NLRB Exercises Jurisdiction Over Cannabis Company

On May 23, 2025, a National Labor Relations Board  (“NLRB”) administrative law judge held that a cannabis company violated the National Labor Relations Act (“NLRA”) by laying off store associates without bargaining the impact with their union, and by directly dealing with employees.

While the decision here is not novel, the fact that an administrative law judge exercised the NLRA’s jurisdiction over a cannabis company may cement plaintiffs’ positions in unrelated litigation concerning labor peace agreements that we have reported on previously.  

Over the past few months, we have been covering lawsuits challenging labor peace agreement requirements throughout the United States.  California, Connecticut, New York, Oregon and Rhode Island all have statutes or regulations that require cannabis entities to enter into labor peace agreements with unions as a precondition for licensure or license renewal.  As part of the legal strategy, plaintiffs have argued that the NLRA preempts state labor peace agreement requirements because such requirements chill employer speech regarding unions and labor relations that is protected by federal labor law.  This argument has seen varying levels of success.   

 On May 21, 2025, the Oregon District Court found that Oregon’s labor peace agreement requirement was preempted by the NLRA and its enforcement was enjoined as to the plaintiffs.  The decision is currently on appeal to the Ninth Circuit.  For the duration of the appeal, Oregon’s cannabis regulator said that it would no longer enforce the requirement. 

Back in March, a California court dismissed an action challenging California’s labor peace agreement requirement under the premise that the court could not adjudicate the case because the cannabis retailer was engaged in a federally illegal business.  

Now that at least one administrative law judge was willing to exercise the NLRA’s jurisdiction over cannabis-related entities, it is possible that litigation challenging state labor peace agreement requirements may leverage the recent NLRB decision, citing it as an example of the NLRA’s scope.  At least one lawsuit remains pending on this topic.  In New York, a cannabis retailer has argued that the LPA requirement in the NY Marihuana Regulation and Taxation Act is preempted by the NLRA.  Connecticut’s statute remains unchallenged.  We will continue to monitor any legal developments in this burgeoning arena.