Labor Union Victories Mean More Pressure on Margins and Profits in the Cannabis Industry

June 6, 2023 ·

A new front in the conflict between cannabis businesses and labor unions is forming as the cannabis industry keeps growing and gaining legal recognition in more states. A surge of labor-management disputes within the developing business is being heralded by recent triumphs for cannabis unions in achieving collective bargaining rights and better working conditions. These developments give light on how the cannabis industry is changing and how a complicated relationship between employers, workers, and organized labor is emerging as a result of the interaction of social, economic, and political variables.

Sean O’Brien, the general president of the International Brotherhood of Teamsters, has a clear view of the American Capitol building from his office in Washington, DC. In addition to being nearby, O’Brien has a direct line to the centers of power and isn’t afraid to challenge them. This was made clear during a heated Senate committee hearing in March when O’Brien harshly lambasted both corporate leaders and federal lawmakers for allowing the “repeated mistreatment of American workers.”

Further evidence that O’Brien’s leadership has increased the Teamsters’ support for the cannabis sector is provided by recent events in Chicago. Similar to how O’Brien has dealt with corporate behemoths like Amazon and Starbucks, they are as combative with multistate businesses.

According to experts consulted for this article, the Teamsters and the United Food and Commercial Workers (UFCW), the two largest unions in the cannabis industry, have won important triumphs over the past month. It is thought that the nearly two-week long walkout at three dispensaries run by Green Thumb Industries by retail workers represented by the Teamsters was the longest in the industry’s record-keeping. Workers at PharmaCann facilities in the Chicago region signed a union contract that ensures salary increases soon after the strike, which contributed to the restart of contract negotiations. Another work stoppage in Missouri was sparked by these union achievements.

As the cannabis sector enters a phase of anticipated consolidation, labor experts and employer-side lawyers believe that labor will take increasingly active moves. They think the environment is ideal for unionizing workers in the cannabis industry. Challenges facing the marijuana sector include declining profit margins, stalling federal changes, and increasing investor pressure. Workers are becoming less willing to accept what they believe to be insufficient remuneration from publicly traded cannabis companies as a result of the broader comeback of organized labor, which is exacerbated by rising expenses and depressed incomes due to inflation.

Following the Chicago way

The American labor movement is experiencing a resurgence during the tenure of U.S. President Joe Biden, who pledged to be the most pro-labor president in recent memory.

Buoyed by this support from the highest levels of government, labor is eagerly utilizing all available means at its disposal. These include labor strikes and an increasing number of complaints and grievances filed against cannabis companies with the National Labor Relations Board (NLRB), which has adopted a more worker-friendly stance under the Biden administration.

NLRB records indicate that numerous active cases and unfair labor practice complaints have been lodged against cannabis companies. For instance, Curaleaf Holdings is involved in 16 ongoing cases, while Trulieve Cannabis has seven open cases. These legal proceedings often involve allegations of unlawful union-busting.

Trulieve has not responded to requests for comment, whereas Curaleaf spokesperson Jordon Rahmil, in an emailed statement, denied any wrongdoing and expressed the company’s intention to contest these allegations through the formal NLRB process. Rahmil emphasized that Curaleaf respects the rights of team members who have chosen union representation and adopts a fair and business-oriented approach when working with union representatives.

While Curaleaf believes that establishing a direct relationship with its team members is the ideal approach, the company acknowledges and respects the voices of its employees. Curaleaf has engaged in good-faith negotiations with union leaders and intends to continue doing so.

Successful Strikes and Growing Union Competition in the Cannabis Industry

Labor unions took decisive action this spring, with a notable victory achieved when Teamster-organized employees at three Chicago-area RISE dispensaries, owned by Green Thumb Industries, initiated a nearly two-week strike starting April 19. The strike, triggered by an impasse in contract negotiations regarding retirement benefits, received support from local elected officials. Although Green Thumb Industries did not provide a comment, the strike’s impact on bargaining led Robert Bruno, a labor and employment professor, to deem it a successful endeavor.

Another significant development highlighting the changing labor landscape was PharmaCann’s agreement to sign a contract guaranteeing 20% raises over three years for Teamsters-organized workers at its Verilife stores in Chicago. This move by PharmaCann is seen as a response to the potential risk of a work stoppage, as stated by Bruno.

In addition to the Chicago events, employees at a Shangri-La dispensary in Columbia, Missouri, staged a two-day picket to organize under the United Food and Commercial Workers (UFCW) Local 665. The competition between the Teamsters and the UFCW to attract workers in the industry is apparent, according to Bruno. However, the president of UFCW Local 665, Dave Cook, did not respond to requests for comment. These recent actions by labor unions indicate an increasing willingness to take a more assertive stance and engage in collective bargaining within the cannabis industry.

Unions’ Changing Approach in Washington D.C

Peter Finn, the Teamsters union’s Western Region vice president, highlighted the union’s new approach to the cannabis industry under President O’Brien. They are actively supporting legalization and organizing the industry, aiming for growth that benefits both the industry and workers. Unions offer more than just increased labor costs; they bring additional revenue and political influence to the table.

Washington insiders acknowledge the significant impact of organized labor, particularly during a Democratic administration. There is evidence of shifting attitudes, as seen in Senator Sherrod Brown’s hearing on cannabis banking, where the focus was on the interests of small businesses and workers. Labor is recognized as a respected voice in Congress, providing support that the cannabis industry sometimes lacks.

State regulators have shown a willingness to penalize cannabis companies that violate union rules. However, the broader labor movement can also pose challenges, as seen in opposition from teachers and nurses unions in California to cutting heavy cannabis taxes. States and cities facing budget deficits are hesitant to decrease revenue by easing the tax burden on cannabis companies. Nevertheless, in heavily populated blue states with established cannabis industries, labor enjoys advantages not commonly seen in other sectors.

Bottom Line

Labor unions are becoming a more formidable force as the cannabis business grows and receives legal recognition, winning important victories in collective bargaining and improved working conditions. Successive strikes and union contracts in Chicago and Missouri are proof that the Teamsters and the United Food and Commercial Workers (UFCW) have made significant progress in organizing workers. The Biden administration has backed labor unions in their efforts to defend the rights of those employed in the cannabis sector, and the National Labor Relations Board has adopted a more pro-worker attitude. The shifting labor market and intensifying union rivalry illustrate the altering relationships between companies, employees, and organized labor in this swiftly changing sector. (Full Story)

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