Another Labor Peace Agreement Mandate Challenged in Court

New Jersey’s labor peace agreement mandate found in the Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization (“CREAMM”) Act is the latest target for lawsuit.  

Under the CREAMM Act, a cannabis company must enter a labor peace agreement with a “bona fide labor organization” as a precondition for licensure.  This is not a unique feature of cannabis statutory schemes.  A number of states have instituted such requirements, including Connecticut, New York, California, Oregon, and Rhode Island.   

But the New Jersey definition of “bona fide labor organization” is particularly restrictive.  To be a “bona fide labor organization,” the labor organization must be a party to one or more collective-bargaining agreements with a cannabis employer, have a written constitution for the prior three years, be affiliated with a regional or national association of unions, or be a member of a “national labor organization that has at least 500 general members in the majority of the 50 states of the United States.”  This restriction means that if a cannabis company enters into a labor peace agreement with a “start up” or new labor organization, then it does not satisfy the conditions for licensure.  Needless to say, the New Jersey LPA requirement benefits larger, established unions.

In the complaint, the cannabis company asserts that the LPA requirement is preempted under the National Labor Relations Act because it (1) regulates union organizing; (2) imposes remedies for failing to bargain or sign an LPA or collective bargaining agreement; (3) restricts the company’s use of economic weapons; and (4) limits the choice of employees to select their collective-bargaining representative.  

Over the past year, we have highlighted challenges to labor peace agreement mandates in New York, Oregon, California, and Rhode Island.  Despite having a labor peace agreement mandate, Connecticut’s cannabis statutory scheme remains unchallenged.  In May, an Oregon District Court held that Oregon’s labor peace agreement mandate was preempted by the National Labor Relations Act.   This decision remains on appeal.  We will continue to monitor any legal developments in this area.