As of January 1, 2020, licensed cannabis companies in California with 20 or more employees will have 60 days to certify that they’ve entered into a “labor peace agreement” with a “bona fide labor organization.” Otherwise, they can lose their licenses. What does that mean?

First, some background. In 2017, California enacted the Medicinal and Adult-Use Cannabis Regulation and Safety Act. MAUCRSA spells out the requirements for cannabis companies wishing to become licensed by the state. This includes companies applying to sell for medical or recreational use and companies doing laboratory testing. Among many other things, MAUCRSA required that “an applicant with 20 or more employees, provide a statement that the applicant will enter into, or demonstrate that it has already entered into, and abide by the terms of a labor peace agreement.”

MAUCRSA defined a “labor peace agreement” as an agreement between a licensee and a “bona fide labor organization” that, at a minimum:

  • prohibits picketing, work stoppages, boycotts, and similar interference with the applicants business;
  • allows the bona fide labor organization to  to communicate with, and attempt to organize and represent, the applicant’s employees; and
  • gives the bona fide labor organization access to the workplace, at reasonable times, to meet with employees and discuss their right to be represented, their rights under state law, and the terms of their employment.

While a “bona fide labor organization” sounds a lot like a union, and unions strongly supported the bill, there’s no requirement that the organization be a union. Nor does the bill mandate a particular method of electing or certifying the organization. So the employees don’t get to decide if they want to be represented. The state simply requires that they be represented. (Before we leave our discussion of MAUCRSA, I’m able to debunk rumors that the term comes from the Michael Jackson song “Wanna Be Startin’ Something.” The lyrics starting around the 5 minute mark in the linked video are not, as some claim, “Ma ma se, ma ma sa, ma ma maucrsa.”)

On October 12, 2019, Governor Newsom signed AB 1291, which expanded on the requirement for “labor peace agreements.” Under AB 1291, any company with 20 or more employees applying for a license from California’s Bureau of Cannabis Control must “provide a notarized statement that [it] will enter into, or demonstrate that it has already entered into, and abide by the terms of a labor peace agreement.” Any such company with fewer than 20 employees applying for a license must provide a notarized statement that it “will enter into and abide by the terms of a labor peace agreement within 60 days of employing its 20th employee.” AB 1291 goes on to state that the BCC, the Department of Food and Agriculture, and the State Department of Public Health can revoke or suspend a cannabis companies license for failure to comply.

Both MAUCRSA and AB 1291 specify that “supervisors” don’t count toward the 20-employee threshold. Moreover, supervisor is defined broadly. Under MAUCRSA, a supervisor is anyone who has authority to “to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibility to direct them or to adjust their grievances, or effectively to recommend such action, if, in connection with the foregoing, the exercise of that authority is not of a merely routine or clerical nature, but requires the use of independent judgment.” If workers have authority to do any one of those things (e.g. recommend assigning work), they fall within the definition of supervisor. So employers may be able to avoid meeting the 20-employee threshold by assigning one or more duties that the law deems “supervisory” to workers who would not typically be considered supervisors. (But that should not involve trying to characterize workers as independent contractors unless they can satisfy the ABC test, discussed here.)

While the law does not take effect until January 1, 2020, now is the time for licensed cannabis companies, and those planning to apply for licenses, to talk to their lawyers about their staffing plans, how to comply (and certify compliance), how to prepare for union efforts to organize their workers, and how to negotiate and document a “labor peace agreement.” That’s a lot to do in a relatively short period of time. It will require advice from attorneys who know the cannabis industry, licensing, and labor and employment law. Unions didn’t support this bill without expecting that they had something significant to gain. It’s high time to start getting ready.