A federal judge in Oregon has struck down the requirement that
cannabis companies enter into a labor peace agreement (LPA) as a
condition of obtaining or renewing a license. See Casala v.
Kotek, D. Oregon, May 20, 2025. Following that ruling, Oregon
state officials quickly announced that they "will no longer
require a labor peace agreement (LPA) to apply for or renew a
cannabis license."
The decision is not a surprise, as state laws requiring LPAs or
other union-friendly concessions as a condition of licensure run
headlong into the doctrine of federal preemption. The federal
National Labor Relations Act (NLRA) governs labor relations, and
state laws that tread into this territory have often been struck
down. So too, here, Judge Simon ruled that the Oregon law "is
preempted by the NLRA in violation of the Supremacy Clause and
violates Plaintiff's First Amendment rights." Organized
labor has announced that it will appeal the ruling.
The ruling contrasts with a decision by a federal court in
California earlier this year. That court rejected a challenge to a
similar California law, ruling that federal preemption did not
apply because cannabis is unlawful under federal law. Ctrl Alt
Destroy v. Elliot, S.D. Cal, March 12, 2025. That decision is
on appeal. The Oregon court expressly disagreed with the California
court, ruling that the lawfulness of cannabis was not at issue;
rather, the NLRA's broad regulation of labor law caused the
state law to be preempted.
While several other states (such as Connecticut, New Jersey, New
York, and Rhode Island) have LPA requirements, this ruling applies
only to the Oregon law. Similar laws in other states are also ripe
for challenge, and challenges are underway in some other states.
Some industry players, however, have shied away from contesting the
laws because of a desire not to upset the regulators upon whose
good will they need to operate.
Notably, federal preemption would not apply to most workers in grow
facilities. These employees would likely be considered to be
"agricultural workers" and are not covered by the NLRA.
We previously blogged about that here. Such workers would be regulated by state
law, and as such, states are free to impose LPA requirements in
that sector without a federal preemption challenge.
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