Two Portland cannabis businesses Tuesday urged a judge to halt enforcement of Measure 119, which requires them to set up labor agreements for their workers as a condition of licensing or their license renewal.
Measure 119, approved by voters in November, went into effect Dec. 5.
The measure requires cannabis retailers and processors to remain neutral regarding a labor organization’s communications with their employees yet would punish the business owners if an agreement isn’t executed.
Even if the businesses have no employees or if their workers don’t want to be in a union, the requirement stands.
Ascend, a marijuana retailer in Northeast Portland, and Bubble’s Hash, a processor that makes marijuana into edibles and concentrates for sale in Southwest Portland, filed suit.
Their lawyers argued that the measure violates the Constitution and federal labor law by muzzling business owners’ speech.
The measure, they contend, is preempted by the National Labor Relations Act, which gives employers the right to express views that are for or against unionization, so long as they don’t threaten reprisal or force or promise any benefit.
“In short, the State of Oregon lacks authority to leverage its licensing power to dictate the substance of employer communications or artificially reshape collective-bargaining dynamics,” attorney Stephen M. Scott wrote on behalf of the businesses.
The businesses also noted only two labor organizations in the state are designated to enter into the measure’s so-called “labor peace agreements” — UCFW 555 and the Teamsters — although Oregon has more than 200 local unions.
The National Labor Relations Act now regulates interactions between employees and employers, but Measure 119 gives two unions “outsized economic power,” and “puts a thumb on the scales and upsets that balance,” said attorney Alexander Wheatley, also representing the businesses.
The state told Ascend, also known as Re Rehab Consulting, on Feb. 4 that its retail license could not be processed for renewal until it submitted a labor agreement. Yet Ascend said it wasn’t able to find a “bona fide labor organization,” and that other unions could not assist with a labor agreement because the business was in UFCW “555 territory,” according to court records.
Ascend does well over $500,000 in annual sales and losing its license would cause eight employees to lose their jobs, health benefits, college reimbursement and company car to attend college, its lawyers said.
The dearth of acceptable unions for the agreements puts Ascend “under a constant threat of licensure revocation and fines,” Scott wrote to the court.
Bret Born, an owner of Ascend, said he reviewed labor peace agreements drafted by the unions, and said they required “unfettered access to the premises and disabling of a 24-hour camera surveillance system during meetings,” which he considered “neither fair or legal under state or federal law,” according to his sworn declaration to the court.
Bubble’s Hash has two employees and paid about $435,000 in start-up costs. The business is concerned because its license expires on May 22. The business called UFCW 555, but the union didn’t respond, according to court briefs.
Lawyers for the statecountered that the measure doesn’t affect employee rights to choose their labor representation or force staff to unionize. Further, they contend the measure regulates commercial speech, not free speech.
While Measure 119 requires employers to enter into a labor peace agreement, it does not “restrict or determine the rights of employees in any way, let alone require employees to unionize, or engage in collective bargaining with a particular labor organization or at all,” Assistant Attorney General YoungWoo Joh wrote for the state.
In a friend of the court brief, the Oregon AFL-CIO said it supports Measure 119’s policy that enables the “dissemination of information” about labor rights to cannabis industry workers, whose working conditions are “extraordinarily dangerous.”
U.S. District Judge Michael H. Simon said he understands that workers in the cash-driven cannabis industry are in greater danger than typical workers, and he recognizes the “historical and valuable role” that unions play.
But he said he is struggling with the ambiguity of the measure’s text regarding what it would allow an employer to say or do.
The AFL-CIO maintained that the measure requires a cannabis business to “remain neutral” regarding a union’s communications with its staff about their labor rights but doesn’t require the employer to “remain neutral” about its opinions on unionizing.
“I don’t understand what that means,” Simon said. “I don’t understand what an employer can do with that.”
Further, Simon pointed out that the Oregon legislative counsel’s office in 2023, when state lawmakers previously considered a similar bill, found that the proposed state regulations would be preempted by the National Labor Relations Act.
That’s because the state was seeking “to regulate conduct or activity that is actually or arguably protected or prohibited by the NLRA” and barring the rights of employees to select a representative of their own choosing, Jessica A. Santiago, senior deputy legislative counsel, wrote to lawmakers in 2023.
A law regulating speech can be deemed unconstitutionally vague if it’s so unclear that ordinary people cannot understand what conduct it prohibits.
Joh, the state’s lawyer, argued that the businesses haven’t provided a sufficient argument to overturn the will of the voters.
Simon cut in that it doesn’t matter if the law was approved by voters or the Legislature.
“If we have a state law that’s preempted by federal law … our Constitution says it’s invalid,” he said.
Simon said he would issue a ruling before May 22, when the license for Bubble’s Hash, also known as Casala, expires.
— Maxine Bernstein covers federal court and criminal justice. Reach her at 503-221-8212, mbernstein@oregonian.com, follow her on X @maxoregonian, on Bluesky @maxbernstein.bsky.social or on LinkedIn.
U.S. District Judge Michael H. Simon said he was struggling with the “ambiguity” of Measure 119. Read More
