

Procedural Fairness Standard Applied

ERA Member Larmer ruled that Alliance's failure to investigate alternatives or assess impairment levels before dismissal violated the fair process obligation under the Employment Relations Act 2000. The Authority cited the employer's duty to conduct a reasonable investigation, consider the employee's explanation, and explore less severe disciplinary options before termination.

Alliance conducted a drug test as part of routine workplace safety screening. The worker tested positive for THC metabolites, which can remain detectable for weeks after use and don't indicate current impairment. Alliance terminated the worker within days. No assessment of whether he was impaired at work. No inquiry into whether his cannabis use outside work hours affected job performance.

Safety-Sensitive Role Complicates Defense

Alliance operates meat processing facilities where workers handle sharp equipment and heavy machinery, roles the company classified as safety-sensitive. The employer argued that any presence of cannabis in a worker's system justified termination to protect workplace safety. The ERA didn't dispute the legitimacy of safety concerns but found Alliance failed to demonstrate the worker's specific role required absolute prohibition of off-duty medicinal cannabis use.

This decision doesn't establish a blanket right for medicinal cannabis users to be exempt from drug testing. Instead, it requires employers to assess each case individually, considering the nature of the role, the timing of use, evidence of impairment, and whether accommodations are feasible.

Implications for New Zealand Employers

The ruling creates compliance pressure on employers with zero-tolerance drug policies to revise procedures for handling medicinal cannabis cases. Legal experts noted the decision aligns with a 2023 ERA case involving a truck driver terminated for medicinal cannabis use, where the Authority similarly required employers to prove impairment rather than mere presence of THC.

Employers in safety-sensitive industries face a procedural tightrope — they must maintain drug-free workplace standards while accommodating workers with legitimate medical needs, and the ERA's framework demands documented risk assessments, individualized reviews, and good-faith exploration of alternatives such as role reassignment or modified duties.

For more background on this issue, see the CannIntel topic hub on workplace drug testing and medical cannabis.

Case Advances to Full Hearing

The ERA scheduled a substantive hearing for November 2026 to determine whether Alliance's termination was justified and, if not, what remedies the worker is entitled to receive. Potential remedies include reinstatement, lost wages, and compensation for humiliation and injury to feelings. The worker's legal team indicated they'll argue Alliance's policy effectively discriminates against employees with disabilities who require medicinal cannabis treatment.

Alliance hasn't indicated whether it will appeal the ERA's procedural ruling. The company declined to comment on active litigation. Employers across New Zealand's agriculture, manufacturing, and transport sectors are watching closely, particularly where safety-sensitive roles and drug testing policies intersect with rising medicinal cannabis patient numbers.

Document discovery is due October 15. The substantive hearing will examine Alliance's drug testing protocols, the worker's job duties, and whether less restrictive alternatives were available.