As you might recall from previous blog posts, more and more states are requiring cannabis companies to enter into labor peace agreements with unions in order to obtain their licenses, but could that soon go up in smoke?

The National Right to Work Legal Defense Foundation (“NRTWF”) asked the National Labor Relations Board (“NLRB”) for help when New Jersey took one toke over the line by requiring cannabis companies to not only enter into a labor peace agreement but also enter into a collective bargaining agreement within 200 days of commencing operations. If companies fail to adhere to New Jersey’s requirement, then their permit will either be suspended or forfeited.

The NRTWF argues that under section 7 of the National Labor Relations Act (“NLRA”), employees have the right to choose to be represented by a union or to refrain from union representation. However, by forcing companies to enter into collective bargaining agreements, the State is taking that right away from employees. At the end of the day, having a labor peace agreement with a union does not mean employees will choose to unionize. A labor peace agreement is simply an agreement between a company and a union whereby the company agrees to give the union access to its employees and, in exchange, the union agrees not to disrupt business operations–that’s it.

But by imposing such requirements in the first place, certain unions are in effect indirectly forcing employees to choose them over others (or none at all), which could violate section 9(a) of the NLRA. Section 9(a) provides that employees have the right to elect a union of their choosing, not the other way around.

So can the NLRB take action? It seems like it. First, NRTWF argues that federal law preempts state interference in the labor field. In particular, courts, when faced with state interference, have often ruled that such state action is preempted by the NLRA.

Second, as noted above, labor peace requirements and collective bargaining agreements take away an employee’s right to choose to be represented by a union and, takes away their right to choose which union. And the requirements contradict the NLRA because they “destroy[] the right to free negotiation.”

Among other things, the NRTWF argued that the Board has implied power to challenge state regulation when “federal law preempts the field.” This includes the power to sue for declaratory relief. And importantly, the Board has sued in the past for similar issues. Previously, a state agency tried to force employers to sign collective bargaining agreements. The Board in that matter sued to restrain the state agency’s order. The injunction was granted. On appeal, the court found that the order was preempted by the NLRA, thereby solidifying that the Board can bring claims such as the one at issue here.

The Board has yet to respond to the inquiry, so it’s unclear if the labor peace agreement and collective bargaining agreement requirements will go up in smoke. Stay tuned for further updates.