ALBANY — The operators of a retail cannabis store in New York City have filed a federal lawsuit against the state Cannabis Control Board and Office of Cannabis Management challenging the constitutionality of a requirement in the law that legalized marijuana for all licensees to have labor peace agreements.
The lawsuit was filed in U.S. District Court in Manhattan this week by Hybrid NYC, a limited liability company that operates a store on Kent Street in Brooklyn under the name Gotham. The company received a retail cannabis license in September and opened its shop a month later.
The law also stipulates that the labor peace agreements are intended to protect the “proprietary interests” of the state as a stakeholder in the cannabis industry. But Hybrid’s lawsuit, the first of its kind against New York, contends that stipulation is unlawful because New York cannot have a proprietary interest in the marijuana industry without violating the federal Controlled Substances Act.
The law also requires all cannabis industry licensees to provide their employees' contact information to the labor organization that may seek to represent them, and not to engage in any communication with their employees to try and dissuade them from joining a union.
The lawsuit contends New York’s requirement for the labor peace agreements to be in place for cannabis licensees violates the National Labor Relations Act, which it said: “entrusts the federal government with exclusive and preemptive authority over labor relations in general and over the organizing process for all private sector employers in particular.”
The company’s lawsuit contends a fallout of the licensing requirement is that Local 338, a downstate union representing thousands of workers in industries that include the grocery, pharmaceutical, health care, transportation and the cannabis sectors, has become “one of the only — if not the only — labor union that meets this standard, thus further limiting the ability of cannabis license holders to meaningfully negotiate the terms of their (labor peace agreements).”
Several attorneys for retail cannabis license holders said the law requiring their clients to sign the labor peace agreements with a “bona fide labor organization that is actively engaged in representing or attempting to represent the applicant’s employees” has resulted in many of those agreements being made with Local 338. A person familiar with the matter said that there are other labor unions that have signed labor peace agreements with cannabis licensees in New York.
“We are proceeding with legal action to not only protect our business, and the industry, but more importantly, our right to be heard,” said Joanne Wilson, Hybrid’s CEO and founder. “As entrepreneurs, we should not be suppressed from actively participating in decisions being made that will directly impact the very employees and/or communities we aim to serve.”
Wilson’s statement said Gotham is the first “cannabis concept store,” a female-founded business “where culture, community, and commerce come together.”
“We’ve built a company that sets the bar for what modern cannabis can be,” she added. “We’ve set the standard for our industry by offering far-above-market wages, exceptional benefits including health care and 401(k)s, real opportunities for career growth, and the chance to be part of the world’s first cannabis concept store.”
Nikki Kateman, an assistant to John R. Durso, president of Local 338, said that employees of Hybrid’s stores — Gotham — had approached the union and inquired about obtaining union representation.
“We did a very traditional union organizing campaign where we spoke to workers outside of the workplace on their own time, without ever engaging the LPA,” Kateman said. “We did, once we reached the majority of the cards at that location, contact the employer and requested recognition through the LPA on April 1.”
Kateman added that there have been many instances in which employees of cannabis companies have said, “We are not interested in joining (a union). We’re happy with our working conditions. We’re happy here.”
“And we’ve said, 'Great, we respect that,'” Kateman said. “We move on.”
She said the union has sought to improve working conditions in the cannabis industry and to make it a sector where employees and other stakeholders are able to carve out a career.
The lawsuit argues that the labor peace agreements require the licensees to negotiate only with Local 338 because of its footing in New York’s cannabis industry, although licensees are able to negotiate those agreements with any union of their choosing. Hybrid further asserts that their agreement with Local 338 bars them from informing their employees of what the company contends may be “superior benefits” for their employees if they reject unionization, including any alleged financial liabilities incurred through union membership, according to the court filing.
Hybrid’s lawsuit says that its employee benefits include receiving a base pay of $25 per hour; 100% reimbursement of medical and health benefits; a 401(k) plan that doubles the first 8% of each employee’s contribution; four weeks of paid vacation and 10 paid holidays and other incentives.
The situation between Hybrid and Local 338 escalated on April 1 when the union sent the company a letter saying that a majority of the company’s employees had allegedly chosen the union to represent them for collective bargaining purposes. That request is now pending before the National Labor Relations Board, which oversees union elections and the process for certifying union representations.
The company’s position is that the labor peace agreement “predetermines Local 338 as the designated union for Hybrid and deprives Hybrid’s employees of the right to select a union of their choosing.”
Taylor Randi Lee, a spokeswoman for the Office of Cannabis Management, said they “do not comment on pending litigation.”
