Will the Midwest’s blue-collar unions join the green rush?

Cannabis businesses need to understand applicable labor laws

Voters in Michigan have now given recreational marijuana its first toehold in the traditional Midwest as the progressive movement has expanded beyond the coasts and mountains. The possibility of additional Midwestern states, including Ohio and Illinois, voting for recreational marijuana in 2019 and 2020 further proves that a growing number of states will continue opening their economies to this booming industry.

In 2017, the legal marijuana industry provided more than 120,000 jobs, which is expected to increase to almost 300,000 by 2021. This includes cultivators, manufacturers, retailers, dispensaries, distributors, deliverers and testing labs.

Coinciding with the rapid growth of this industry is the continued shrinking of labor union numbers across the nation, especially in the Midwest. In the heyday of the mid-1950s, more than 30% of workers nationwide were union members, with that number being close to 40% in some Midwestern cities. Today, unions in the Midwest and across the country cling to a 7% hold on workers in the private sector.

With so many potential employees entering the workforce, the question is clear: Will the traditional Midwestern unions make a push for the marijuana industry?

 

Are Marijuana Workers Eligible?

During the infancy of the cannabis movement, one question was whether the employees in the industry would be recognized under some federal statutes, since the Controlled Substances Act renders all marijuana businesses illegal under federal law.

In 2013, the National Labor Relations Board (NLRB) initially agreed to take on the question of whether these types of employees fell under the National Labor Relations Act (NLRA) when looking at whether there could be union busting and/or unfair working conditions at a Maine medical marijuana dispensary. However, when the case settled before the NLRB could make a determination, many in the industry still wondered if the employees qualified in the federally illegal industry.

In 2014, the NLRB consisted of appointees who were pro-industry, and in August 2014, the NLRB’s Office of General Counsel released an advice memorandum in response to the case from 2013. Detailed in the memorandum was the board’s view at that time that some marijuana workers were “employees” entitled to NLRA protections. Specifically, the memorandum took the position that the NLRB did not need to decline jurisdiction over medical marijuana because: (a) the NLRB had jurisdiction over any employer doing business in the country except those specifically made exempt by Congress; (b) the NLRB had the authority to regulate the marijuana industry because cannabis operations are intrastate; and (c) despite the fact that the NLRA did not include protections for “agricultural laborers,” other marijuana workers (such as budtenders or processing assistants) should be considered eligible employees because they were involved in “manufacturing” a product.

Since the 2014 advice memorandum, there has not been a clear indication from the NLRB as to how they would actually approach issues in the marijuana industry. And while the memorandum is still a persuasive guideline, it is not binding authority and the NLRB under the Trump administration has taken a much different view on many issues compared to the Obama administration.

As the industry continues to grow, the question of who, when and where the NLRB test case on marijuana will come from remains an open-ended question.

 

Current Status

Unionization in the marijuana industry has been sporadic and split along state, political and historical boundaries. In California and Nevada, the United Food and Commercial Workers Union (UCFW), best known for representing grocery store employees, has a strong showing in the ranks of budtenders, trimmers, joint rollers and growers, whom the union refers to as techs and processors. Similarly, some employers on the East Coast have agreed to representation of their dispensaries and in some cases their processing.

Along the West Coast, other states have been slower to join, with Oregon and Washington seeing their first unionized group of budtenders in early 2018. However, in Colorado there is no union presence in the industry despite multiple efforts.

 

Issues for Investors/Employers

Several questions and issues remain unanswered, including:

– Union avoidance: Some industry employers and investors have made clear they believe their industry to be agricultural and prefer workplaces that are union-free. These entities have invested in training and employee development. In Colorado, despite a push for unionization of both retail budtenders and grow operations, employers have avoided unionization of the industry as a whole through training management and maintaining direct relationships with employees.

– Workers’ compensation: In some cases, employers in California and on the East Coast have allowed for the unionization of their grow operations without engaging in the argument over the status or classification of the employees, based solely upon workers’ compensation issues. Simply put, some employers have chosen to allow unions in order to get around classifying employees as “agricultural workers,” and avoid some of the workers’ compensation costs that come along with such classifications in some states.

– Workers’ rights and state law: There is a philosophical debate over how the NLRA could possibly interact with very strict state laws on access to the facilities and employees. A simple example is employees’ Weingarten Rights, which include having the option to have a union representative present at any disciplinary meeting or discussion. However, given that many of these types of discussions happen in backrooms, the question of who and how representatives will be able to attend such meetings could raise compliance issues.

 

What Should Employers Do?

Employers in the cannabis industry, especially with grow operations, need to understand their potential obligations under the NLRA and the employees’ potential right to join unions. Employers should focus on ensuring their policies and procedures are in line with the requirements of the NLRA regardless of their position on unions and not ignore the potential exposure of infringing on employees’ rights.

 

Micah Dawson is an associate in the Denver office of Fisher Phillips. He advises employers on how to comply with a range of state and federal regulations and develop the best corporate practices. He has significant experience representing clients regarding employment litigation, trade secret matters and wage and hour class actions and collective actions. He can be reached at mdawson@fisherphillips.com.

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