News Story

Look For The Union Label On Legal Pot Shops?

State marijuana regulators propose unauthorized union privilege as condition of licensure

State government regulators are proposing new rules that would require those applying for a business license in Michigan’s rapidly expanding marijuana marketplace to first certify that they have negotiated a so-called labor peace agreement with a union.

The proposal, introduced in a draft rule from the Department of Licensing and Regulatory Affairs that was made public last week, is among the most union-friendly in the country.

But it is meeting with deep skepticism from some lawmakers and marijuana industry advocates. They claim there is no basis for it in the laws approved by voters legalizing medical and adult use marijuana; it is, they say, merely a backdoor effort to boost labor unions.

If adopted, the rule would require virtually anyone involved in the marijuana business to “attest ... that the applicant has entered into a labor peace agreement and will abide by the terms of the agreement.” It would apply to growers, processors, transporters, retailers and even event organizers.

A labor peace agreement, according to the draft language, “means an agreement ... that, at a minimum, protects the state’s interests by prohibiting labor organizations and members from from engaging in picketing, work stoppages, boycotts, and any other economic interference with the applicant’s business.”

Presumably, the justification for the rule is based on the notion that state revenues from marijuana sales could be disrupted by boycotts, strikes, and so forth. A spokesman for the licensing agency said on Wednesday that he would seek clarification of its rationale, but so far, has not provided further information.

Lance Boldrey heads the cannabis law practice for the Lansing-based Dykema Law Firm. He said the rule would essentially give labor unions leverage to force marijuana business owners to accede to organizing efforts in return for a labor peace agreement.

That’s because if an employer resisted, he or she would simply not be eligible for licensure, Boldrey said.

Labor peace agreements have been required in some jurisdictions nationally (most of them on the east and west coasts) for more than a decade, usually for hotels and casinos.

But in recent years, legislatures in New York and California have incorporated them in marijuana licensing requirements as well. California’s statute applies the requirement to marijuana businesses with more than 20 employees, a threshold not included in the proposed Michigan rule.

In Michigan, the application is “completely new for marijuana,” Boldrey said, and it is potentially outside the authority of a state agency to require. “There has to be a statutory basis for all rules,” he said, “and I don’t see anything in either the medical marijuana or (adult use) initiative ... that would authorize this type of agreement.”

The words “union,” “labor organization” or similar terms do not appear in the voter-approved law that decriminalized marijuana and prescribed a state licensure regime for sellers. The law does include a provision to “encourage participation” in the business by “people from communities that have been disproportionately impacted by marihuana prohibition and enforcement.”

Under the state law governing administrative rulemaking, the proposed rule is subject to public review and comment.

Marijuana businesses in Michigan are currently licensed under interim rules which will expire in July 2020. The Republican co-chairs of the Joint Committee on Administrative Rules both expressed skepticism about the need for the labor peace provision and questioned the motives of administration officials.

“What is the state’s compelling interest here?” asked state Sen. Peter Lucido, R-Shelby Township. “What is the problem they are trying to solve? It looks to me like the unions are just trying to restore their power.”

State Rep. Matt Maddock, R-Milford, said the proposed regulations, including labor peace agreements, are a “kind of rule-making abuse” designed to protect special interests. “The voters legalized pot, and (Gov. Gretchen Whitmer) is now busy making it illegal through complex administrative rules,” he said. “Labor peace agreements are just one example of the threat of the administrative state ... bureaucrats creating legislation by rule.”

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.