California Cannabis Companies Risk License Loss After Joining Fake Labor Union

California cannabis business licenses are on the line – at least a dozen of them – after an investigation by state’s Agricultural Labor Relations Board (ALRB) decided the labor union they signed with isn’t a “bona fide” labor union.

As our Los Angeles cannabis business lawyers can explain, when the state rolled out regulations for cannabis license requirements, one of those was the mandate to sign a labor peace agreement with a a bona fide labor union.

For those who may not be familiar with labor peace agreements, they are contractual agreements between employers and labor unions. The union agrees it won’t picket, stop work, boycott, or interfere with employer operations, and in exchange, the employer promises not to try to interfere with the union’s ability to organize the workers. The purpose is to lay the foundation of a relationship of collaboration between workers and their employers, with the ultimate goal of boosting stability, safety, productivity, and company longevity. It can also help lower the potential for employee abuse and/or exploitation – which was a major concern of state regulators when they were drafting cannabis company rules.

So what happened here?

According to the ALRB panel findings, a number of California marijuana businesses signed off with an organization dubbed the Professional Technical Union Local 33, or ProTech for short. Problem was it appears to have been a “labor union” in name only. It had few members, made no intent to organize workers, and failed to respond to basic inquiries from the ALRB about its membership and organizational structure.

This is part of a pattern we’ve seen crop up in other regions of the country as well. But why would these companies take the risk of losing their license by signing off with a sketchy labor union?  Regulators suspect the motivation for these companies was to sidestep worker protection laws and lower labor costs by signing off with a “labor union” that wasn’t actually a labor union.

As for what constitutes a “bona fide labor union,” the ALRB broadly defined it as one that shows sincere good faith with regard to organizing workers, representing them in collective bargaining negotiations, and has the capacity and resources to effectively carry out these tasks.

The fact that the union in this case spotlight did not respond to basic questions from the board led to the panel’s conclusion of impropriety. For that reason, the board ruled that any cannabis company labor union deals inked with ProTech were immediately void. Because a labor union deal is required for state-issued cannabis business licenses, all of those companies are at risk of having their license revoked – unless they scramble to sign off on new deals with recognized labor unions.

This whole investigation kicked off after a number of other California cannabis labor unions filed complaints with the ALRB. One of those representatives expressed approval of the board’s ruling, saying that simply signing a deal isn’t enough to ensure employee protections. There has to be leadership guiding employee organization and sufficient representation to advocate for important workplace rights.

Cannabis labor unions across the country have been showing lately that they aren’t afraid to drive a hard bargain – including exercising their power to strike. For instance, employees of a handful of retail dispensary employees in Chicago were led in a two-week strike to compel company owners to guarantee worker raises.

One the flip side, many cannabis businesses are grappling with tightening profit margins, rising product costs, stagnation on federal reform promises, and heightened investor pressure. But workers say these difficulties aren’t an excuse to pay them a less-than-fair (or livable) wage.

Whether you’re a cannabis company with concerns about the labor union with which you are contracted OR an employee who finds your company’s current labor union to be substantially lacking, we can help.

The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 714-937-2050.

Additional Resources:

Agricultural Labor Relations Board Makes First Finding of NonBona Fide Labor Organization for Cannabis Labor Peace, July 13, 2023, Agricultural Labor Relations Board

More Blog Entries:

Los Angeles Cannabis B2B Companies Must Establish Clear Pay Default Policies, June 16, 2023, Los Angeles Cannabis Business Lawyer Blog