Denver marijuana company’s dispute with union highlights PR pitfalls

Image of former Green Dragon employees picketing at the Denver company.

Former Green Dragon employees picket at the company's marijuana cultivation facility in Denver. (Photo by Jimena Peterson, UFCW)

A new Colorado law that allows agricultural workers, including cannabis grow employees, to unionize has led to a public relations crisis for one Denver marijuana company, with staffers and union organizers making headlines by alleging unsafe working conditions and poor treatment.

The company’s plight underscores the risks companies can face if union dealings go sideways.

Earlier this month, Green Dragon, a vertically integrated cannabis company with retail locations in Colorado and Florida, watched as union organizers from the United Food and Commercial Workers (UFCW) Local 7 led a picket line of former grow-house workers outside its Denver cultivation facility.

Employees alleged the cultivation facility was unsafe and unhealthy to work in because of mold issues. Workers also complained of low wages.

California-based marijuana delivery platform Eaze acquired Green Dragon last year for an undisclosed price.

Jimena Peterson, union organizer for Local 7, claims Green Dragon unlawfully fired four Denver cultivation workers for participating in union activities.

According to Peterson, after the picket Green Dragon then offered to rehire two of the workers, but they chose to take a severance package instead. Local 7 is working to get the other two workers rehired, Peterson said.

Also, according to Peterson, after Local 7 filed for a union election Green Dragon fired their whole staff, excluding management, then rehired them under a staffing agency.

Peterson added the workers learned of their contractor status when they tried to buy cannabis from Green Dragon but no longer qualified for an employee discount.

In an emailed response to MJBizDaily, Green Dragon rejected any suggestions that its activities were anti-union.

“Green Dragon vehemently denies any and all allegations of our organization being anti-union,” the company said.

“Green Dragon has not and will not retaliate against employees for union activities, and we are continuing to work closely with our colleagues and the representatives from UFCW Local 7.”

The company’s troubles come as unions have waged highly publicized organizing campaigns at mainstream corporations, including tech behemoths Apple and Amazon as well as coffee giant Starbucks.

Rachel Gillette, a Denver cannabis attorney with Holland & Hart, said a situation such as Green Dragon’s can cause reputational damage – whether the allegations are true or not.

“That’s bad PR,” she noted. “Nobody wants to think that their cannabis is being grown where their cannabis employees are not being treated right.”

Green Dragon declined to comment on specific personnel matters but did say that any characterization of its cultivation facility as having a substandard work environment “is without merit.”

According to Green Dragon, the same week that the UFCW organized the picket line, the company welcomed inspectors from the Denver Department of Public Health & Environment to the facility.

“Our facility – which has never had any labor violations or health issues in nearly 10 years of operations – passed the inspection with no issue,” the company told MJBizDaily via email.

According to the Denver health department, during Green Dragon’s most recent inspection on April 6, the agency found four “critical” violations at the facility, including a dead mouse “observed stuck in an unknown liquid on the floor under the sink” next to several small rodent droppings.

The inspection report states the company cleaned the floor to correct the violation.

The investigator also commented that after conducting a walk-through of the facility, the “cultivation area appeared generally well-maintained.”

Broader implications

Peterson said Local 7 plans to hold a May 25 election for Green Dragon workers to decide whether to unionize.

In the meantime, the UFCW filed charges with the Colorado Department of Labor alleging that Green Dragon broke the law for firing workers who sought union representation.

That outcome is uncertain.

According to Peterson, because the Colorado labor law was passed in 2019 and is relatively new, no precedent has been set for what penalties Green Dragon could face if found to have broken the law.

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Agricultural workers are not covered under federal labor laws that protect workers who seek to unionize.

Last year, the National Labor Relations Board ruled that marijuana cultivators, trimmers, sorters and packagers cannot unionize because they qualify as agricultural laborers.

In response, Colorado lawmakers approved legislation creating a state law to protect agricultural workers, including those who work in cannabis cultivation facilities.

The issue of organizing cannabis industry employees also is garnering national attention, including in Washington DC.

On Tuesday, Democratic Reps. Mark Pocan of Wisconsin and Donald Norcross of New Jersey – co-founders of the Congressional Labor Caucus – hosted New Jersey cannabis workers and union representatives for a roundtable titled, “Organizing the Cannabis Industry.”

Sustained efforts

Throughout the U.S. cannabis industry, more states have started mandating labor peace agreements as part of regulations that prohibit employers from interfering with labor organizing.

During the COVID-19 pandemic and into this year, union organizing in the marijuana industry has been surging across the country.

Jim Araby, director of strategic campaigns for UFCW Local 5 in Northern California, estimates unions have organized 30,000-40,000 cannabis workers across the country.

California alone has about 5,000 unionized workers, according to Araby.

So far in 2022, a handful of cannabis companies have seen their workers unionize, including in Illinois, Michigan and New Jersey.

In addition to the UFCW, the International Brotherhood of Teamsters has been recruiting cannabis workers to its ranks in California and Illinois.

Meanwhile, a marijuana-centric labor group, the Cannabis Engineer Extractors & Distributors Union (CEED) Local 420, said it has unionized workers in New Jersey.

According to Araby, that steady increase in unionized employees in the cannabis industry is no accident.

“What other time do you have to be at the ground floor of an emerging industry?” he added. “We view it as proof that business and labor can work together, if we work together.”

PR problems and what to avoid

Some cannabis companies, in fact, have welcomed union representation.

Minnesota-based multistate operator Goodness Growth holdings – the former Vireo Healthhas lauded unionization.

“As a socially responsible business, Vireo is deeply committed to its employees and is proud to be a union employer,” Kyle Kingsley, then CEO of Vireo Health, said in a 2019 news release announcing a labor pact in Pennsylvania with the UFCW.

Regardless of the outcome, cannabis companies want to avoid a public relations crisis if workers seek to form a union or go on strike to protest wages or working conditions.

One of the main reasons employees seek out union protection is a morale issue, including job dissatisfaction or safety concerns, according to Gillette.

“Employee morale is an important part of this – generally people aren’t seeking to unionize when they’re happy with their job,” she said.

To avoid a potential conflict, she advises cannabis company executives to empower their managers and supervisors to listen to their employees and do what they can to keep them happy.

Members of management also should be trained to know what they can and cannot say within the law about employees unionizing, according to Gillette.

She said unhappy cannabis employees seeking to unionize can cost the company financially in several ways, including low productivity in grow rooms and added lawyer fees.

Boston labor attorney Jonathan Keselenko agreed that there are PR considerations around unionization efforts and a company should try to stay in front of it.

“When an employer sees a union drive, it should consider educating its workforce about the pros and cons of joining an union,” he added.

That can often dissuade employees from joining a union, according to Keselenko.

“Once a union drive is filed, it’s usually too late at that point.”

Bart Schaneman can be reached at bart.schaneman@mjbizdaily.com.