Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.
Connecticut recently legalized recreational marijuana use by adults. The new law creates complex employment protections for recreational marijuana users. The same legislation also includes provisions that strongly encourage any cannabis-related employer seeking to operate in Connecticut to permit the unionization of its workforce.1
Connecticut is not alone in enacting legislation that mandates a labor-friendly stance for companies that want to receive licenses to operate cannabis-related businesses in the state. New York, New Jersey and California, among others, have included similar provisions in their cannabis-related laws that promote collective bargaining and the recognition of labor organizations. Notwithstanding this trend, federal law arguably pre-empts such local regulations, which typically ignore the right of employees under Section 7 of the National Labor Relations Act (NLRA) to choose to join in or refrain from collective bargaining. Right-to-work organizations have expressed their views about these conflicts, but given recent changes in leadership at the National Labor Relations Board (NLRB) and President Biden’s promise to be “the most pro-union president you’ve ever seen,” employees and employers that want to overturn the mandates will likely need to seek such relief from the courts.
Labor Peace Agreements
Section 102 of Connecticut’s legislation requires each cannabis establishment, as a condition of licensing, to enter into a labor peace agreement (LPA) with a bona fide labor organization.2 The statute defines an LPA as an agreement between a cannabis establishment and a union (1) under which the owners and management of the cannabis establishment agree they will not lock out employees and (2) that prohibits the labor organization from engaging in picketing, work stoppages, or boycotts against the cannabis establishment. Inherent in the LPA requirement, of course, is that the employer must recognize a union as the representative of its employees and engage in bargaining with that union in order to reach an LPA—almost certainly as part of a full collective bargaining agreement.
The legislation further requires that any LPA must include an agreement of the parties that the exclusive remedy for any violation of the agreement will be final and binding arbitration by a neutral labor arbitrator. If an arbitrator finds that an establishment failed to comply with an order issued by the arbitrator to correct a failure to abide by the agreement, then the State Department of Consumer Protection (DCP) must suspend the establishment’s license upon receipt of a written copy of this finding without pausing for further administrative proceedings or a formal hearing.
To enforce an arbitration award or seek to lift a license suspension, the bill allows the cannabis establishment or union to bring a civil action in the superior court. The establishment’s license will remain suspended until (1) the arbitrator or both parties to the arbitration notify DCP that the establishment is in compliance with the arbitration award; (2) both parties notify DCP that they have satisfactorily resolved their dispute; (3) the court, after a hearing, lifts the suspension; or (4) the court, after a hearing, orders alternative remedies. Judicial remedies may include ordering DCP to revoke the license or to appoint a receiver to dispose of any cannabis inventory. With limited exceptions (primarily for medical-use situations), the affected cannabis establishment cannot sell, transport, or transfer cannabis to another establishment, consumer or laboratory.
Project Labor Agreements
Section 103 also requires that construction or renovation of any facility for operating a cannabis establishment for $5 million or more must be subject to a project labor agreement (PLA) involving all contractors, subcontractors and the cannabis establishment.3 A PLA, under the legislation, means a labor agreement that:
- binds all contractors and subcontractors on the covered project to the PLA through the inclusion of specifications in all relevant solicitation provisions and contract documents;
- allows all contractors and subcontractors to compete for contracts and subcontracts on the project regardless of whether they are otherwise parties to collective bargaining agreements;
- establishes uniform terms and conditions of employment for all construction labor employed on the project;
- guarantees against strikes, lockouts, and similar job disruptions;
- sets mutually binding procedures for resolving labor disputes arising during the PLA; and
- includes any other provisions as negotiated by the parties to promote successful delivery of the covered project.
A contractor, subcontractor, or employee organization4 may enforce the PLA mandate or seek remedies for noncompliance with a PLA by bringing a civil action in the superior court. After holding a hearing, the court may order penalties of up to $10,000 per day for each violation of the PLA by the cannabis establishment.5
Potential Preemption under the National Labor Relations Act
The legal doctrine of federal preemption is based upon the Supremacy Clause—Article VI, Paragraph 2 of the U.S. Constitution. It establishes that the Constitution and the laws of the United States are the supreme law of the land. A state law that interferes with congressional intent to regulate certain conduct exclusively under federal law is said to be “preempted” and therefore invalid. Numerous cases have established that it was the intent of Congress when enacting the NLRA to preempt, for exclusively federal regulation, the field of private-sector labor relations.
Two sections of Connecticut’s new law may be particularly ripe for preemption challenges. Section 102 conditions license approval for a cannabis establishment upon entry into an LPA with a labor union that is actively seeking to represent cannabis workers in the state. Section 103 requires a cannabis establishment to enter into a PLA for all construction or renovation projects (costing $5 million or greater) of any facility for the operation of a cannabis establishment.
While the specific provisions of LPAs and PLAs may vary from case to case, in practice these agreements compel an employer to make concessions to a union and its organizing activities. Such concessions can include recognizing the union by card check instead of a secret ballot election, remaining neutral during the organizing campaign, permitting union organizers access to the workplace and providing employee contact information. Connecticut’s law requires a negotiated LPA to contain an agreement not to lock out employees in exchange for limits on picketing, work stoppages and boycotts. Another major concession demanded by the law is the requirement that the employer agree to binding arbitration for resolution of disputes arising under an LPA.
NLRA preemption has an extensive judicial history, including the seminal decision Building & Construction Trades Council (San Diego) v. Garmon, 359 U.S. 236 (1959). Garmon stands for the principle that potential (not provably actual) conflict with the NLRA is sufficient to require preemption of a state law. Subsequent cases identified exceptions, such as where “compelling state interest” in a matter could justify local regulation and where the NLRB chose to cede jurisdiction to the states under its power to decline jurisdiction over certain employees or disputes. Another exception may exist where the state is acting as a market participant (as opposed to a regulator) when requiring the use of LPAs and PLAs. If the state is contracting for a public construction project, for example, it is generally permissible to include such requirements. When the state is acting as a regulator, however, the import of the cases seems to be that enactments conflicting with the NLRA with respect to private-sector labor relations may indeed be preempted.
Despite statutory language to the contrary, it is difficult to avoid concluding that the PLA requirement will effectively prevent non-union contractors from working on cannabis-related building projects. A challenge to the PLA requirement on preemption grounds could, therefore, potentially come from one or more non-union contractors. Similarly, the mandate to enter into an LPA effectively requires any cannabis-related business that wants a license to recognize and bargain with a union regardless of whether its employees have been given the opportunity to accept or reject union representation. A challenge to the LPA requirement on preemption grounds could therefore be pursued in court by one or more cannabis businesses that seek to remain non-union.
1 Any provisional cannabis establishment licensee, dispensary facility or producer as defined in Section 1 of the act.
2 Senate Bill 1201 defines a “bona fide labor organization” as a labor union that (1) represents employees in this state with regard to wages, hours, and working conditions; (2) whose officers have been elected by a secret ballot or in another manner consistent with federal law; (3) is free of any employer domination or interference and has not received any improper assistance or support from the employer; and (4) is actively seeking to represent cannabis workers in the state.
3 PLAs are pre-hire agreements in the construction industry that establish terms and conditions of employment for employees, many still to be hired, who will work on a construction project. PLAs are generally bargained by developers with the area building trades council — that is, a consortium of unions. A developer with bargaining power may be able to obtain concessions such as uniform or coordinated work hours for the various trades and the regularization of differing work rules. Most PLAs do not directly forbid the use of non-union contractors and employees, but by mandating union wages and benefits their practical effect is to favor union contractors. Section 8(f) of the NLRA permits the creation of such agreements.
4 An “employee organization” is any lawful association, labor organization, federation, or council with a primary purpose of improving wages, hours, and other conditions of employment for cannabis establishments' employees.
5 Under the legislation, a cannabis establishment’s failure to comply with the statute’s PLA provisions cannot be the basis for any administrative action by DCP.