New Rule, December 5: Oregon Cannabis Retailers, Processors and Labor Peace Agreements

Oregon’s Measure 119 passed last week, as expected. This means that as of December 5^th, every OLCC licensed retailer, processor, researcher and testing lab must secure a labor peace agreement before OLCC will approve a new or renewal license application. The labor peace agreement must be with a “bona fide labor organization.”

I previewed M119 back in September, explaining:

Compulsory peace agreements aren’t anything new in cannabis, although it would be something different here in Oregon. California, for example, requires labor peace agreements for many of its cannabis licensees, and has for many years. We had clients struggle with the concept initially, and we saw some fumbled rollouts, but people eventually adjusted.

Measure 119 further provides that retailers and processors would be required to remain neutral, under the peace agreements, when labor organizations communicate with employees about collective bargaining rights “with any licensure or renewal application.”

M119 may be legally problematic

I’m not a First Amendment lawyer, but it’s not clear to me that an Oregon business can be constrained from speaking with employees– regardless of what M119 provides. Oregon’s speech protections are extremely broad, which is why we have a naked bike ride, tons of strip clubs and no campaign finance restrictions.

I’m also not a labor lawyer, but I’m told M119 could hit a snag on the National Labor Relations Act.

I’ve run these concepts by an Oregon First Amendment lawyer and a couple of labor lawyers, and all confirmed to me that M119 has real exposure. I found that feedback interesting, because M119 sponsors would have understood this when they set out signature gathering. Back in September, I wrote:

The United Food and Commercial Workers Local 555 spent a good deal of money to get Measure 119 on the ballot, rounding up some 163,000 signatures when only 117,173 were required. This follows on a stymied effort to get House Bill 3183 passed last year, which would have accomplished the same thing legislatively.

HB 3183 failed after a couple of advisory letters from the State of Oregon, Legislative Counsel Committee (see here and here). Those letters discussed preemption exposure for what is now M119 under the National Labor Relations Act, The Taft Hartley Act, and other federal laws. Oregon Business and Industry, the largest business group in the state, also submitted opposing testimony, highlighting legal exposure.

As to the First Amendment issues, anyone watching this is advised to follow litigation recently brought by Ctrl Alt Destroy, Inc., on a similar requirement in California.

So let’s see how that goes, and let’s see if anyone in the Oregon cannabis space wants to make a run at litigating M119. For now, credit to UFCW Local 555, I guess, for not giving up and for getting this thing on the ballot. And for having some fun by slipping a Rickroll into the voter pamphlet. I’m sure that won a few people over.

The OLCC process

I don’t have any information yet on what OLCC is going to do ahead of the December 5^th deadline. It’s worth noting that, in addition to California, other recreational cannabis states including New York, New Jersey, Rhode Island, Connecticut and Delaware all have similar requirements. Most likely, OLCC will put out an FAQ page very soon that looks something like this and licensees will need to upload something or other to CAMP with respect to any post-December 5^th application or renewal.

As far as OLCC licensees negotiating these agreements, the best approach would be to speak with experienced labor counsel. Labor law is highly specialized, and negotiating a labor peace agreement with any outfit claiming to be a “bona fide labor organization” is not a typical exercise.

For now, this is just one more thing for licensed cannabis businesses to comply with. Please reach out to us if you have any questions or need a referral.