High Times in NY State: Union Fires Up Plan to Organize Pot Shops

RWDSU is organizing New York’s cannabis industry workers. Above: cannabis gummies sold in Massachusetts dispensaries containing 5 milligrams of THC. Photo by Steve Wishnia.

By Steve Wishnia

With New York State beginning to license its first legal adult-use marijuana farms and stores, the Retail, Wholesale and Department Store Union [RWDSU] is preparing to organize workers in the industry — even though most of the businesses that will employ them haven’t opened yet.

RWDSU Local 338 already represents workers at nine out of the ten medical-cannabis chains in the state, most recently winning recognition for workers at the Etain company’s cultivation facility in the Adirondack village of Chestertown, says Nikki Kateman, Local 338’s political and communications director.

The adult-use business will be much larger. As of Sept. 20, the state’s Office of Cannabis Management had issued 261 conditional licenses for cultivators and 25 for processors. It is also processing the more than 900 applications for “conditional adult-use retail dispensary” licenses that it received before the Sept. 26 deadline, and will issue up to 150. Those licenses are reserved for people who were convicted of a marijuana offense during prohibition (or had close family members who were) and have experience running a profitable business. Up to another 25 licenses will go to nonprofit organizations that serve or employ formerly incarcerated people.

Organizing will be easier because New York’s cannabis regulations have the strictest protections of any state that has legalized adult use. All businesses in the industry must have a labor-peace agreement with a union in order to get a state license.

“If you don’t take care of this now, you’ll regret it,” RWDSU President Stuart Applebaum wrote in the Amsterdam News in September. “Prospective operators who fail to have their paperwork in order will miss out on the first set of licenses.”

The RWDSU has developed a standard labor-peace agreement in which employers pledge to remain neutral toward a unionization campaign, and to recognize the union once a majority of employees have signed union-authorization cards. In exchange, the union and workers pledge not to go on strike, picket, or boycott the company. (Those agreements generally end after a first contract is ratified, says Kristin Heidelbach, a cannabis lobbyist for the United Food and Commercial Workers’ Western States Council.)

Local 338 is now focusing on educating license applicants about labor-peace agreements — “what they are, and what they’re not. There are a lot of misconceptions,” says Kateman. The goal is also “to remove some of the traditional antagonism.” Union shops are more likely to retain workers, she notes.

The union wants workers to understand they have rights and protections, but it has represented workers at small businesses for decades, so it understands their owners’ concerns, she adds.

New York’s requiring all licensed cannabis businesses to have labor-peace agreements is important, she says because most states don’t — and those that do, have less strict regulations. In California, where a state ballot initiative legalized adult use in 2016, a 2019 labor-peace law exempts cannabis businesses with less than 20 employees. In June, Governor Gavin Newsom signed a law that will lower that to 10 employees, effective in July 2024.

“There are companies that made sure they stayed below the 20-worker threshold” to avoid having to deal with a union, says Heidelbach.

The UFCW, which RWDSU is affiliated with, is the main union representing cannabis-industry workers, followed by the Teamsters.

California’s 2022-2023 budget will also provide $40 million in tax credits for what UFCW Local 5 calls “high-road cannabis employers.” Companies that pay workers at least 50% more than minimum wage and meet safety and security standards will be eligible for up to $250,000, Heidelbach says.

Connecticut, which began taking license applications for adult-use businesses in February, also requires labor-peace agreements. In New Jersey, employers have to “make a good-faith effort” to reach a union contract within 200 days of opening, except for “microbusinesses” with no more than 10 employees.

Virginia law says cannabis employers that fail to stay neutral will have their licenses revoked. Illinois and Pennsylvania don’t require labor-peace agreements, but favor license applicants that have them.

Overall, Heidelbach says, California’s labor-peace requirement has been “really successful.”

California has been the largest producer of marijuana in the U.S. since domestic cultivation developed in the 1970s, with growers depending on “budtrimmers” working long hours during harvest season. With those illicit roots, she explains, “this industry has had a hard time understanding what you can and can’t do to workers.” But if employers can’t interfere with union activity, it means that “regardless, they have to deal with us.”

Having a labor-peace agreement, though, doesn’t guarantee automatic success, Heidelbach cautions. “It’s on the labor union to go in and organize,” she says. “You still have to convince the workers.”

Gray-Market Competition

Competing with the continued illicit market, however, remains a major problem in both New York and California. In New York, unlicensed “smoke shops” have proliferated all over the state, especially in New York City. The Marijuana Regulation and Taxation Act, legalizing possession and use, went into effect on March 31, 2021, but more than 18 months later, the state still has no licensed retailers, creating a giant market vacuum. The Office of Cannabis Management says it expects the first dispensaries to open by the end of the year — but for that to happen, they would have to receive their licenses and construct shop interiors within ten weeks.

The first 150 dispensaries will include up to 22 in Manhattan, 19 in Brooklyn, 16 in Queens, 10 in the Bronx, 3 in Staten Island, and 20 on Long Island — although those will all be in Suffolk County, because Nassau County’s local governments have voted not to allow dispensaries.

In contrast, some Manhattan neighborhoods already have more than 22 smoke shops.

“I’m very concerned,” says Kateman. The unlicensed shops have established a foothold, she explains, which will put the licensed dispensaries at a disadvantage when they open. The unlicensed retailers can sell marijuana and related products for less because they’re not paying taxes or complying with regulations. They’ve also hurt sales at the medical dispensaries where Local 338 represents workers.

There are consumer-safety issues as the products are not lab-tested, Kateman adds — and labor issues. “Are workers getting paid for overtime?” she asks. “Are they getting paid in cash, off the books — or in product? And how safe are they working in a semi-illegal, mostly cash business?”

The union isn’t calling for “recriminalization,” she says, but “it has to be addressed.”

Heidelbach says she understands why licensed growers would work both sides, selling to both the legal and illegal markets. Wholesale prices dropped on the West Coast after legalization. A licensed California dispensary will pay about $800 for a pound of marijuana buds. A grower can sell that same pound to an out-of-state customer for $2,800.

But the “booming” unlicensed sector is undercutting the legal one. “Enforcement is a dirty word in the cannabis community,” she says, but “you have to take out the bad actors, or otherwise the legal industry can’t compete with them.”

Local governments that don’t permit dispensaries abet the black market, she adds, because they deny residents a legal local source.

In New York, Kateman says, the RWDSU wants state regulations to be developed with a “worker lens.” Rules might have good intentions, she says, but they can have unintended effects, such as increasing barriers to get into the industry — and the workers actually doing the job know best what helps them and what doesn’t.

Cornell University’s School of Industrial Relations is developing a 15-hour program to introduce workers to the industry: what skills they need, what jobs are there, and getting them “prepped to speak the language of cannabis,” Kateman says.

The union also advocates for the industry with state and local governments.

“We’re trying to make sure this program is successful,” she says.