Earlier this month, a cannabis company located in Manistee, Michigan, announced that its dispensary workers successfully unionized, marking the first instance of organized labor in the state’s cannabis industry. The company’s dispensary workers are now members of United Food and Commercial Workers Local 876. While Michigan has a long history of unionized workforces, this is a new development for the state’s cannabis industry. Industry employers should take note of some key considerations when managing a union shop.[1]

Federal Labor and Employment Laws Apply

The ongoing federal illegality of marijuana continues to cause well-known woes for the industry, from tax issues around Section 280E to the inability to provide retail customers with the simple convenience of paying with a credit card. However, despite the fact that cannabis remains illegal under federal law, a panoply of federal laws governing labor and employment applies to cannabis businesses, just as it does to businesses operating in any other industry. In addition to the standard, broadly applicable laws such as the Family and Medical Leave Act, Title VII’s workplace discrimination laws, and a portion of the National Labor Relations Act (“NLRA”) that applies to non-agricultural workers regardless of unionization, a cannabis company with a unionized workforce will be subject to the full weight of the NLRA’s provisions governing union-related activity. Additionally, employers of unionized workforces should be aware of some lesser-known union-centric legislation, such as the Labor-Management Reporting and Disclosure Act of 1959 and the Labor Management Relations Act of 1947, better known as the Taft–Hartley Act.

These laws have robust histories and have created a legal environment that provides guidance and some level of certainty about how to best manage a unionized workforce. But make no mistake, a unionized shop creates an additional layer of laws and rules that the cannabis employer must take into account in its day-to-day operations.

The Labor Peace Agreement

In its simplest form, a Labor Peace Agreement, (“LPA”) is an agreement between a workforce considering unionization and its employer. The LPA usually represents an agreement that the employer will not try to stop a unionization effort and the workforce will not engage in any strongarm tactics during the process, such as strikes or work stoppages.

LPAs gained popularity in the California cannabis industry and have spread across the cannabis-friendly states with varying degrees of success. In some states, they are required to be entertained by law, and in others, there is no specific guidance one way or the other. Although Michigan’s Marijuana Regulatory Agency (the “MRA”) at one time considered requiring LPAs, the legislature prevented it from moving forward with such a requirement. As a result, Michigan cannabis companies are not required to enter into LPAs, but such agreements are not expressly prohibited either. There also is some debate about whether LPAs are enforceable under the NLRA at all, but no employer appears to have litigated the issue as of yet.

An LPA was voluntarily entered into by the employer at the outset of the unionization effort in Manistee. Starting off the union-management relationship from a collaborative position can be a positive way to enter into the collective bargaining process; however, LPAs may not be appropriate for all situations, and it is important to consult with experienced counsel before entering into such an agreement.

The Collective Bargaining Agreement

Once a workforce has unionized, the relationship between the company and the employees in the bargaining unit will be governed by a collective bargaining agreement (“CBA”). CBAs are each unique and often the result of long rounds of negotiations, but well-crafted CBAs do have some commonalities, such as grievance procedures, seniority schedules, and provisions concerning overtime pay, retirement benefits, and disciplinary procedures.

The CBA is a contract that binds the employer and must be complied with in running day-to-day operations. Most CBAs have mandatory arbitration provisions for certain claims arising under the agreement. As a result, many employment disputes that might otherwise be brought in a court of law are resolved pursuant to a CBA’s arbitration provision. Again, it is strongly recommended to consult with counsel should any issues arise related to compliance with a CBA.

The National Labor Relations Board

The National Labor Relations Board (“NLRB”) is an “independent federal agency vested with the power to safeguard employees’ rights to organize and to determine whether to have unions as their bargaining representative. The agency also acts to prevent and remedy unfair labor practices committed by private sector employers and unions.”[2] Among other things, the NLRB presides over unionization efforts and claims of unfair labor practices at cannabis companies, despite cannabis’s federal illegality and the fact that cannabis companies do not send their products into interstate commerce. The NLRB, in considering whether to preside over such cases, has concluded that it can exercise jurisdiction over cannabis companies with more than $500,000 in business annually that procure more than a minor amount of supplies through interstate commerce.

Cannabis company practice before the NLRB is a new and dynamic area of the law, with new decisions being released regularly. An important factor to consider for any cannabis company with a grow operation that sees unionization on the horizon is the status of those employees involved in cultivation. Agricultural workers are specifically exempted from NLRA coverage and thus are not eligible for protection under the NLRA. Unlike some states, Michigan also has no law providing agricultural workers with union-related rights. Thus, while these employees may attempt to unionize, they are not protected in their efforts to do so.

Furthermore, because agricultural workers are not “employees” under the NLRA, they are not appropriate members of bargaining units associated with cannabis companies. For example, in December 2021, the NLRB examined exactly what work tasks several categories of workers at a cultivation operation in Washington did on a daily basis and determined that a significant portion of them, including workers whose main job was not tending to live plants but rather processing previously harvested plants, were properly classified as agricultural workers and therefore ineligible to join the union that was being formed, which included machine operators, fulfillment associates, and inventory associates. In that case, the union was attempting to organize both agricultural and non-agricultural (mostly retail) employees of the employer, but the ruling limited the drive to cover only non-agricultural employees. That case was Cannaseur’s Choice, LLC and United Food And Commercial Workers Union Local 21, Affiliated With United Food And Commercial Workers International Union, AFL-CIO, National Labor Relations Board Region 19, December 10, 2021.

Conclusion

Cannabis employers, like any business, must comply with the various laws governing employment, both at the state and federal levels. The arrival of organized labor in Michigan’s cannabis industry presents a new opportunity for workers and management alike to further evolve the state’s cannabis business environment. However, along with unionization comes another layer of legal complications that cannabis employers must deal with, and Dykema’s Cannabis Industry Group has experienced Labor and Employment lawyers who also understand the special concerns of cannabis employers. If your workforce is considering unionization, or if your cannabis business has any other employment-related questions, issues, or concerns, Dykema stands ready to provide counsel and advocate for you.

Stay tuned for more updates and insights from Dykema as the cannabis employment environment continues to evolve in Michigan and across the country.

[1] Dykema does not represent any party with respect to the recently announced unionization in Manistee.

[2] NLRB Website at https://www.nlrb.gov/about-nlrb/what-we-do