Unions have been puffing away at cannabis growers and producers as well as dispensaries. Those wins regularly pop up in news reports, but this is an unusual area of labor law for many reasons, including the counterintuitive reality that the industry isn’t even federally recognized but must navigate endless federal red tape in order to exist. In fact, it remains technically illegal, according to the feds, for these businesses to operate.
Are cannabis companies required to adhere to federal laws, including the National Labor Relations Act? You’d better believe it.
This has led to federal courts enforcing workplace rights in the cannabis industry. At the same time, companies must also navigate wildly vacillating state laws, including that of Connecticut, which mandates “labor peace agreements” (i.e., union neutrality agreements) from businesses. Add this to the fact that cannabis income is taxed at an almost unbelievable rate, up to 80% in some instances, and it’s no wonder that the industry is struggling.
Of course, there are other factors at work, including chosen business models, when discussing business longevity, but the labor friction doesn’t help matters. As such, the cannabis realm has been plagued by recent headlines about the despair of small growers within California’s so-called “Emerald Triangle,” and this month saw the collapse of the state’s largest pot distributor only a year after sales were still booming.
Cannabis companies do remain ground for union infiltration. Granted, the rate of industry unionization has not entirely been booming even with budtenders increasingly signing up for third-party representation – something we will soon discuss in another article – but the industry had the displeasure of being a guinea pig for the NLRB’s Cemex decision.
Recently, workers at a NY fast-casual cafe tried to win that race, but a Salem, Massachusetts, cannabis dispensary was the first ordered to bargain under the Cemex framework. An administrative law judge ruled that I.N.S.A. Inc. had illegally fired union activists and committed unfair labor practices, which made it unlikely for “a fair vote” to take place in 2022.
The proceedings followed ULP charges from the UFCW, which contested the 17-11 vote against the union, and due to Cemex, the vote’s outcome fell by the wayside. It also remains to be seen how the new Cemex standard will withstand possible legal challenges from companies that become subject to such retroactive rulings.
What is clear, however, is that administrative judges are not hesitating to run with the new standard, which undoes decades of precedent, including 1969’s NLRB v. Gissel Packaging Co. That case applied a narrow exception to forcing a company to bargain with a union following a finding of egregiously unfair labor practices, and that time is no more.
In early November, as well, another cannabis company became a Cemex casualty. In Missouri, the UFCW brought ULP charges against Point Management LLC (which was operating as Shangri-La Dispensaries), which subsequently agreed to a settlement that required the company to recognize and bargain with the union and also pay $145,000 to union activists who were fired after participating in an organizing drive.
The beleaguered cannabis industry certainly didn’t need the additional burden of being Cemex's proving ground, especially when Cemex Construction Materials Pacific LLC is presently in the process of appealing the decision. Stay tuned there, and we will also soon further discuss the unions that are increasingly organizing the cannabis industry.
