One toke over the line

This is a column about pot.

Now that we’ve got your attention . . .

We are going to discuss today the cannabis ordinance passed by Council in the wee hours of Wednesday morning.  That’s the bait.

Here’s the switch:  we intend to offer the story of the passage of the ordinance as a case study about how our union-friendly Council members pursue their mission of advancing the interests of organized labor.  Thanks to them, unions will have a greater opportunity to organize cannabis workers in Alameda than in any city in the county.   Indeed, it’s possible that every cannabis business that wants to operate here will be required to open its doors to union organizers.

Our readers can judge for themselves whether these Council members are doing the job the people who voted for them – and not just the unions who funded their campaigns – elected them to do.

Start with the background.  In 2015, the State Legislature passed, and the Governor signed, three bills – one sponsored by Alameda’s own Assemblyman, Rob Bonta – creating a process for licensing businesses to sell marijuana for medical uses.  To qualify for a state license, an applicant was required, among other things, to “enter into” and “abide by” a so-called “labor-peace agreement.”

As the law defined the term, a “labor-peace” agreement included a promise by the business owner applying for a license “not to disrupt efforts” by a union “to communicate with, and attempt to organize and represent” the applicant’s employees.  In addition, the business owner was obligated to provide the union “access at reasonable times to areas in which the applicant’s employees work, for the purpose of meeting with employees to discuss their right to representation, employment rights under state law, and terms and conditions of employment.”  In exchange, the union signatory promised not to engage in “picketing, work stoppages, boycotts, and any other economic interference with the applicant’s business operations.”

(These provisions constituted the “minimum” contents of a “labor-peace” agreement.  Left unsaid was whether a union could insist upon other provisions typically found in these agreements, such as that the employees’ decision about union representation can be made via a “card-check” procedure in lieu of a formal election conducted by the National Labor Relations Board.)

The Sacramento Bee reported that the requirement for a “labor-peace” agreement was inserted into the bill at the behest of the United Food and Commercial Workers union, “which was making a push to organize cannabis workers.”  In fact, according to its website, the UFCW had launched a “Cannabis Workers Rising” campaign in 2010 and had gotten “tens of thousands of cannabis workers across multiple states” to join the union.

The state law did not require every applicant for a medical-marijuana license to enter into a “labor-peace” agreement.  Rather, only those businesses with 20 or more employees were subject to the requirement.

Then, in November 2016, California voters passed Proposition 64, which authorized the sale of marijuana for recreational use.  (The preferred euphemism for “recreational” is “adult use.”)  This June, the Legislature passed, and the Governor signed, a bill implementing the proposition and setting up a dual-licensing system for all cannabis-related businesses, which must obtain both a license from the state and a permit from a city that has decided to allow such businesses within its borders.

Like an applicant for a state medical-marijuana license, a cannabis business seeking a state recreational-marijuana license is required to enter into a “labor-peace” agreement.  But the new law retains the limitation that only enterprises with 20 or more employees must comply with this requirement.  A smaller business has no duty to ease the way for union organizers.

The 20-employee threshold established by state law was good enough for the cities close to Alameda that have decided so far to authorize commercial cannabis sales.  According to Community Development Director Debbie Potter, none of the five cities in Alameda County that have adopted local laws regulating such sales (Berkeley, Emeryville, Hayward, San Leandro, and Union City) have required “labor-peace” agreements from cannabis businesses with fewer than 20 employees.  (Ms. Potter told us that Hayward informs permit applicants with fewer than 20 employees that they “may score higher” in the RFP process if they submit a “labor-peace” agreement.)  Likewise, the draft ordinance presented to the Oakland City Council imposes no such requirement.

But the state’s 20-employee threshold was too high for organized labor’s allies on the Alameda City Council.

In July, Council voted, 4-to-1, to overturn the City’s existing ban on the sale of medical marijuana – which had been effect since May 2010 – and directed staff to draft an ordinance for issuing both medical- and recreational-marijuana permits.  Staff very well may have considered it superfluous to include a provision requiring a “labor-peace” agreement, since state law already imposed that requirement.  In any event, the draft did not obligate an applicant for a local permit to enter into such an agreement.  In fact, the staff report didn’t even mention “labor peace.”

The omission did not go unnoticed when the matter came before Council on September 5.

Council members Oddie, Vella, and Ashcraft had good reason to pay attention to an issue so important to organized labor in general and to the UFCW in particular:

  • When Mr. Oddie ran for Council as a first-time candidate in 2014, unions gave him $23,544.90 for his campaign – about 40 per cent of his total campaign funds.  UFCW Local 5, which is headquartered in Hayward but whose geographic jurisdiction includes Alameda, kicked in $500.
  • When Ms. Vella ran for Council as a first-time candidate in 2016, unions gave her $32,650 for her campaign – slightly less than two-thirds of her total campaign funds. Again, UFCW Local 5’s contribution was $500.
  • In addition, Ms. Vella and incumbent Councilwoman Marilyn Ezzy Ashcraft were the two Council candidates whom the political action committee misleadingly calling itself “Alamedans United” selected for its pro-labor, pro-development slate in 2016.  Unions furnished $44,353.32 – about 63 per cent – of the PAC’s funds.  UFCW Local 5 was good for $1,000.

It thus came as no surprise that when Mr. Oddie’s turn to comment on the draft ordinance came up on September 5, he declared that a “labor-peace” agreement – “whether it’s card check or some other type of labor peace” – was a “critical” element in any local law.  Ms. Vella concurred – and then took it up (or down) a notch.  The state required “labor-peace” agreements only for cannabis businesses with 20 or more employees, Ms. Vella acknowledged.  But Alameda should “at least cut that number into half.”

Why lower the threshold?  The pro-labor reason is obvious:  reducing the threshold will subject more businesses – especially smaller businesses – to the requirement, which will expand the target base for union organizers.  The public-policy reason is less clear.  We’ll quote Ms. Vella’s stated rationale in full: “I think that gives us insight into making sure that the facilities are safe and that we’re really working towards safety and safe access, also in the working environment.”

Whatever.  Having heard the comments from Mr. Oddie and Ms. Vella – and despite Mayor Spencer’s endorsement of the state’s 20-employee  threshold – staff revised the next draft of the ordinance to include a requirement that a permit applicant with 10 or more employees have entered into, or agree to enter into, a “labor-peace” agreement.

On October 21, Council held a special meeting to review the revised draft.  None of the Council members discussed the issue of “labor peace” until the very end of the five-and-half-hour meeting, when Mayor Spencer brought it up.

And then things got very strange.

Ms. Potter noted that a majority of Council appeared to accept the 10-person threshold contained in the revised draft ordinance, but when Ms. Spencer sought to confirm this, Mr. Matarrese piped up, “All – like Berkeley has.”  Nonplused, Ms. Spencer pressed for clarification.  He meant, Mr. Matarrese responded, that all permit applicants should be required to enter into a “labor-peace” agreement.  Since it would seem odd to talk about “organizing” a one-person workforce, this meant that any business with two or more employees would fall under the mandate.

We couldn’t tell from the video whether Ms. Vella’s jaw dropped when she heard Mr. Matarrese’s statement, but she immediately concurred.  So did Mr. Oddie.  And then Ms. Ashcraft jumped on board as well:  “Sure,” she said when asked about a two-employee threshold.  “I think it might limit some of the businesses who come here, but if they can’t afford to pay their workers well . . .”  She then took a breath, and Mr. Oddie finished the sentence for her:  “. . . maybe we don’t want them.”  “Maybe we don’t want them here – right,” Ms. Ashcraft repeated.

Now we don’t know why Mr. Matarrese took the position he did.  “The smaller the employee pool, the more chance there is of some sort of advantage being taken” is what he said.  But he also said, repeatedly, that his proposal for requiring “all” cannabis businesses to enter into a “labor-peace” agreement mirrored the policy in the City of Berkeley.  In fact, according to Ms. Potter, Berkeley is one of the cities that defers to the state’s 20-employee threshold.

Could Mr. Matarrese, who has sought union support in the past, have been trying to show potential labor backers that he was willing to go even further than Ms. Vella and Mr. Oddie to expand the opportunities for organizing cannabis workers?  After all, under his proposal, virtually every cannabis business that wanted a permit from the City would be required to allow union organizers on the premises.  Or was he staking out an extreme position so that an eventual decision to reduce the threshold from 20 to 10 would look like a compromise?  Your guess is as good as ours.

In any event, the business community finally woke up when a revised draft ordinance lowering the threshold to two was put on the Council agenda for its November 7 meeting.

Previously, the Alameda Chamber of Commerce had sent a letter to Council opposing the requirement for a “labor-peace” agreement for a business with 10 or more employees.  “While the Chamber respects the rights of employees to voluntarily establish union representation,” the letter stated, “we are not in favor of government mandates that reduce the ability of small businesses to compete with their larger counterparts.”  A fortiori, the Chamber opposed the extension to businesses with only two employees.

So did the Greater Alameda Business Association and the West Alameda Business Association.  Requiring “labor-peace” agreements from businesses with as few as two employees “would put Alameda at a disadvantage when cannabis operators are looking where to locate their business,” WABA argued in an email to Council.  All three organizations urged sticking with the state’s 20-employee threshold.

Representatives from all three organizations spoke on Tuesday night, and three self-identified Alameda small business owners came to the meeting to make the same plea.  “Quite frankly, I can’t afford a union,” said one who owned a business employing 10 workers.  “I pay a living wage.  I have happy employees.  And I’d like to keep it that way.”

The reactions from the three members of the Triumvirate ran true to form.

As is his wont, Mr. Oddie chose to denigrate those who disagreed with him.  “I was a little disappointed,” he said, “that some of the more virulent, right-wing talking points on how bad labor unions are were parroted by some of our business leaders.”  (Not being up on the talking points, we’re not sure whether Mr. Oddie was referring to the comments about union dues lowering take-home pay – which they do – or something else.)  Moreover, the business community had “mischaracterized” the duty imposed on an employer by a “labor-peace” agreement.  “All it says,” Mr. Oddie asserted, “is that, if the employees want to organize, they should be allowed to conduct that vote, and do that without being interfered with.”  (Which is, of course, not how the statute defines the term at all.)

As usual, Ms. Vella’s reasoning was hard to follow.  Again, we are obliged to quote her at length:

This is not like every other industry.  This is a cash-only, semi-legal industry, so, even though January 1st we’re decriminalizing it fully here in California, we have that nagging problem that the federal government hasn’t quite caught up to what many of the states are doing, including California.  So, to that end, there are things that happen.

You’re talking about protecting Alamedans.  We also have a local hire provision.  I assume that there’s going to be Alamedans that are going to be employed.  There’s also the whistleblower act protection.  A lot of the laws that exist still require people to come forward and enforce them.  If you’re an at-will employee, you get fired.  If you have a concern about the practices relative to sales or the actual product itself, and what’s being sold to customers and consumers who are Alamedans and you raise that concern, you may feel as though you want to get a union so you have a representative to represent you when you do come forward with that information.

So I really see this as a public health and public safety issue because of the nature of this industry.  It’s great to hear that the employers all think they’re great employers.  Continue to be great employers and this won’t be a problem.  And continue to be upstanding businesses and you don’t have to fear the big bad wolf that is labor unions, as you’re putting it.

Having gone along with her “progressive” colleagues on October 21, Ms. Ashcraft now let her cautionary instincts rise to the fore.  Taking care to dissociate herself from the Chamber of Commerce, she professed sympathy for small business owners.  But the overriding factor to her was that the City shouldn’t go out on a limb.  (Maybe our speculation about Mr. Matarrese’s motives is right after all.)  “I do think we were being a little overzealous” in reducing the threshold from 20 to 10 to two, she said.  “I do believe there is a need for employees to be able to consider whether they want to unionize or not, but I cannot answer for myself why Alameda wants to be the outlier when Berkeley and San Leandro and Union City are following the state and doing 20. . . .   I have no need to be the one that is two.”

After all of those on the dais had had their say, Council went through every suggested change to the revised draft ordinance to see if a majority supported it.  When the “labor-peace” provision came up, City Attorney Janet Kern asked for a show of hands on who wanted to return the threshold for requiring a cannabis business to enter into a “labor-peace” agreement to 10 employees from the two in the revised draft.  Mr. Oddie, Ms. Vella, and Ms. Ashcraft all raised their hands.

One might have thought that settled the issue.  But the situation has gotten weird yet again:  The final version of the ordinance posted on the City website for the second reading on November 21 still has a two-employee threshold.  (“For an applicant with two (2) or more employees, the applicant must provide either a statement that the applicant will enter into, or provide a copy of a fully executed labor peace agreement as part of the application.”)

We frankly don’t know whether this is a just a mistake – after all, the vote was taken after 2 a.m. – or whether Ms. Kern has determined that, for some reason, the apparent consensus on a 10-employee threshold did not make it into the ordinance Council ultimately passed.  But if that is the City Attorney’s view, one wonders whether Ms. Spencer realized that, in voting to approve the ordinance as a whole, she was agreeing to a two-employee threshold.

Update: Sarah Henry, the City’s Public Information Officer, informed us Tuesday that the wrong version of the ordinance passed by Council had been posted originally on the City website.  The correct version  – and the one Council will vote whether to approve on second reading on November 21  – is now online.

In any event, the bottom line is that if the final ordinance contains a two-employee threshold, the requirement for a “labor-peace” agreement will apply to virtually every applicant for a cannabis permit in Alameda.  Yet even if the threshold reverts to 10 employees, Ms. Vella will have accomplished the goal she set out to achieve:  a local ordinance that goes beyond the standards set by state law to facilitate efforts by the UFCW and other unions to organize cannabis workers in Alameda.

In either case, chalk up another victory for organized labor.  Undoubtedly,  with this Council, there will be more to come.


State cannabis law: AB 243   Assembly Bill – AMENDED; AB 266   Assembly Bill – AMENDED; SB 643   Senate Bill – AMENDED; SB 94

Alameda cannabis ordinance: 2017-09-05 Ex. 1 to staff report – Draft Cannabis Ordinance; 2017-10-21 Ex.1 to staff report – RedlineStrike-out Revised Draft Ordinance2017-11-07 Ex. 1 to staff report – Redline Cannabis Businesses Ordinance; 2017-11-21 Ordinance (second reading); 2017-11-02 LTE (Alameda Sun) – labor peace in cannabis ordinance; 2017-11-07 Correspondence – Updated 11-07

“Labor-peace” agreements: O’Brien, NEUTRALITY AGREEMENTS; U.S. Chamber of Commerce, Labor Peace Agreements

Campaign disclosure statements are available on the City website:




About Robert Sullwold

Partner, Sullwold & Hughes Specializes in investment litigation
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11 Responses to One toke over the line

  1. dave says:

    That time when Lawrence Welk was one toke over the line:

  2. MP says:

    There are valid reasons for and against requiring labor peace agreements in the cannabis ordinance, and the specifics of any requirement. One can also imagine reasons for and against a similar requirement as a permit condition for any number of business types. Does the author have an opinion, though, on the legality of Alameda requiring labor peace agreements and whether, even assuming there is a question as to legality, there is some or only minimal risk for the city for imposing such a requirement?

    Some very general background:

    • I did not research this issue and therefore can’t offer an opinion. That being said, I did not come across any secondary sources questioning whether a city legally could require a “labor-peace” agreement for a cannabis business.

  3. MP says:

    Nor did I. Here is a recent article by a former NLRB Chair and former California (Ag.)LRB Chair that discusses, generally, NLRB vs. ALRB jurisdiction over the cannabis industry.

  4. Sharon Golden says:

    I was the one who invited the three cannabis organizing unions to the city council meetings, because, as a 12 year cannabis worker, doing everything in the industry from seed to sale, the value of the worker has decreased incredibly. I started at age 18, making $15/hour and had full health benefits including dental and vision. Now that working in cannabis is no longer a civil disobedience (yes, when I started, employees were being arrested alongside ownership,) the value of the cannabis worker has went down while the value of the industry has exploded into a multi billion dollar industry. Further more, out of the 8 places that I worked, only 2 had more than 10 employees.

    Also, the 2+ labor piece came during the Oct. 21st meeting, although everyone commenting last Tuesday was mentioning 10. They haven’t been involved, so it makes sense that they missed that. On the 21st, Malia motioned for a 10+ LPA, Oddie seconded, and FRANK said 2+, because it IS the smaller businesses that tend to take advantage if their employees. This wasn’t a grab from “the labor candidates” in the slightest.

    I know the meetings are long, but if you’re going to write a diatribe yourself, you might as well do the research and watch all of it. Otherwise you lose credibility.

  5. Gretchen Lipow says:

    Bottom line…workers in the cannabis business have to vote to join the union. They are not automatically union members until a majority vote to join the union. Turns out the Berkeley Bowl did a get a majority of the workers to vote union but at the next go around they voted to disaffiliate claiming they made less in the union than not. So whatever you call it, labor peace or whatever the workers have a right to choose to be in a union or not, the majority determines whether it is a union shop.

  6. Steve Gerstle says:

    It can be a very long walk from getting a union to getting the employer to agree to a beneficial union contract. Collective bargaining does not guarantee a good contract — that depends on a lot of factors. Too many misunderstand the gap between union representation and a good contract. Signing a union card is only the beginning to a better life. I pay about $1800 a year in union dues (AFT) and I think that it is worth it. However, all of that may be overturned by an upcoming Supreme Court decision.

    To lump all unions together in one basket is no different than lumping all employers together. I don’t see anything wrong with the proposed labor peace agreement, but I don’t see it having much of an effect. And yes, the same standards should apply to all employers in Alameda, regardless of industry. If the council really cared about workers, they would increase the minimum wage in Alameda for all workers in all industries.

  7. MP says:

    A snippet re the labor peace agreement provision in AB266 from a story in the East Bay Express. Not sure if the final legislation has the effect of addressing — perhaps by subjecting (the statutorily compelled) LPAs to government scrutiny — the types of alleged abuses committed by the person fired by the UFCW, as reported in the article.
    “The bill also has fingerprints on it from the United Food and Commercial Workers Union, which just fired their pot industry organizer, Dan Rush. Rush faces federal charges for accepting cash and gifts from dispensary operator Martin Kaufman of BLUM Oakland, which is also part of TerraTech. The FBI is accusing Rush of selling “bullshit” labor neutrality agreements to dispensary operator Kaufman and Peterson, and promising “doors slamming, slamming, slamming,” for TerraTech’s competitors.”

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