Cannabis union wins signal more labor-management conflicts ahead

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organized labor cannabis, Cannabis union wins signal more labor-management conflicts ahead

From Sean O’Brien’s office in Washington DC, the general president of the International Brotherhood of Teamsters has a direct view of the U.S. Capitol complex.

Along with the physical proximity, O’Brien also has a direct link to the corridors of power – as well as a willingness to confront it.

This was demonstrated during a testy Senate committee hearing in March, when O’Brien blasted both corporate executives and federal lawmakers for allowing the “repeated abuse of American workers.”

And, as actions last month in Chicago showed, under O’Brien, the Teamsters are also more cannabis friendly than ever before – and just as confrontational with multistate operators as their leader was with online shopping behemoth Amazon and coffee giant Starbucks.

Over the past month, both the Teamsters and the United Food and Commercial Workers – the two most prominent unions active in cannabis – have notched what observers contacted for this article said are notable victories.

At three Chicago-area dispensaries run by Green Thumb Industries, Teamster-organized retail workers went on strike for nearly two weeks in what’s believed to be the longest work stoppage in U.S. cannabis history to date.

Not long after that strike, which helped compel management to resume contract negotiations, workers at Chicago-area locations of PharmaCann, another big cannabis company, signed a union contract guaranteeing raises.

These union victories appears to have inspired a separate work stoppage in Missouri.

And, as the cannabis industry enters what observers believe will be a consolidation period, more aggressive action from labor is likely to follow, predict labor experts and employer-side attorneys, who agree conditions are near-ideal for worker organizing in cannabis.

The marijuana industry is struggling under the weight of shrinking margins, stalled federal reform and increased pressure from investors.

Meanwhile, as part of a broad renaissance for organized labor – coupled now with rising costs and depressed wages exacerbated by inflation – workers are proving less willing to accept what they feel is inadequate compensation from publicly traded cannabis companies.

These are strong signs that more labor-management conflict – and more aggressive action from invigorated and encouraged workers – is looming over the horizon, observers told MJBizDaily.

Following the Chicago way

The American labor movement is enjoying a renaissance under the administration of U.S. President Joe Biden, who vowed to be the “most labor friendly” president in recent history.

Encouraged from the top down, labor is proving eager to use every tool at its disposal.

These tools include labor strikes as well as a growing pile of complaints and grievances filed against cannabis companies at the National Labor Relations Board (NLRB), which has become more pro-worker under Biden.

According to NLRB records, there are dozens of active cases and unfair labor practice complaints against cannabis companies.

For example, records show 16 open cases involving Curaleaf Holdings and seven open cases involving Trulieve Cannabis, two of the country’s more prominent multistate operators.

These cases include union allegations of illegal union-busting.

Trulieve did not respond to requests for comment.

In an emailed statement, Curaleaf spokesperson Jordon Rahmil said the company denies any wrongdoing and would push back on such allegations during the formal NLRB process.

“As a company, Curaleaf respects the rights of team members who have chosen to be represented by a union,” she added. “Where team members have chosen such representation, the company pursues an honest, business-like approach in working with those representatives.”

“While we believe that a direct relationship with our team members is the best route for us to work together, we respect the voices of our team members and we have negotiated with union leaders in good faith and will continue to do so.”

Forcing change

This spring, unions took more direct action.

Labor notched one win after Teamster-organized employees at three Chicago-area RISE dispensaries – a retail chain owned by multistate operator Green Thumb Industries – went out on strike for nearly two weeks beginning April 19.

The open-ended stoppage – triggered after the two parties reached an impasse in contract negotiations over retirement benefits – drew support from local elected officials including a member of Congress.

Contacted through a spokesperson, Green Thumb Industries did not respond to a request for comment.

Since the stoppage “helped to produce some movement in bargaining,” it’s fair to call the strike “successful,” said Robert Bruno, director of the Labor Studies Program and a professor of labor and employment at the University of Illinois-Champaign Urbana.

One signal of the cannabis industry taking notice of labor’s changing landscape was seen in PharmaCann’s willingness to sign a contract guaranteeing 20% raises over three years for the Teamsters-organized workers at its Verilife stores in the Chicago area, Bruno said.

“Likely, they were legitimately worried about a work stoppage, so why put yourself through that?” Bruno told MJBizDaily.

The events preceded current and former employees walking off the job and picketing a Shangri-La dispensary in Columbia, Missouri, for two days last month.

The picketers are attempting to organize with the with United Food and Commercial Workers Local 665. Dave Cook, UFCW Local 665’s president, did not respond to requests for comment.

This also suggests increased competition between the Teamsters and the UFCW to sign up workers, Bruno said. 

New attitude, movement in DC

Speaking on behalf of Teamsters nationwide, Peter Finn, the union’s Western Region vice president, told MJBizDaily that the Chicago actions demonstrate the union’s new attitude toward cannabis under O’Brien, who was elected president in November 2021.

“We’re in sort of a different mode with cannabis” compared to before, Finn said. “We’re out in full force supporting legalization and organizing this industry.”

According to Finn, unions have something to offer the cannabis industry beyond just increased labor costs: more revenue as well as political clout in Washington and state capitols.

“We want this industry to grow,” he said. “We just want the workers to prosper along with that growth.”

If companies “engage with us in a fair way, we can actually partner with them to help the industry” with badly needed federal reform like the SAFE Banking Act, reintroduced this spring in the Senate, and 280-E tax reform, Finn said.

At least some Washington insiders agree.

Speaking on background, one Capitol Hill lobbyist working on cannabis acknowledged that organized labor is “a tremendous force” in Washington, particularly during a Democratic administration, and there’s already proof that attitudes are shifting.

In the most recent session of Congress, U.S. Sen. Sherrod Brown, the Ohio Democrat who now chairs the Senate Banking committee, “didn’t want to touch banking,” the lobbyist said.

This year, Brown called a hearing on cannabis banking, in which he highlighted the plight of small businesses and workers – not publicly traded companies, the lobbyist pointed out.

“SAFE (Banking) has not got as far as it has because of the efforts of the cannabis industry alone,” the lobbyist added.

Labor “is going to be, for lack of a better word, the ‘respected voice’ that sometimes the cannabis industry can’t be” in the halls of Congress.

State regulators also have proven keen to punish cannabis companies for flouting union rules.

Earlier this year, New Jersey state regulators briefly refused to renew one of Curaleaf’s adult-use cannabis licenses, citing a “clash with unionization.”

However, the broader labor movement also can spell trouble even for cannabis-friendly unions.

In California, efforts to cut heavy cannabis taxes are opposed by teachers and nurses unions, given that the taxes often help fund education and other public services that suffer during an economic downturn.

Similarly, states and cities – many of which are facing budget deficits after federal COVID aid ended – also are loathe to cut revenue in order to ease the tax burden on cannabis companies.

But in heavily populated blue states where the cannabis industry is currently most entrenched, including California and Oregon as well as Illinois, Massachusetts, New Jersey and New York, labor enjoys some advantages not seen in other industries.

A ‘perfect storm,’ by design

Unlike other rapidly developing U.S. industries such as technology, cannabis may be peculiarly suited for labor organizing.

Marijuana is a heavily regulated, labor-intensive business sector that emphasizes skill, even if it is not always rewarded.

Workers must pass background checks in most states to work in cannabis.

Esoteric knowledge about cultivars and their complex effects on the human body are prized.

And some workers declared “essential” during the COVID-19 pandemic received hourly wage increases that have since been rescinded, gifting labor a fresh sense of grievance.

Cannabis companies that claim shrinking margins and pressure from investors are seeking to cut expenses in an economy where wages aren’t keeping pace with the cost of essential needs.

At the same time, cannabis companies are holding a hard line on compensation at a time when workers across many sectors are showing a general militancy toward their employers – think Starbucks, REI and Amazon – and favorable attitudes towards labor unions are on the rise.

Unlike mainstream industries, cannabis legalization created a favorable environment by law.

Companies in many states – including California, Illinois, and New York, the country’s biggest individual markets – must sign labor-peace agreements with bona-fide labor unions in order to receive business licenses.

“Those things make a perfect storm for labor to breathe,” said Zack Kobrin, a Florida-based attorney and former general counsel at multistate operator Trulieve, who noted a “a clear effort, between UFCW and the Teamsters, to increase their footprint into what is ultimately a massive economy.”

Being an off-cycle year for elections, 2023 “is just a good year for labor to organize,” he said. “It isn’t a busy political year, so unions can spend more time organizing.”

Kobrin also acknowledged what could either be an unfamiliarity or an unwillingness – or an outright hostility – among C-suite cannabis executives to work with organized labor based in part on the belief that higher labor costs harm a company’s bottom line.

“I think there are some management teams that just haven’t dealt with labor,” he said. “They just don’t know … and the lack of experience in dealing with them probably lends itself to a more anti-labor position as opposed to a more conciliatory, cooperative position.”

No matter what, a pragmatic business needs to recognize that labor will have to be dealt with in some way, Kobrin added, either by collaborating with the union or “appeasing employees, retaining employees, putting things in place to get them to not want to join labor.”

Looking ahead, more confrontations may be on the horizon, especially if cannabis companies determine that dried-up capital markets and steep tax bills mean that wages are the prime place to cut costs.

“I do think there are companies out there that just don’t want do deal with unions, and that list of companies is growing,” said Jim Araby, the Northern California-based director of strategic campaigns at UFCW Local 5, the first union to sign up cannabis workers, back in 2010.

“Partially that has to do with the financial trends in the industry,” he said. “Businesses are now wanting to see a profit. That means squeezing labor. And we’re going to have to return serve, right?”

Chris Roberts can be reached at chris.roberts@mjbizdaily.com.