California Cannabis Licensing and Labor Peace Agreements

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Labor Peace Agreements can save you from strikes.

We recently hosted a webinar discussing cannabis disputes and litigation. Over 1,000 people signed up to learn about the different types of litigation that can occur, how to avoid disputes, and, if necessary, how to prevail when litigation is unavoidable. During the presentation, I covered employment litigation and received quite a few questions. Several people were curious about labor peace agreements in particular, which are an important topic for the California cannabis industry. Because we ran short of time during the webinar, however, I will address those agreements here.

California’s Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) requires adult use cannabis and medicinal cannabis licensees with 20 or more employees to provide a statement that the applicant will enter into, or demonstrate that it has already entered into, a labor peace agreement. In other words, once your business reaches a certain size, you will not be able to operate in California without a labor peace agreement. But, what is a labor peace agreement?

In short, a labor peace agreement is an agreement your cannabis business enters into with a union that represents cannabis workers. The agreement includes obligations for both the union and the cannabis employer. This types of agreements are highly specialized.

As a preliminary matter, the cannabis employer must agree to remain neutral regarding unions and their representation of employees. This means the employer cannot make any statement opposing or advocating for unionization and cannot retaliate against any employee for discussing joining a union or disparaging unions. Employers are responsible for ensuring all managers and supervisors are aware of the neutral requirements of labor peace agreements.

Usually, labor peace agreements include a provision that requires employers to provide a list of the name and contact information of all non-supervisory employees. Employers typically are required to provide these lists at the request of the union, although most labor peace agreements include a limit on the frequency of the requests the union may make (i.e., no more than once a week). A labor peace agreement also grants the union the right to contact the cannabis business employees. However, this right must not disrupt normal business and productivity activities.

Unions also have obligations under Labor Peace Agreements. The union is required to be neutral in its communications with employees. The union cannot disparage the company and cannot paint the cannabis employer in a bad light to employees or to the public. The union must also agree to not disrupt or interfere with the employer’s operations or businesses, and cannot encourage or engage in a strike, slowdown, or picketing of the company.

In addition for individual obligations for both employer and the union, labor peace agreements also typically contain provisions related to collective bargaining if the cannabis employees decide to unionize. The collective bargaining agreement requires the parties to bargain in good faith, and it usually includes a provision about how to resolve an impasse if the parties cannot reach an agreement.

Labor peace agreements may seem intimidating or burdensome but they are nothing more than an agreement to work with your local union and allow the union access to your cannabis employees. In return, the union agrees to not disrupt your business practices in contacting employees, and agrees to not strike or to cause a labor strike.

Ultimately, when looking to enter into a labor peace agreement, your foremost concern should be entering into the agreement with a union that is easy to work with. The union should be open to your ideas and open to negotiations in the labor peace agreement. In the end, you will have options over what union you choose to enter the agreement with, but you will always need a labor peace agreement if your California cannabis business has more than 20 employees.