As Minnesota’s adult-use cannabis industry continues to grow, businesses eager to enter the market must navigate a complex and evolving regulatory framework. Among the more pressing challenges is compliance with Minnesota’s Labor Peace Agreement (LPA) requirement—a statutory mandate that significantly empowers labor unions and increases the likelihood of unionization within the cannabis sector.

Under Minnesota Statute § 342.14, subd. 1(d), licensed applicants and holders are required to enter into a valid LPA with a bona fide labor organization. Notably, this is not a one-time requirement, but maintaining a valid LPA is a continuing condition for licensure and license renewal.

What is a Labor Peace Agreement (LPA)?

A Labor Peace Agreement is a contract between an employer and a labor union in which the employer agrees to remain neutral during union organizing efforts and allow the union reasonable access to employees and the workplace. In return, the union agrees to refrain from disruptive tactics such as picketing, work stoppages, and boycotts.

The statute defines an LPA as:

“An agreement between a cannabis business and a bona fide labor organization that protects the state’s interests by, at minimum, prohibiting the labor organization from engaging in picketing, work stoppages, or boycotts against the cannabis business.”

While the statute clearly prohibits unions from engaging in certain disruptive actions, it leaves much else undefined. This ambiguity creates significant leverage for unions during negotiations. In practice, many unions will demand:

• Full access to the workplace and employees for organizing purposes
• Employer neutrality during unionization campaigns
• Waiver of secret ballot elections in favor of card check recognition

If an employer refuses to agree to these terms, the union will almost certainly decline to sign the LPA—effectively blocking the employer from securing a cannabis license in Minnesota.

A Rising Tide of Legal Challenges to LPA Mandates

Minnesota is not alone in mandating LPAs for cannabis licensees. States such as California, Oregon, and New York have incorporated similar requirements into their cannabis regulations as part of broader efforts to encourage union participation in the industry.  However, these mandates are increasingly facing judicial scrutiny.

In the recent case of Casala, LLC v. Kotek, a federal court in Oregon ruled that the state’s LPA requirement was preempted by the National Labor Relations Act (NLRA) and violated the First Amendment by compelling employer neutrality on union matters. Following the decision, Oregon’s regulators ceased enforcing their LPA rule — a significant development that could serve as a blueprint for challenges in other jurisdictions, including Minnesota.

Similar legal challenges to LPA mandates are underway in other states, raising the possibility that Minnesota’s requirement could also be tested in court.

Key Takeaways for Cannabis Employers

Businesses entering Minnesota’s cannabis market must treat LPA compliance as a critical and ongoing obligation. In addition, employers should be aware of the broader labor landscape and the significant implications of union organization within their operations.

To navigate these challenges effectively, cannabis employers should:

• Consult experienced labor counsel to negotiate LPAs that comply with the law without yielding unnecessary ground
• Understand their rights and responsibilities under federal labor law and the NLRA
• Prepare proactively for potential union organizing efforts, which are likely to increase under an LPA framework

At Bianchi & Brandt, we work closely with cannabis operators on all aspects of labor and employment compliance, including union-related issues and LPA negotiation. As legal developments continue to unfold across the country, we are here to help cannabis businesses stay informed, compliant, and prepared.