In May 2025, a federal district court invalidated Oregon’s Measure 119, which required cannabis employers to enter a Labor Peace Agreement (LPA) with a “bona fide labor organization,” remain neutral during union organizing campaigns, and refrain from interfering with organizing efforts in order to obtain or renew a state license. In Casala, LLC v. Kotek, 789 F.Supp.3d 1025 (D. Or. 2025), the court held Measure 119 was unconstitutional and preempted by the National Labor Relations Act (NLRA)—the federal law that governs private-sector union organizing. Under the NLRA, employers are permitted to express “any views, argument, or opinion,” or disseminate such expression, provided that expression “contains no threat of reprisal or force or promise or benefit.” The Court determined that Measure 119 went too far by prohibiting employer’s permissible free speech. As a result, Oregon regulators are no longer requiring or reviewing LPAs as part of cannabis license applications.
Although this ruling does not directly change California law, it is significant. It shows that federal courts are willing to scrutinize state-imposed LPA mandates—particularly where they may conflict with federal labor law. Other states considering similar requirements are watching closely.
The Current Situation in California
California’s LPA requirement remains in place. Under California Business and Professions Code §§ 26001 and 26051.5, cannabis businesses with 10 or more employees (or businesses with 20 or employees that submits an application on or before July 1, 2024) must enter into an LPA with a “bona fide” labor organization to obtain and maintain a license. Under these agreements, employers must allow union representatives access to employees, and avoid interfering with union organizing. In exchange, the union agrees not to strike, picket, boycott, or otherwise disrupt operations.
While the mandate is still on the books, enforcement has been historically limited - only a small percentage of active licensees have LPAs on file, very few suspensions have occurred solely due to lack of an LPA, and in most enforcement cases, other violations were involved. However, that does not mean there is no risk. Anyone can file an anonymous complaint with the California Department of Cannabis Control (DCC). Unions may also bring complaints before the Agricultural Labor Relations Board (ALRB) against employers that employ agricultural workers. For many operators, the real exposure may arise at license renewal or through third-party complaints.
Legal Challenges in California Are Ongoing
California’s mandate is currently being challenged in federal court in Ctrl Alt Destroy, Inc. v. Elliott et al, Case No. 3:24-cv-00753, 2025 WL 790963 (S.D.CA 2025). The case is now pending further review. If the courts ultimately find that California’s requirement conflicts with federal labor law, as the Oregon court did, the mandate could be struck down. Until then, however, it technically remains enforceable.
What Cannabis Employers Should Consider
- The LPA requirement in California is still law.
- Enforcement has been limited, but complaint-driven risk remains.
- Courts are increasingly examining whether these mandates conflict with federal labor law.
- The legal landscape could shift.
For now, cannabis operators should evaluate their license status, workforce size, and renewal timeline carefully before making decisions about entering into an LPA. For guidance on whether entering into a LPA with a union makes sense for your business, please contact Tashyla Billington or Mark S. Spring in CDF’s Traditional Labor Law Practice Group.
