Suspect unions’ effort to evade state law could hurt marijuana workers

March 31, 2023 · MJ Biz Daily

Trickery Concept.Business partners shaking hands with one of them holding fingers crossed behind back.

Marijuana businesses in California and on the East Coast are evading worker-friendly licensing requirements by obtaining state business permits after signing deals with “labor organizations” that appear to be illegitimate “company unions,” documents and interviews show.

The growing presence of these fake unions jeopardizes the inroads made by the United Food and Commercial Workers (UFCW) and the International Brotherhood of Teamsters, critics charge, while offering limited or zero benefits to workers.

In many states with adult-use legalization, state law requires legal marijuana businesses to sign a labor peace agreement, or LPA, with a “bona fide” labor union before receiving final licensing.

The LPAs are contracts in which an employer agrees to be neutral during a labor-organizing campaign.

In return, the union agrees not to picket, boycott or otherwise interfere with the employer’s business.

States that require would-be cannabis industry operators to secure labor peace agreements under state law include some of the U.S. industry’s biggest markets: California and New York as well as New Jersey and Connecticut.

For organized labor, the retail and manufacturing worker-heavy marijuana industry represents one of the biggest opportunities in memory to grow membership and political influence in the United States, after decades of atrophy as workers shifted from a manufacturing to a service-heavy economy.

Two big mainstream unions have been actively organizing cannabis sector workers:

But in the states noted above, marijuana businesses are also receiving state licenses after signing LPAs with company unions.

These organizations do not have members, do not organize and have no intention of organizing workers, according to documents and interviews.

Cannabis businesses that have signed LPAs with these organizations include major distributors and multistate operators, according to media interviews and public records obtained by MJBizDaily.

At least three company unions have signed LPAs with marijuana businesses, according to records and media reports.

In California, company unions persist despite a state law passed last year that “enhances enforcement” of the LPA requirement.

Company unions first appeared in cannabis as early as 2018.

And so far, state regulators have been either unwilling or unable to stop what legitimate unions – those with members and demonstrable histories of winning contracts, including the UFCW and the Teamsters – say is a deliberate subversion of the process.

“We’re at every event, every planning meeting, every zoning meeting,” said Emily Sabo, organizing director with the UFCW Local 919 in Connecticut.

“We’re doing everything we can to make sure cannabis workers are represented, whereas these other ‘unions’ are not.

“They’re taking away the workers’ rights to organize. They never intend to act on these LPAs.

“All these rights are stripped from workers when operators sign these agreements in bad faith.”

A storied name, with no trace

San Jose is Northern California’s largest city, but a strict zoning law means there are fewer legal marijuana stores there than in nearby Oakland and San Francisco.

San Jose is also the only city in Santa Clara County with legal cannabis storefronts, including one called White Fire.

In California, marijuana businesses with 20 or more employees must sign LPAs with a “bona fide labor organization.”

According to an email from a former San Jose city manager obtained by MJBizDaily, White Fire signed an LPA with an organization called the National Agricultural Workers Union, or NAWU.

Wendy Sollazzi, the marijuana division manager at the San Jose Police Department’s Division of Cannabis Regulation – the local agency responsible for overseeing San Jose dispensaries – confirmed to MJBizDaily that the NAWU is one of the “unions” that signed LPAs with licensed dispensaries.

The NAWU has a history in California.

The organization was one of several, along with Cesar Chavez’s United Farm Workers, that tried to organize the “braceros” migrant farm workers and others laboring in the state’s sweltering melon, grape and lettuce fields in the 1950s and 1960s.

But in 2023, according to a U.S. Department of Labor database, the NAWU does not appear to exist.

The NAWU has not made any of the required federal filings attesting to membership, dues collection, contracts or other typical union activity.

The organization’s principal, according to San Jose records, is named Sean McNally.

The White Fire executive who signed the LPA with the National Agricultural Workers Union is Darren Dykstra, whom corporate records identified as the retailer’s CEO.

Dykstra did not immediately return MJBizDaily requests for comment left at White Fire and via Grupo Flor, a California-based vertically integrated operator based in Salinas that he joined in 2019.

No contact information, including a website or registration forms, could be found for the NAWU or McNally.

In an emailed statement, the San Jose Police Department’s Sollazzi said that determining a labor union’s legitimacy wasn’t the city’s responsibility.

Even so, the state Agricultural Labor Relations Board (ALRB) is expected to meet in the near future with San Jose’s registered marijuana businesses in the coming weeks to discuss the LPA requirement, she said.

And some might be required to sign a new LPA with a legitimate union or jeopardize their licensing.

“Since San Jose is not responsible for determining ‘bona fide’ labor organization status, I felt it was best to have the State discuss this with San Jose’s registered cannabis businesses directly to ensure their compliance with the requirement,” she told MJBizDaily via email.

“If an organization is not recognized by the ALRB, the labor organization(s) will need to work with the State to get recognized as a bona fide labor organization or the businesses will need to submit updated LPAs with organizations acknowledged by the State as complying.”

Biggest company unions

So-called company unions have a long history in American organized labor.

A tried-and-true technique for a business to appear to comply with labor law while subverting the organizing process, company unions sometimes have connections to organized crime, said John Logan, professor of labor studies at San Francisco State University.

In nearly every instance, a fake or company union will follow a familiar pattern: They will not be affiliated with the AFL-CIO (though neither are the Teamsters). They will be a “local” union without members in other states, according to Logan.

There will be no filings with the U.S. Department of Labor’s Office of Labor Management Standards or filings that show no membership.

And, most importantly, they have no record of winning a collectively bargained contract, the ultimate goal of a unionized workplace.

“It’s not unusual to find local or sometimes questionable unions emerge in industries such as (marijuana),” Logan told MJBizDaily.

One such “union” with a growing history in in California calls itself the Professional Technical Union Local 33, or Protech.

According to a complaint filed with the ALRB on March 15 by an attorney working for the Teamsters – and obtained by MJBizDaily via a public-records request – Protech signed a labor peace agreement last summer with Three Habitat Consulting Palm Springs.

According to state cannabis business records, Three Habitat Consulting Palm Springs operates the One Plant store in that city.

As the Teamsters’ complaint alleges, Protech did make required federal labor department filings. However, the union called itself the National Production Workers Union, with offices in a Chicago suburb.

And, more to the point, “since 2019, Protech reported having 19 members,” none of them in California, where the union maintains no office and has no website or other publicly available presence, the ALRB complaint alleges.

The union also reported paying out $0.00 to four employees and three trustees.

The Teamsters’ ALRB complaint regarding Protech is the only current complaint regarding an allegedly bunk labor union in California, confirmed Santiago Avila-Gomez, the ALRB’s executive secretary.

The ALRB will consider the complaint in closed session and make a determination within the next few months.

In the meantime, Protech has signed LPAs with marijuana businesses in other California cities.

These include Santa Ana in Orange County, where, according to public records, Protech signed an LPA in January 2021 with Herbl, a major licensed distribution company.

Herbl CEO Mike Beaudry, who signed the LPA with Protech’s Joseph Senese, did not immediately respond to a request for comment from MJBizDaily.

Senese did not immediately respond to a text.

The City of Santa Ana did not provide comment, nor did the state Department of Cannabis Control.

Since the state does not maintain a list of labor peace agreements, it’s not immediately clear how many California marijuana companies have LPAs with suspect labor organizations.

Union officials say the problem is widespread and persists, in part, because of lax state oversight.

“Our expectation was that the state would enforce this requirement,” said Jim Araby, the strategic campaigns director at the Northern California-based UFCW Local 5, which has secured contracts for employees at major cannabis companies including MedMen Enterprises.

California has what’s likely the country’s oldest LPA, which dates to the medical marijuana era, Araby pointed out.

“We are now in year seven of this requirement, and there has been no enforcement of this requirement,” he said.

“This lapse is unacceptable. The state needs to do something about that.”

On the East Coast

In February 2022, according to the Montclair Local, workers at a New Jersey location of MSO Ascend Wellness signed a contract with management negotiated by a union called Cannabis Engineers Extractors and Distributors (CEED) Local 420.

According to its website, CEED is associated with a larger umbrella union called the International Union of Journeymen and Allied Trades, or IUJAT.

In 2021, CEED reported no members.

But in federal forms accounting for 2022 activity filed this month, the union reported 36 members and the collection of $6,309 in union dues.

At the same time, however, the union reported making no payments to employees or officers.

The union’s president and treasurer, Jonathan Ames and Troy Anderson, respectively, are also listed as officers with the United Service Workers Union. Critics have accused that union of “offering employers ‘sweetheart deals’ and substandard contracts.”

According to the CEED website, its address is the same Trenton, New Jersey, office shared by a political consultancy.

An MJBizDaily message left at that number for comment was not returned.

According to the UFCW’s Sabo, who organizes in Connecticut, CEED has signed several LPAs in that state despite “representing no workers.”

The UFCW has contacted state regulators in Connecticut about the question of legitimate unions in marijuana, but in the meantime, businesses are receiving licenses with questionable LPAs, she said.

“This is unchartered waters,” Sabo said. (Full Story)

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