Federal court strikes down Oregon law requiring marijuana licensees to sign labor peace agreements 

A federal judge has ruled that an Oregon law requiring marijuana licensees to sign labor peace agreements with a union is unconstitutional. The judge concluded that the law tries to usurp powers that are constitutionally reserved to a federal agency and that it violates the free speech rights of marijuana business owners. 

A labor peace agreement generally entitles union representatives to enter the employer’s premises and attempt to organize employees into a union. In exchange, the union promises not to cause a work disruption at the employer’s business. Under federal workplace rules, if union leaders can get a majority of workers within a proposed bargaining unit to support their representation, then the union becomes the “exclusive bargaining agent” for all members in the bargaining unit. In states without Right to Work laws, like Oregon, even workers who do not consent to union membership can be required to join the union and have dues withheld from their paychecks once the union wins majority support. Union leaders can also define the “bargaining unit” to include only a subpopulation of workers at a business if they believe it increases their likelihood of success. 

During the 2023 legislative session, the United Food and Commercial Workers Union (UFCW) requested that lawmakers introduce a bill that would have required any applicant for a state cannabis license or a license renewal to attest that they had signed a labor peace agreement as a condition of licensure. The resulting bill, House Bill 3183, was heard by the Oregon House Committee on Rules, where it received written testimony from 600 individuals. Of these 600, 593 were statements of support after the union organized a support campaign for its bill—substantially all of these support statements were identical except for the authors’ names. Among the seven organizations submitting testimonies opposing the bill were the Oregon Cannabis Association, Oregon Business and Industry, Americans for Prosperity, and Reason Foundation. 

Reason Foundation argued that the National Labor Relations Act (NLRA) grants exclusive jurisdiction to the National Labor Relations Board (NLRB) to regulate private-sector labor relations. States can establish rules for labor relations within state and local government, but any attempt to impose unionization requirements on private entities would unconstitutionally usurp the powers of the NLRB and violate the Supremacy Clause of the U.S. Constitution. In multiple cases, federal courts had upheld this general principle and struck down requirements for a business to enter a labor peace agreement as a condition of licensure. This included a 1987 ruling by the U.S. Supreme Court that the City of Los Angeles could not force a taxicab company to sign a labor peace agreement as a condition of licensure. 

Lawmakers found these arguments compelling and declined to advance HB 3183 out of committee based on the conclusion it would be preempted by the NLRA. UFCW then responded by sponsoring a version of the proposal as a ballot initiative and collected more than 160,000 signatures to qualify the measure for the 2024 ballot as Measure 119. The initiative was approved by 57% of Oregon voters. 

In early 2025, two Oregon cannabis licensees—Bubble’s Hash and Ascend Dispensary—challenged the new law. Ascend Dispensary was denied a renewal of its license by the Oregon Liquor and Cannabis Commission in February 2025 because it had not entered into a labor peace agreement. Bubble’s Hash attempted to contact a union but never received a call back and feared its license would not be renewed. The plaintiffs brought suit, claiming that Measure 119 violated the federal Supremacy Clause and that its wording also violated their First Amendment rights because it restrained employers from presenting their employees with counterarguments to the claims of union leaders.  

On May 20, Oregon Federal District Court Judge Michael Simon ruled that “Measure 119 is preempted by the NLRA in violation of the Supremacy Clause and violates Plaintiff’s First Amendment rights.” A significant unknown during this case was whether a federal court could grant injunctive relief to a federally illegal cannabis business. Simon addressed that issue directly, reasoning, “The NLRA does not limit its jurisdiction to ’lawful commerce’ or ’legal substance’ as some other federal laws do.” Simon cited NLRB’s existing memoranda about the operations of the cannabis industry, as well as the application of other federal laws, such as the Fair Labor Standards Act, as evidence that some federal laws still apply. 

This direct ruling against labor peace agreements as a requirement for licensure of marijuana companies should give pause to other states like Michigan or New Mexico that have considered similar measures, and encourage states like California, New York, and Minnesota that have enacted similar requirements to rescind those requirements. 

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