Cannabis Businesses at Risk of Losing Licenses After Signing with Fake Unions

Cannabis Businesses at Risk

A dozen California cannabis companies may be at risk of losing their licenses after signing a labor peace agreement (LPA) with an illegitimate "union." California's Agriculture Labor Relations Board (ALRB) ruled on July 6 that Professional Technical Union Local 33 (ProTech) is not, in fact, a union. According to MJBizDaily, the California Department of Cannabis Control (DCC) has issued a notice that "any labor peace agreements entered into by licensees with (ProTech) are null and void."

Both the International Brotherhood of Teamsters (Teamsters) and the United Food and Commercial Workers (UFCW) have complained about fake or "company" unions that have made significant inroads without offering any benefits to workers. Until recently, however, it appeared that state licensing boards were loathe to enforce the requirement that cannabis businesses sign LPAs with legitimate unions.

Understanding Unions and Labor Peace Agreements

A union, often referred to as a labor or trade union, is an organized group of workers who come together to make collective decisions about conditions affecting their work. These decisions can pertain to various aspects such as wages, benefits, schedules, job security, and other employment terms and conditions.

The primary purpose of a union is to give workers a collective voice in their workplace, which tends to be more influential than individual voices. By banding together, workers can negotiate with employers for better pay, improved working conditions, fair treatment, and more. This process of negotiation between the union and employer is known as collective bargaining.

A labor peace agreement (LPA) is a type of contract between an employer and a labor union. This agreement aims to ensure a harmonious working environment by minimizing labor disputes and strikes.

In an LPA, the employer agrees to remain neutral during any union organization efforts, while the union agrees not to strike, picket, or engage in other disruptive activities. The goal of such agreements is to maintain operational stability for the business and secure certain rights and protections for employees.

For instance, in the context of the cannabis industry, some states - including California - require cannabis businesses to enter into LPAs as a condition of their licensing. This requirement aims to ensure that the growth of this new industry benefits workers and aims to contribute positively to local economies.

What's a "Company" Union?

A company union is an employee organization that is dominated or influenced by an employer rather than being independently run by the workers themselves. Company unions are often created, sponsored, or controlled by employers to prevent employees from joining or forming independent trade or labor unions.

The main goal of a company union is to manage and resolve issues related to the workplace environment, wages, working hours, and other employment conditions. However, because of their close ties with the employer, these unions are often criticized for not adequately representing the interests of the workers. They are sometimes seen as a strategy employed by companies to prevent the establishment of more powerful, independent unions that could demand greater rights and benefits for workers.

In many countries, including the United States, company unions are considered illegal due to their potential for undermining the power of workers to negotiate collectively and independently with their employers. The National Labor Relations Act (NLRA) of 1935 prohibits employers from interfering with, restraining, or coercing employees in the exercise of their rights to form, join, or assist labor organizations. This includes the prohibition of company unions.

What Cannabis Businesses Need to Know About Signing an LPA

California cannabis businesses need to understand several things about signing a labor peace agreement (LPA) with a bona fide union:

  • Legal requirement: California law mandates that all cannabis businesses with 20 or more employees must sign an LPA with a bona fide labor organization. From July 1, 2024, this requirement will also apply to cannabis businesses with ten or more non-supervisory employees.
  • What it entails: An LPA is a contract between the employer and a labor union. In this agreement, the union agrees not to disrupt business operations through strikes, picketing, or other means. At the same time, the employer agrees to remain neutral during any union-organizing efforts among its employees.
  • Bona fide union: The agreement must be with a "bona fide" labor organization. This means a legitimate, recognized union that represents the interests of workers.
  • Consequences of non-compliance: Failure to sign an LPA with a bona fide union could lead to the denial, suspension, or revocation of the cannabis business license.
  • Changing requirements: It's important to note that labor peace agreement requirements may change over time. Cannabis businesses should stay updated on changes in legislation and regulations to ensure they remain compliant.
  • Legal advice: Due to the legal complexities involved, it's recommended that cannabis businesses seek advice from an experienced cannabis business attorney before signing an LPA. This can help them understand their rights and obligations under the agreement and avoid potential legal pitfalls.

By understanding these aspects, California cannabis businesses can navigate the process of signing a labor peace agreement effectively and ensure compliance with state law.

How Purdy & Bailey, LLP Can Help Your Business

At Purdy & Bailey, LLP, our team of experienced cannabis business lawyers is well-versed in the intricacies of licensing requirements and labor laws specific to the cannabis industry. We understand the unique challenges faced by businesses operating in this rapidly evolving field and are committed to helping you maintain compliance with all relevant regulations.

Navigating the complexities of cannabis business licensing can be a daunting task. Our lawyers have extensive experience in this area, and we can guide you through each step of the process. From initial application to ongoing license maintenance, we ensure that every detail is meticulously handled.

When it comes to unions and labor peace agreements, we can help you understand the nuances of these agreements and help ensure they are correctly implemented to avoid potential legal issues.

Our lawyers can help you understand your rights and obligations under an LPA, ensuring that your business remains compliant with state law. We can assist you in negotiating terms with unions, drafting the agreement, and implementing appropriate procedures within your business.

We also continually monitor changes in legislation and regulations to ensure our clients are always up to date. As your legal partners, we proactively address any potential compliance issues before they become a problem.

Contact us online and call (858) 360-7080 to learn more about how we can assist your cannabis business.

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