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Marijuana industry labor relations are reaching a crossroads

By Chris Roberts, Reporter


May 13, 2024


There’s much that sets the still-emerging U.S. marijuana industry apart from traditional sectors of American business.

Cannabis companies must contend with heavier taxes, stricter regulation and an ongoing conflict with federal law.



However, there’s one area where marijuana firms behave much the same way as Amazon, Starbucks or Target – an uneasy and often adversarial relationship with labor, according to documents and industry observers.

In October 2021, with the COVID-19 pandemic encouraging “essential workers” at marijuana stores nationwide to reassess conditions and pay, employees at multistate operator Curaleaf Holdings’ store in Worth, Illinois, voted to join the United Food and Commercial Workers (UFCW).

That was among a flurry of unionizations in 2021-22 that were touted as major victories for labor organizations, which saw a once-in-a-generation opportunity for growth in the labor-intensive marijuana industry.

But simply voting to unionize, the first and possibly easiest step in a long process, doesn’t guarantee workers anything.

Subsequent contract negotiations can drag on for an average of 15 months, according to a recent Bloomberg Law analysis.

The Curaleaf workers in Illinois never got to that point. Instead, earlier this year, a worker moved to kick out the union.

According to National Labor Relations Board records, a Curaleaf employee retained an attorney with the National Right to Work Foundation, a prominent anti-union advocacy group, to “decertify” or remove the union on the basis that the majority of the 30 workers there no longer want to be unionized.

A vote is pending but has not yet been scheduled.

The looming decertification in Illinois is one of at least three examples nationwide of marijuana workers rejecting or at least reconsidering relationships with organized labor.

According to representatives of management and unions, these setbacks – following a flurry of early organizing victories and even cooperation between both sides – demonstrate that labor relations in the $36 billion legal marijuana industry are at a key inflection point.

Labor reckoning

In February 2022, 14 workers at Herbology in Newark, Ohio, became the first dispensary in the state to unionize.

But, by August 2023, after the location was purchased by Curaleaf, the bargaining unit was down to seven workers.

And that month, they deadlocked 3-3, with one abstention, over whether to keep the UFCW.

The tie meant “a collective-bargaining representative has not been selected,” according to NLRB records. The upshot: That location is no longer unionized.


And as MJBizDaily first reported last month, 20 cultivation workers at a Cresco Labs location in Fall River, Massachusetts, who voted to unionize in 2020 and then won a contract, chose to exit the UFCW Local 328 rather than renegotiate another deal.

The company immediately rewarded the newly nonunionized employees with a raise, a development other workers are likely to notice.

Elsewhere, according to interviews and records, cannabis companies are digging in for costly and lengthy fights to avoid bargaining altogether.

Benefit of unions in question

The initial COVID-era wave of contracts and unionizations are up for reconsideration during a generally ongoing bear market for marijuana.

In this atmosphere, unions are keen to maintain their inroads and demonstrate their worth to workers.

And in an era of inflation and increased costs, hourly wage earners could be inclined to question whether their union dues is yielding a return.

Meanwhile, both small operators and larger, publicly traded MSOs – unions have focused much of their energies on the latter – continue to lose money.

Paths to profitability likely include labor cost-savings, though most marijuana operators argue that retail jobs already pay better than similar entry-level positions at companies such as Target.

In the highly regulated, heavily taxed cannabis space, unionization “changes the game,” said Marc Rodriguez, the president and co-founder of Green Leaf Business Solutions, a California-based provider of payroll and HR services.

“You’re losing control of your workforce,” he said. “Now the workforce says, ‘We want X amount of money.’”

To employers, Rodriguez added, that begs the question, “‘Are we going to be profitable?'”

Labor organizers see the same struggle between workers and employers at mainstream American businesses also playing out in cannabis.

They point to examples across the country of companies desperate to beat back unionization by any means necessary – including tried-and-true union-busting tactics as well as lengthy and expensive court battles.

In at least one instance, a company chose to close a location rather than deal with an organized workforce – more proof that, at least with regard to labor, marijuana isn’t unique.

“The cannabis industry isn’t special in how they treat their employees,” said Ademola Oyefeso, an international vice president at the UFCW, where he directs the union’s Legislative and Political Action Department.

“Just like with any other large corporation, they want to pay low wages and offer minimal benefits.”

Some cannabis companies are using anti-union tactics “straight from the Walmart playbook,” he added.

Negotiation strategies

Most marijuana MSOs declined to publicly comment to MJBizDaily, citing a desire to avoid antagonizing labor unions or give workers more incentive to consider organizing.

In a statement to MJBizDaily, Curaleaf spokesperson Jordon Rahmil said the company “respects the rights of team members who have chosen to be represented by a union.”

“Where team members have chosen such representation, the company will pursue an honest, business-like approach in working with those representatives,” she added.

However, union advocates say that’s not the approach Curaleaf has taken in Phoenix.

There, workers at two Curaleaf stores voted to unionize in 2022.

As the union made clear during an April 20 picket of the Camelback location, there’s still no contract.

That’s partially because, despite promises to negotiate, the company didn’t even recognize the union’s legitimacy, as the UFCW claimed in a complaint to the NLRB last fall.

In February, the agency found that Curaleaf’s “failures and refusals” to engage “constitute an unlawful failure and refusal to recognize and bargain,” leading the NLRB to order the company to start negotiating.

Instead, Curaleaf appealed the NLRB’s ruling to a federal court. An appeal at the D.C. Circuit Court of Appeals is pending, according to court records.

In what critics say illustrates Curaleaf’s strong desire to avoid the union – and its eagerness to expend resources to do so – the MSO hired prominent management-side law firm Littler Mendelson to represent the company in labor talks.

That’s the same firm retained by Apple and Starbucks to bust union drives.

Meanwhile, the union alleges, the company is refusing to increase organized workers’ pay, despite bumping up wages at nonunion shops.

All of this is a deliberate strategy intended to thwart organizing, labor officials contend.

 

Curious tactics

Ongoing situations in Missouri also illustrate the lengths companies large and small will go to keep unions out of their workplaces.

There, a company called BeLeaf is mounting a legal challenge to cultivation workers’ unionization vote earlier this year.

BeLeaf is arguing that employees engaged in cultivation are classified as agricultural workers under federal law and thus have no right to unionize.

Farm workers are notoriously exempted from the 1935 National Labor Relations Act and generally can unionize only if they are protected under state law.

Most blue states, such as California, have additional state laws that guarantee agricultural workers the right to organize.

However, many red states, such as Missouri, do not.

The BeLeaf case is pending, but precedent in other states suggests the company might prevail.

Missouri is also where one cannabis company adopted perhaps the most drastic strategy to avoid unionization: Go out of business.

According to an NLRB complaint, last August – a month after its workers in Valley Spring voted to join the International Brotherhood of Teamsters – the Bloc dispensary shuttered the location and laid off all the workers.

But the NLRB ruled May 1 that Bloc must furnish laid-off workers back pay.

In California and in Rhode Island, operators are going to court to overturn state laws requiring them to sign nonbinding “labor peace agreements” with labor unions as a perquisite for licensing.

Common ground?

There’s another factor influencing companies and labor organizations to dig in: the looming presidential election.

While the NLRB under President Joe Biden is considered to be more labor-friendly than it has been in decades, future iterations of the agency might not be so amenable to workers’ causes.

If former President Donald Trump, the presumptive Republican nominee, were to retake the White House in November, it’s likely the NLRB would be remade to be more sympathetic to management.

Regardless of that outcome, cannabis companies and labor unions are locked in an uneasy relationship in Washington, D.C.

Both sides are invested in ambitious, business-friendly federal marijuana reforms, including banking protections and the tax relief promised by the ongoing rescheduling process.

The question is whether that common cause can translate to any goodwill or cooperative spirit at the bargaining table.

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