Attempt to remove Unionization Falls

Original HA9N Article

Jenny Beth Dills

In a significant legal development, a California cannabis retailer’s attempt to challenge the

state’s unionization law has been dismissed. The U.S. District Court for the Southern District of

California ruled that the retailer’s operations violate federal marijuana laws, thereby invalidating

their challenge under the ‘unclean hands’ doctrine.

This ruling underscores the complex legal landscape cannabis businesses navigate, caught

between state legalization and federal prohibition. California mandates that cannabis

businesses enter into labor peace agreements with bona fide labor organizations as a condition

of state licensure.

The state’s cannabis industry faces additional challenges. As of December 31, 2023, nearly

15% of California’s cannabis operators were in default on their sales-and-use tax obligations,

totaling approximately $189 million. Furthermore, 15.4% of retail licensees defaulted on the

cannabis excise tax, amounting to over $54 million.

These financial strains are compounded by competition from a robust illicit market. A 2019 audit

revealed nearly 3,000 illegal marijuana businesses operating in California, dwarfing the legal

market and undermining licensed operators.

In response, the California Legislature has introduced a series of bills in 2025 aimed at

reforming the cannabis industry. Proposals include allowing licensed cannabis businesses to

sell industrial hemp products, adjusting excise tax rates, and strengthening enforcement against

unlicensed operations. Additionally, measures are being considered to permit microbusinesses

to ship medicinal cannabis directly to patients, enhancing access for medical users.

Worker protections are also a focus, with proposed requirements for cannabis employers to

secure workers’ compensation coverage. There’s also a move to accelerate psychedelic

research for veterans by streamlining approvals for DEA-registered studies.

As these legislative efforts progress, stakeholders are closely monitoring their potential impact

on the future of California’s cannabis market. The outcome of these reforms could significantly

influence the industry’s trajectory in the coming years.

Stay tuned for further updates on this evolving situation.