Oregon Labor Peace Agreement Requirement Struck Down as Preempted by NLRA

On May 20, 2025, the United States District Court for the District of Oregon held that the labor peace agreement (“LPA”) mandate, Measure 119, which requires all state-licensed cannabis businesses to sign a labor peace agreement with a labor union, is preempted by the National Labor Relations Act (“NLRA”) in violation of the Supremacy Clause and violates Plaintiffs’ First Amendment rights.  In doing so, the court became the first United States District Court to invalidate a cannabis-related LPA requirement.

As we discussed earlier this year, under Measure 119, businesses seeking licenses and certifications to manufacture or sell cannabis products must enter into an LPA or sign an attestation affirming that the business has entered into an LPA.  Oregon law defines an LPA as “an agreement under which, at a minimum, an applicant or licensee agrees to remain neutral with respect to a bona fide labor organization’s representatives communicating with the employees of the applicant or the licensee about the rights afforded to such employees…”  Without entering into an LPA, cannabis-related businesses would be unable to receive or renew existing licenses.  Oregon’s requirement is not unique; a similar requirement exists in California, Rhode Island, Connecticut, and New York. 

The plaintiffs include a cannabis retailer located in Portland, Oregon, whose license renewal was not processed because it was unable to reach an LPA with any qualified union, and a processor with an upcoming renewal deadline who had not yet entered into an LPA.  Plaintiffs challenged Measure 119, asserting, among other things, that Measure 119 is preempted by the NLRA, and that it constrains plaintiffs’ First Amendment rights. 

As a threshold issue, the District Court determined that the NLRA likely applies to cannabis businesses even though the use of cannabis is illegal under federal law.  Specifically, the NLRA does not limit its jurisdiction to “lawful commerce” or “legal substance,” and as far back as 2013, the NLRB issued advisory memoranda stating that the medical marijuana industry is within the NLRB’s jurisdiction if the NLRA’s jurisdictional monetary requirements are met. 

The District Court concluded that Measure 119 impermissibly conditions a state license on an employer “refraining from conduct protected by federal labor law, which chills one side of the robust debate which has been protected under the NLRA.”  Further, with little analysis, it concluded that because Measure 119 prohibits all speech by employers that is not “neutral” toward unionization, it violates Plaintiffs’ First Amendment Rights to free speech.  The District Court entered a permanent injunction enjoining the application of Measure 119 to Plaintiffs.

The Oregon decision runs directly counter to the California decision in Ctrl Alt Destroy v. Elliott issued in March.  2025 WL 790963 (S.D. Cal. Mar. 12, 2025).  There, the California District Court concluded that it could not adjudicate the issue, as the cannabis entities exist for the sole purpose of making money through repeated and ongoing violations of federal law.   The Oregon court acknowledged Ctl Alt Destroy, and expressly stated that it is not persuasive.  

Over on the East Coast, a New York lawsuit challenging the LPA requirement in the NY Marihuana Regulation and Taxation Act remains pending.  And though Connecticut’s cannabis statutory scheme mandates entry into an LPA as a precondition for licensure, its law remains unchallenged.  We will continue to monitor any legal developments in this arena.