Changing Labor Peace Agreement Requirements for California Cannabis Businesses

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As more and more States legalize medical and/or adult-use cannabis, the issue of worker’s rights in the cannabis industry has taken center stage. Many States with regulated commercial cannabis business industries, including California, require applicants for licensure and licensed cannabis businesses with a certain number of employees to enter into and abide by the terms of a Labor Peace Agreement. 

Recently, the California Department of Cannabis Control (the “DCC”) amended its regulations for commercial cannabis businesses and made some notable changes to the Labor Peace Agreement requirements found within the regulations. 

Labor Peace Agreement Basics for Cannabis Businesses

According to California Business and Profession and Professions Code, Division 10, Chapter 1, Section 26001(y), a Labor Peace Agreement is “an agreement between a licensee and any bona fide labor organization that, at a minimum, protects the state’s proprietary interests by prohibiting labor organizations and members from engaging in picketing, work stoppages, boycotts, and any other economic interference with the applicant’s business.

In a broader sense, a Labor Peace Agreement is an agreement between a license applicant or licensee and a labor union pursuant to which the licensee agrees not to “disrupt efforts by the bona fide labor organization to communicate with, and attempt to organize and represent, the licensee’s employees.” Additionally, pursuant to a Labor Peace Agreement, a licensee will typically agree to “provide a bona fide labor organization access at reasonable times to areas in which the licensees employees work, for the purpose of meeting with employees to discuss their right to representation, employment rights under state law, and terms and conditions of employment.” 

Changes to Labor Peace Agreement Requirements

Current Labor Peace Agreement Requirements for Cannabis Businesses

Pursuant to the 2019 passage of Assembly Bill 1291, which amended the Business and Professions Code to strengthen California’s pro-union requirements for licensed commercial cannabis businesses, any licensed cannabis business with twenty (20) or more employees was required to, among other things, enter into and abide by the terms of a Labor Peace Agreement. However, due to recent changes in state law, as of July 1, 2024, more license applicants and licensees will be required to enter into and abide by Labor Peace Agreements. 

Labor Peace Agreement Requirements for Cannabis Businesses After July 1, 2024

Specifically, beginning July 1, 2024, license applicants and licensees with ten (10) or more non-supervisory employees will be subject to the state’s Labor Peace Agreement requirements.  The changes that go into effect in 2024 apply to all licensees, not just new licensees. Therefore, existing licensees with ten (10) or more non-supervisory employees but less than twenty (20) such employees, that are not currently required to have Labor Peace Agreements in place, should start the process of finding a “bona fide labor organization” to work with on an appropriate Labor Peace Agreement.

Bona Fide Labor Organization Requirement

In California, the Agricultural Labor Relations Board (the “ALRB”) is responsible for determining whether a labor organization is a “bona fide labor organization” under state law. If you have questions or concerns about whether a specific labor organization you are considering is, in fact, a “bona fide” labor organization, contact the ALRB. If you opt not to contact the ALRB and it later turns out that the organization you entered into a Labor Peace Agreement with is not a “bona fide labor organization”, your Labor Peace Agreement will be deemed void and the DCC will get involved. 

However, the DCC’s process for dealing with Labor Peace Agreement violations of this nature appears to be quite tame. Specifically, if, at any point in time, the ALRB determines that an applicant or licensee entered into a Labor Peace Agreement with an entity that is not a “bona fide labor organization”, it will contact the DCC and the DCC will,

  1. notify all licensees that have signed Labor Peace Agreements with the entity at issue and;
  2. offer each of those licensees a reasonable amount of time, not to exceed 180 days, to enter into a new Labor Peace Agreement with a “bona fide labor organization”.  

While finding a Bona Fide Labor Organization to enter into a Labor Peace Agreement with is typically a relatively simple process, licensees and applicants should do their due diligence to ensure they engage with a labor organization that, among other things, has experience working with other commercial cannabis businesses. 

For more information about how the amended Labor Peace Agreement requirements may impact your business, contact the cannabis industry lawyers at Rogoway Law Group today.

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