Key Takeaways
- Oregon's labor peace agreement mandate for cannabis businesses was struck down as unconstitutional and preempted by federal law.
- The court found the law violated the First Amendment and the National Labor Relations Act.
- Oregon regulators will no longer enforce the LPA requirement.
- The ruling may influence similar laws in other states, though it is only binding in Oregon.
An Oregon federal court struck down a labor peace agreement (LPA) requirement tied to cannabis licensing on May 20, 2025. Specifically, the court invalidated provisions of Measure 119, Oregon's "United for Cannabis Workers Act," a voter-approved initiative that required cannabis businesses to remain neutral regarding unionization and sign an LPA with a "bona fide" labor organization to obtain or renew their license to operate. While the ruling currently applies only in Oregon, similar LPA requirements for cannabis licensees apply in other jurisdictions, including New York and California. This Article provides an overview of the case and takeaways for stakeholders in Oregon and across the country.
Background
Measure 119, effective December 2024, required cannabis businesses to submit either a signed labor peace agreement or an attestation confirming such an agreement as part of any license or renewal application. The law defined an LPA as an agreement in which the employer, at a minimum, agrees to remain neutral while union representatives communicate with employees about their rights. This would effectively bar employers from expressing opposition to unionization. The plaintiffs in Casala, two cannabis operators, challenged the requirement, arguing that it violated their rights under the First Amendment and the National Labor Relations Act (NLRA).
Holding
In Casala, LLC v. Kotek, the court held that Measure 119 is unconstitutional and otherwise preempted under federal law.
On the constitutional analysis, the court held that Measure 119 violated the First Amendment. Because the measure compelled employer neutrality and did not distinguish between coercive and noncoercive speech, it constituted an unconstitutional restriction of protected expression. The court issued a permanent injunction, and Oregon's cannabis regulator has since confirmed it will no longer enforce the LPA requirement.
Regarding preemption, the court held that the NLRA preempted the state requirement for three reasons. First, the court held that the LPA mandate disregarded employees' rights to choose their own labor representation, as guaranteed by Section 7 of the NLRA. Second, the court concluded that the mandate violated the NLRA's employer speech protections under Section 8 of the NLRA. Third, the court reasoned that requiring an LPA as a condition of licensure improperly regulates union-employer relations, which Congress intended to be free from regulation.
Takeaways
The Casala ruling had an immediate effect in Oregon, striking down Measure 119 and prompting the state cannabis regulator to forgo enforcement of the LPA requirement. The ruling may influence future litigation in other jurisdictions. More than half a dozen states, including California, New York, and New Jersey, have adopted or proposed similar LPA requirements tied to cannabis licensing. While the ruling is not binding outside Oregon, its application of federal labor law preemption doctrines makes it a persuasive precedent throughout the country. Employers operating in the cannabis industry (or advising clients who do) should closely monitor related challenges across the country as courts continue to grapple with the intersection of state cannabis regulation and federal law.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
