Los Angeles, CA:
As California tries to get its struggling licensed cannabis industry up and running, people have asked us questions about the role of labor unions in the process. Many business owners have allied with a labor union from the beginning, recognizing the substantial benefits that union ties can bring to a licensed and heavily regulated business. Other business owners, however, have been skeptical of working or even speaking with unions as they fear a union may take control over their business operation and drive up labor costs.
Unions are important to the cannabis industry because they have very strong relationships with many state and local politicians, and cannabis is a heavily regulated and licensed industry, requiring business owners to work closely with the government to secure licenses and operate smoothly. Forming a partnership with a strong union can be invaluable when working with local governments and community groups including churches and neighborhood councils.
In Southern California, our law firm has been working closely with the Teamsters Local 630 to organize cannabis license applicants and encourage local governments to issue more licenses to responsible operators. The Teamsters have provided substantial support to Los Angeles social equity applicants who applied for cannabis storefront licenses but are currently caught up in the regulatory system with no ability to operate after spending large sums of money. Business license applicants and labor unions share the same goal of creating new businesses that will be economically successful and create good jobs for community members. Unions can help work toward this goal by encouraging the government to enact or modify laws that make it easier to start and operate businesses, and by working with community groups to answer any questions and address any concerns.
Labor Peace Agreements are required by law and can be a smart business decision
California state law requires cannabis businesses to sign a Labor Peace Agreement (LPA) with a labor union once they have at least 20 employees. Some local jurisdictions, including the City of Los Angeles, are stricter, requiring an LPA once a business has 10 employees. There is no need, however, for cannabis businesses to wait until they have 10 or 20 employees to sign an LPA. Labor unions can provide great benefits to cannabis businesses as they are just getting started and working to secure all the required governmental approvals. With LPAs required in any event once a business reaches 10 or 20 employees, it can be an intelligent choice for owners to sign an LPA earlier in the process so as to not miss out on the benefits of the union helping get the business off the ground, and to develop strong relationships valuable for the health of the business.
LPAs do not themselves unionize a company’s employees. They are an agreement that the employer will allow a union to communicate with employees, which the union could do even without an LPA by speaking to employees outside of work or by picketing a worksite. No union will exist unless the employees themselves vote to unionize and begin paying dues to the union. After a business owner signs an LPA agreement, the decision on whether or not to form a union stays with the employees. LPAs can also make communications with unions more peaceful and less disruptive, by setting up a simple process to follow regarding any union-related communication.
Collective bargaining agreements bring predictability and stability
If employees ultimately vote to form a union (whether or not your business has an LPA), then the next step is to engage in the collective bargaining process. In collective bargaining, employees, through the union, negotiate contracts with the employer to determine their terms of employment, including pay, benefits, hours, leave, job health and safety policies, and ways to balance work and family. The end result is a collective bargaining agreement (CBA) that provides predictability and stability to the employer and employers. A CBA will prevent employees from going on strikes or creating other disruptions, will ensure that the business owner can budget and plan for labor expenses, and will form the basis for a trusting and respectful relationship between the employer and employees. A CBA will also provide a mechanism and procedure for resolving any disputes between employees and the employer. A CBA can boost employee morale and productivity, and provide a better working environment to allow the business to grow and create new jobs.
Anti-union advocacy can have negative consequences
Recent events have highlighted the confusion over labor unions’ role in cannabis, and have shown how important organized labor is to the industry. Last week, the California Cannabis Industry Association (CCIA), the state’s largest cannabis trade association, published and distributed to its members a white paper titled “Tips for Cannabis Business Owners Negotiating Labor Peace Agreements.” The paper drew quick and substantial criticism from labor unions, including the United Food and Commercial Workers Western States Council, two Teamsters locals, and the California Labor Federation. These unions, in a joint letter to state Democrats, called the CCIA’s publication “a piece of anti-union literature” and urged the Democrats to completely refrain from engaging with the CCIA, which the unions no longer view as a legitimate partner in the cannabis industry. (https://mjbizdaily.com/wp-content/uploads/2020/02/2.12.20-joint-letter-on-CCIA.pdf.). The CCIA’s publication, among other things, gave employers tips on how to limit union organizing activity, and warned that if a union successfully organized employees, a cannabis employer would lose flexibility and face increased costs.
Following the unions’ letter to the state Democrats, the CCIA sent a letter to all its members apologizing for its “mistake,” and claiming that it had not intended its white paper to be anti-union. The CCIA then stated to the press that it was retracting “any statements that may have been misleading” and that its white paper on unions, produced by the CCIA Insurance/HR Committee, “does not reflect priorities in our legislative platform, nor our guiding policies.” (https://mjbizdaily.com/california-unions-ask-states-democrats-to-shut-out-major-cannabis-trade-group). A CCIA representative has explained to our firm that the white paper was solicited from an outside party, and was mistakenly published before the group discovered the content viewed as anti-union.
The unions’ strong message to state politicians regarding CCIA, and CCIA’s swift efforts to walk back its statements that were viewed as anti-union, demonstrate just how powerful and important unions are to the cannabis industry. The episode shows that public efforts at union-busting can have large negative political ramifications.
Beware of fake unions
In other recent union news, many labor leaders have criticized one “union” named “ProTech Local 33,” that is an offshoot of a group based in Illinois, and has been signing LPAs with cannabis companies in California. ProTech Local 33 holds itself out as both a labor union and a “proud Executive Member of the California Cannabis Industry Association” (https://protech33.com ). According to some, however, ProTech Local 33 is not a union at all, and instead is a front group or “company union” created and controlled by cannabis business owners to create the illusion of a bona fide labor organization and thereby avoid complying with California’s labor peace and union laws laws. (https://www.thedailybeast.com/is-a-fake-labor-union-infiltrating-the-weed-industry.). For these reasons, the City of San Francisco refused to accept LPAs signed with ProTech Local 33. Critics allege that ProTech Local 33 does not appear to have any or many members, and that its LPA is overly favorable to companies and matches the suggestions laid out in the controversial union white paper published by the CCIA. The controversy surrounding ProTech Local 33, and San Francisco’s rejection of the group as a bona fide labor organization, will likely bring further scrutiny to LPAs and any efforts that may be viewed as attempts to skirt California’s labor laws.
It appears that unions will play a large role in the cannabis industry moving forward in California. Recent attempts at union-busting have backfired, and governments are recognizing and challenging new schemes to get around the labor laws of this state. It has become clear how valuable unions can be in dealing with the government and community groups, which is critical for any cannabis business.
Contact Margolin & Lawrence for more information regarding this story.
Author: Raza Lawrence