California Labor Peace Agreement Requirements for Growing Cannabis Businesses | Arent Fox

What you should know

  • California law requires commercial cannabis licensees with 20 or more employees who are not managers to enter into a labor peace agreement; however, the legal requirements of such an agreement are far less stringent than the unions would suggest.
  • Licensees should avoid signing a labor peace agreement without first consulting a lawyer.

When filing an application for a new or renewal of the annual cannabis business license, California law (i.e., MAUCRSA) and regulations issued by the California Department of Cannabis Control (DCC) require commercial cannabis companies to provide a notarized statement confirming that the applicant either: (a) has fewer than 20 employees or (b) concludes and complies with a Labor Peace Agreement (LPA) within 60 days of the 20th employee being hired. Failure to comply with the requirements can lead to the license being suspended or revoked. But what does it mean to keep?

First, an LPA is a private contract between an employer and a trade union in which both sides agree to waive certain rights under federal labor laws. Several unions are currently active in the cannabis industry, so a number of organizations can turn to companies. However, licensees only need to enter into an LPA with one union and should not feel pressured to negotiate with others after signing an LPA.

Second, MAUCRSA provides that commercial cannabis licensees do not have to enter LPA negotiations until the 20th non-supervisory employee has been hired. A “superior” has, among other things, the authority to hire, fire and discipline other employees. For example, if a company has 20 employees, including a CEO and a store manager, the company has likely not crossed the threshold that would require entering into an LPA. Even after the 20th non-supervisory employee has been hired, the law does not require licensees to proactively find a union or initiate negotiations. Instead, licensees must participate in the negotiations in good faith. Additionally, the 60-day grace period should allow sufficient time to postpone the hiring of the 20th there was no LPA on request. Rather, this would be an ideal time to contact your lawyer to discuss a possible counter-proposal and the collective bargaining process in general.

Third, the law does not specify what an LPA must contain beyond the following basic concepts:

  • It must prohibit the union from engaging in pickets, work stoppages, boycotts and other economic interference in the applicant’s business;
  • It must prohibit the employer from interfering with the union’s efforts to communicate and organize and represent with its workers; and
  • It must give the union access to the areas where workers work at reasonable times to meet with workers.

Licensees can opt for a more comprehensive agreement that should be drawn up in consultation with a legal counsel. Hence, we recommend consulting an experienced labor law attorney before signing or agreeing to the terms of an LPA.

While this warning ultimately focuses on California, similar requirements have been adopted and are being considered in other states such as New York and Illinois. And license applications often require additional certification on a number of similar technical subjects.

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