The Control, Regulate and Tax Adult Use of Marijuana Act of 2016 (AUMA), an initiative measure approved as Proposition 64 at the November 8, 2016, statewide general election, authorizes a person who obtains a state license under AUMA to engage in commercial adult-use cannabis activity pursuant to that license and applicable local ordinances.

The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), among other things, consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities and requires an applicant for any type of license issued under MAUCRSA to provide to the licensing authority specified information, including a statement, signed by the applicant under penalty of perjury, that the information provided is complete, true, and accurate. MAUCRSA also requires an applicant with 20 or more employees to provide a statement that the applicant will enter into, or demonstrate that it has already entered into, and abide by the terms of a labor peace agreement.

This bill would require an applicant with 20 or more employees to provide a notarized statement that the applicant will enter into, or demonstrate that it has already entered into, and abide by the terms of a labor peace agreement. This bill would also require an applicant for a state license under MAUCRSA, if the applicant has less than 20 employees and has not yet entered into a labor peace agreement, to provide a notarized statement as a part of its application indicating that the applicant will enter into and abide by the terms of a labor peace agreement within 60 days of employing its 20th employee. By expanding the scope of the crime of perjury, this bill would impose a state-mandated local program.

AUMA authorizes the Legislature to amend, by a majority vote, certain provisions of the act to implement specified substantive provisions, provided that the amendments are consistent with and further the purposes and intent of the act.

This bill would declare that its provisions implement specified substantive provisions of AUMA. The bill would also declare that its provisions further the purposes and the intent of the act.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1291

Author:(Jones-Sawyer)

As Amended Ver:August 30, 2019

Majority vote

SUMMARY:

Requires an applicant for a license classification within the cannabis industry who currently employs fewer than 20 employees to provide a statement that the applicant will enter into a labor peace agreement, as currently required by existing law, within 60 days of employing 20 employees, and requires applicants already employing 20 or more employees to provide a notarized statement that they will or already have entered into a labor peace agreement.

The Senate Amendments:

1. Strike the requirement that cannabis license applicants that already employ 20 or more employees must enter into a labor peace agreement within 60 days.
2. Requires that the statement provided by applicants with 20 or more employees affirming that they will enter or have already entered a labor peace agreement be notarized.
3. Expressly states that nothing in the bill authorizes a licensing authority to suspend or revoke a license.

COMMENTS:

Under current law, a cannabis license applicant must submit a statement as part of their application that the applicant will enter into a labor peace agreement, or has already done so, and will abide by its terms. However, the law does not set forth any specific timelines associated with that requirement; instead, the Bureau of Cannabis Control (BCC) regulations state simply that the agreement must be entered into "as soon as reasonably practicable" following licensure. This bill would require that the statement include a commitment that a labor peace agreement will be entered into within 60 days.

Additionally, applicants often may not yet have 20 employees at the time of their application, but will subsequently employ 20 employees after obtaining a license. This bill would add an additional required statement for such applicants stating that the applicant will enter into a labor peace agreement within 60 days of employing 20 employees. This statement must be notarized.

As defined in the Medicinal and Adult-Use Cannabis Regulation and Safety Act, a labor peace agreement is an agreement between a licensee and any bona fide labor organization that, at a minimum, protects the state's proprietary interests by prohibiting labor organizations and members from engaging in picketing, work stoppages, boycotts, and any other economic interference with the applicant's business. In the agreement, the applicant pledges not to disrupt efforts by the bona fide labor organization to communicate with, and attempt to organize and represent, the applicant's employees. The agreement also must provide a bona fide labor organization 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. A labor peace agreement cannot mandate a particular method of election or certification of the bona fide labor organization.

According to the Author:

"AB 1291 will prevent arbitrary enforcement against cannabis businesses and will provide employees with clarity on when an employer is failing to comply with this laws and a complaint needs to be filed. Every stakeholder benefits from certainty."

Arguments in Support:

This bill is sponsored by UFCW Western States Council, which represents "over 170,000 members, many thousands of which work in licensed cannabis businesses." UFCW states that current law regarding labor peace agreements "confusingly do not offer cannabis businesses,

cannabis government enforcers, or labor unions, enough certainty." UFCW argues that "the legislative intent of requiring a labor peace agreement is far better served by a certain standard of compliance than one that makes identifying violations elusive and subjective or relegated to non-enforcement because of an uncertain prospect of winning."

Arguments in Opposition:

None on file.

FISCAL COMMENTS:

According to the Senate Committee on Appropriations, pursuant to Senate Rule 28.8, negligible state costs.

VOTES:

ASM BUSINESS AND PROFESSIONS: 15-3-2

YES: Low, Bloom, Chen, Chiu, Cunningham, Gipson, Gloria, Grayson, Holden, Irwin, McCarty, Medina, Mullin, Quirk-Silva, Ting

NO: Brough, Fong, Obernolte

ABS, ABST OR NV: Dahle, Eggman

ASM LABOR AND EMPLOYMENT: 6-1-0

YES: Kalra, Flora, Carrillo, Gonzalez, Jones-Sawyer, Luz Rivas

NO: Diep

ASM APPROPRIATIONS: 13-5-0

YES: Gonzalez, Bloom, Bonta, Calderon, Carrillo, Chau, Eggman, Gabriel, Eduardo Garcia, Maienschein, Petrie-Norris, Quirk, Robert Rivas

NO: Bigelow, Brough, Diep, Fong, Obernolte

ASSEMBLY FLOOR: 57-15-8

YES: Aguiar-Curry, Bauer-Kahan, Berman, Bloom, Boerner Horvath, Bonta, Calderon, Carrillo, Cervantes, Chau, Chen, Chiu, Chu, Cooley, Cooper, Cunningham, Daly, Eggman, Flora, Frazier, Gabriel, Eduardo Garcia, Gipson, Gloria, Gonzalez, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Levine, Limón, Low, Maienschein, McCarty, Medina, Mullin, Muratsuchi, Nazarian, O'Donnell, Petrie-Norris, Quirk, Quirk-Silva, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Smith, Mark Stone, Weber, Wicks, Wood, Rendon

NO: Bigelow, Brough, Choi, Dahle, Diep, Fong, Gallagher, Kiley, Lackey, Mathis, Melendez, Obernolte, Patterson, Voepel, Waldron

ABS, ABST OR NV: Arambula, Burke, Friedman, Cristina Garcia, Mayes, Ramos, Reyes, Ting

SENATE FLOOR: 31-9-0

YES: Allen, Archuleta, Atkins, Beall, Bradford, Caballero, Chang, Dodd, Durazo, Galgiani, Glazer, Lena Gonzalez, Hertzberg, Hill, Hueso, Hurtado, Jackson, Leyva, McGuire, Mitchell, Monning, Pan, Portantino, Roth, Rubio, Skinner, Stern, Umberg, Wieckowski, Wiener, Wilk

NO: Bates, Borgeas, Dahle, Grove, Jones, Moorlach, Morrell, Nielsen, Stone

UPDATED:

VERSION: August 30, 2019

CONSULTANT: Robert Sumner / B. & P. / (916) 319-3301 FN: 0002067

 THIRD READING  

Bill No: AB 1291

Author: Jones-Sawyer (D)

Amended: 8/30/19 in Senate

Vote: 21

SENATE BUS., PROF. & ECON. DEV. COMMITTEE: 8-0, 6/17/19

AYES: Glazer, Chang, Archuleta, Dodd, Hill, Leyva, Pan, Wilk

NO VOTE RECORDED: Galgiani

SENATE LABOR, PUB. EMP. & RET. COMMITTEE: 4-1, 6/26/19

AYES: Hill, Jackson, Mitchell, Pan

NOES: Morrell

SENATE APPROPRIATIONS COMMITTEE: 5-2, 8/30/19

AYES: Portantino, Bradford, Durazo, Hill, Wieckowski

NOES: Bates, Jones

ASSEMBLY FLOOR: 57-15, 5/16/19 - See last page for vote

SUBJECT: Adult-use cannabis and medicinal cannabis: license application: labor peace agreements

SOURCE: United Food and Commercial Workers, Western States Council

DIGEST:

This bill requires a cannabis-license applicant with less than 20 employees that has not yet entered into a labor peace agreement, to provide a notarized statement that it will enter into, and abide by, the terms of a labor peace agreement within 60 days of employing its 20th employee.

ANALYSIS:

Existing law:

1. Establishes the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) to regulate the cultivation, distribution, transport, storage, manufacturing, processing, and sale of both medicinal cannabis and adult-use cannabis. (Business and Professions Code (BPC) § 26000))
2. Establishes the Bureau of Cannabis Control (Bureau) under the Department of Consumer Affairs (DCA) to regulate cannabis with the sole authority to create, issue, deny, renew, discipline, suspend, or revoke licenses for microbusinesses, transportation, storage unrelated to manufacturing activities, distribution, testing, and sale of cannabis and cannabis products within the state. (BPC §§ 26010, 26012 (a)(1))
3. Requires the California Department of Food and Agriculture (CDFA) to administer the portions of MAUCRSA related to and associated with the cultivation of cannabis. Delegates to CDFA the authority to create, issue, deny, and suspend or revoke cultivation licenses for violations of MAUCRSA. (BPC § 26012 (a)(2))
4. Requires the State Department of Public Health (DPH) to administer the provisions of MAUCRSA related to and associated with the manufacturing of cannabis products. Delegates to DPH the authority to create, issue, deny, and suspend or revoke manufacturing licenses for violations of MAUCRSA. (BPC § 26012 (a)(3))
5. Requires each applicant for any type of state cannabis license with 20 or more employees to provide a statement that the applicant will enter into, or demonstrate that it has already entered into, and abide by the terms of a labor peace agreement. (BPC § 26051.5 (a)(5)(A))

This bill:

1. Requires an applicant with less than 20 employees at the time of application and who has not yet entered into a labor peace agreement, to provide a notarized statement as a part of the application indicating that the applicant will enter into and abide by the terms of a labor peace agreement within 60 days of employing 20 or more employees.
   
2. States that nothing can be construed to limit the Bureau, the DPH, or the DPH’s authority to revoke or suspend a license for a violation of 1) above.
3. Makes technical changes.
4. Makes legislative findings and declarations that this bill furthers the purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act (Act) because it enacts protections for employees and other workers of licensees that are in addition to those provided for in the Act.

Background

The Legislature passed the Medical Cannabis Regulation and Safety Act (MCRSA) in 2015. MCRSA established for the first time, a comprehensive statewide licensing and regulatory framework for the cultivation, manufacture, transportation, testing, distribution, and sale of medicinal cannabis to be administered by the Bureau within DCA, DPH, and CDFA. Shortly following the passage of MCRSA in November 2016, California voters passed Proposition 64, the "Control, Regulate and Tax Adult Use of Marijuana Act" (Proposition 64), which legalized adult-use cannabis. Less than a year later in June 2017, the California State Legislature passed a budget trailer bill, SB 94 (Committee on Budget and Fiscal Review, Chapter 27, Statutes of 2017), that integrated MCRSA with Prop 64 to create MAUCRSA, the current regulatory structure for both medicinal and adult-use cannabis.

Current statutes do not provide a timeline for compliance with labor peace agreement requirements, and regulations state only that a licensee must submit evidence “as soon as reasonably practicable.” This bill requires a cannabis license applicant with less than 20 employees provide a statement, as part of their application, that they will enter into a labor peace agreement within 60 days of hiring their 20th employee.

Current regulations (16 CCR § 5002 (c)(23)) specify that:

For an applicant with 20 or more employees, the applicant shall attest that the applicant has entered into a labor peace agreement and will abide by the terms of the agreement. The applicant shall submit a copy of the page of the labor peace agreement that contains signatures of the union representative and the applicant. For applicants who have not yet entered into a labor peace agreement, the applicant shall provide a notarized statement indicating the applicant will enter into and abide by the terms of a labor peace agreement as soon as reasonably practicable after licensure.” However, the author and sponsor note that “reasonably practicable” is ambiguous; therefore, narrowing the timeframe will clarify that licensees need to abide by the labor peace agreement requirements of current law within 60 days as opposed to a timeframe that is considerably more open-ended which is currently specified in regulations.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Senate Appropriations Committee, “Staff notes negligible impact to the Department of Food and Agriculture (CDFA), which would need to update internal review and approval processes, amend paper applications, update the online licensing system, and amend regulations. Negligible impact to the Department of Public Health (CDPH) or Department of Justice (DOJ).”

SUPPORT: (Verified 8/30/19)

United Food and Commercial, Workers Western States Council (source)

California Labor Federation

California Teamsters Public Affairs Council

OPPOSITION: (Verified 8/30/19)

None received

ARGUMENTS IN SUPPORT: Supporters note that this bill will help clarify ambiguity in current regulations pertaining to labor peace agreement requirements for applicants with less than 20 employees.

ASSEMBLY FLOOR: 57-15, 5/16/19

AYES: Aguiar-Curry, Bauer-Kahan, Berman, Bloom, Boerner Horvath, Bonta, Calderon, Carrillo, Cervantes, Chau, Chen, Chiu, Chu, Cooley, Cooper, Cunningham, Daly, Eggman, Flora, Frazier, Gabriel, Eduardo Garcia, Gipson, Gloria, Gonzalez, Gray, Grayson, Holden, Irwin, Jones-Sawyer, Kalra, Kamlager-Dove, Levine, Limón, Low, Maienschein, McCarty, Medina, Mullin, Muratsuchi, Nazarian, O'Donnell, Petrie-Norris, Quirk, Quirk-Silva, Luz Rivas, Robert Rivas, Rodriguez, Blanca Rubio, Salas, Santiago, Smith, Mark Stone, Weber, Wicks, Wood, Rendon

NOES: Bigelow, Brough, Choi, Dahle, Diep, Fong, Gallagher, Kiley, Lackey, Mathis, Melendez, Obernolte, Patterson, Voepel, Waldron

NO VOTE RECORDED: Arambula, Burke, Friedman, Cristina Garcia, Mayes, Ramos, Reyes, Ting

Prepared by: Elissa Silva / B., P. & E.D. / 916-651-4104

9/3/19 11:08:03

**** END ****

SENATE COMMITTEE ON

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

AB 1291 (Jones-Sawyer) - Adult-use cannabis and medicinal cannabis: license application: labor peace agreements

Bill Summary:

Assembly Bill 1291 would require a cannabis-license applicant with less than 20 employees that has not yet entered into a labor peace agreement, to provide a notarized statement that it will entire into and abide by the terms of a labor peace agreement within 60 days of employing the 20^th employee.

*********** ANALYSIS ADDENDUM – SUSPENSE FILE ***********

The following information is revised to reflect amendments

adopted by the committee on August 30, 2019

Fiscal Impact:

• Staff notes negligible impact to the Department of Food and Agriculture (CDFA), which would need to update internal review and approval processes, amend paper applications, update the online licensing system, and amend regulations. Negligible impact to the Department of Public Health (CDPH) or Department of Justice (DOJ)

Author Amendments:

The author’s technical amendments would affirm the Bureau of Cannabis Control, CDFA, and the CDPH’s authority to revoke or suspense a license for violating the bill’s provisions.

-- END --

SENATE COMMITTEE ON

Senator Anthony Portantino, Chair

2019 - 2020 Regular Session

AB 1291 (Jones-Sawyer) - Adult-use cannabis and medicinal cannabis: license application: labor peace agreements

Bill Summary:

Assembly Bill 129 would require a cannabis-license applicant with less than 20 employees that has not yet entered into a labor peace agreement, to provide a notarized statement that it will entire into and abide by the terms of a labor peace agreement within 60 days of employing the 20^th employee.

Fiscal Impact:

• The Department of Food and Agriculture (CDFA) would need to update internal review and approval processes, amend paper applications, guides, and FAQs, update the online licensing system, and amend regulations. Negligible costs to CDFA.
• Negligible impact to the CDPH or Department of Justice.

Background:

In June 2015, Governor Brown signed the Medical Marijuana Regulation and Safety Act, comprised of Assembly Bill 243 (Wood), Chapter 688, Statutes of 2015; Assembly Bill 266 (Bonta), Chapter 689, Statutes of 2015; and Senate Bill 643 (McGuire), Chapter 719, Statutes of 2015. Together, these bills established the oversight and regulatory framework for the cultivation, manufacture, transportation, storage, and distribution of medical marijuana in California. The CDFA CalCannabis Cultivation Licensing (CalCannabis) regulates cultivation, the CDPH Manufactured Cannabis Safety Branch regulates manufacturing, and the DCA Bureau of Cannabis Control regulates distribution, testing, retail, and microbusiness.

In 2017, the Legislature passed the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), which created a comprehensive system to control and regulation the cultivation, distribution, transport, storage, manufacturing, processing and sale of both medicinal cannabis. In 2018, California voters approved Proposition 64, the Control, Regulation and Tax Adult Use of Marijuana Act, which authorized adults aged 21 years or older to legally grow, possess, and use marijuana for non-medical purposes, under specified restrictions.

Existing law requires an applicant with more than 20 employees to provide a statement that the applicant will entire into, or has already entered into, a labor peace agreement (BPC §26051.5(A)), and current regulations specify that for an applicant with 20 or more employees, the applicant must attest that they have entered into a labor peace agreement, abide by the agreement, and submit a copy of the agreement that contains signature of the union representative. For applicants that have not yet entered into a labor peace agreement, the applicant must provide a notarized statement as soon as reasonably practicable after licensure ((16 CCR § 5002 (c)(23)).

A labor peace agreement is as an agreement between a licensee and any labor organization that, at a minimum, protects the state’s proprietary interests by prohibiting labor organizations and members from engaging in picketing, work stoppages, boycotts, and any other economic interference with the applicant’s business. This agreement means that the applicant has agreed not to disrupt efforts by the bona fide labor organization to communicate with, and attempt to organize and represent, the applicant’s employees. The agreement provides a bona fide labor organization access 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 (BPC §26001).

Proposed Law:

AB 1291 would include the following provisions, among other:

• Requires an applicant with less than 20 employees that has not yet entered into a labor peace agreement, provide a notarized statement as a part of its application indicating that the applicant will enter into and abide by the terms of a labor peace agreement within 60 days of employing its 20th employee.
• Provides nothing in the bill’s provisions limit the Bureau’s authority to revoke or suspend a license for violating the bill’s provisions.
• Makes legislative findings and declarations that the bill furthers the intent of the Control, Regulate and Tax Adult Use of Marijuana Act because it enacts employee and worker protections.

-- END --

SENATE COMMITTEE ON LABOR, PUBLIC EMPLOYMENT AND RETIREMENT

Senator Jerry Hill, Chair

2019 - 2020 Regular

Bill No: AB 1291 Hearing Date: June 26, 2019

SUBJECT: Adult-use cannabis and medicinal cannabis: license application: labor peace agreements.

KEY ISSUE

Should the Legislature require that an applicant for a state cannabis license who employs less than 20 employees provide a notarized statement promising to enter into a labor peace agreement within 60 days of meeting the 20 employee threshold?

ANALYSIS

Existing law:

1. Establishes the Medical Cannabis Regulation and Safety Act, which creates the Bureau of Cannabis Control within the Department of Consumer Affairs and authorizes the Governor to appoint a Chief of the Bureau. (Business and Professions Code §26010.5)
2. Grants the Bureau of Cannabis Control the sole authority to create, issue, deny, renew, discipline, suspend, or revoke licenses for microbusinesses, transportation, storage unrelated to manufacturing activities, distribution, testing, and sale of cannabis and cannabis products within the state. (Business and Professions Code §26012)
3. Authorizes the Department of Food and Agriculture to administer the provisions of this division related to and associated with the cultivation of cannabis.

(Business and Professions Code §26012)

1. Authorizes the Department of Food and Agriculture to create, issue, deny, and suspend or revoke cultivation licenses for violations of this division.

(Business and Professions Code §26012)

1. Authorizes the State Department of Public Health to administer the provisions of this division related to and associated with the manufacturing of cannabis products. The State Department of Public Health shall have the authority to create, issue, deny, and suspend or revoke manufacturing licenses for violations of this division.

(Business and Professions Code §26012)

1. Authorizes the above licensing authorities to collect fees in connection with activities they regulate concerning cannabis. The licensing authorities may create licenses in addition to those identified in this division that the licensing authorities deem necessary to effectuate their duties under this division. (Business and Professions Code §26012)
2. Requires an applicant for a state cannabis license with 20 or more employees to provide a statement that the applicant will enter into, or demonstrate that it has already entered into, and abide by the terms of a labor peace agreement.

(Business and Professions Code §26051.5(A))

1. Excludes a supervisor from “employee” for the purposes of the above section. For the purposes of the above paragraph, “supervisor” is defined to mean an individual having authority, in the interest of the applicant, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibility to direct them or to adjust their grievances, or effectively to recommend such action, if, in connection with the foregoing, the exercise of that authority is not of a merely routine or clerical nature, but requires the use of independent judgment. (Business and Professions Code §26051.5(B))
2. Defines “Labor peace agreement” to mean an agreement between a licensee and any bona fide labor organization that, at a minimum, protects the state’s proprietary interests by prohibiting labor organizations and members from engaging in picketing, work stoppages, boycotts, and any other economic interference with the applicant’s business. This agreement means that the applicant has agreed not to disrupt efforts by the bona fide labor organization to communicate with, and attempt to organize and represent, the applicant’s employees. The agreement shall provide a bona fide labor organization 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. This type of agreement shall not mandate a particular method of election or certification of the bona fide labor organization. (Business and Professions Code §26001)

This bill:

1. Requires that an applicant for a cannabis license with 20 or more employees provide a notarized statement that the applicant will enter into and abide by the terms of a labor peace agreement or demonstrate that it has already entered into a labor peace agreement.
2. Requires an applicant with less than 20 employees at the time of application that has not yet entered into a labor peace agreement provide a notarized statement as a part of its application indicating that the applicant will enter into and abide by the terms of a labor peace agreement within 60 days of employing 20 employees.

COMMENTS

1. Need for this bill?

Labor Peace Agreements (LPAs) represent a compromise between the newly legalized recreational marijuana industry and labor unions. Marijuana cultivators and businesses reap concessions from labor that they will limit work stoppages, strikes, boycotts and other strategies to leverage economic interference. In exchange, the labor unions receive assurances from the employers that employers won’t attempt to interfere with the labor union’s ability to communicate, organize and represent the applicant’s employees. This compromise has existed since the inception of legal recreational marijuana under state law.

Current law requires that an applicant for a cannabis license of any kind who employs 20 or more non-supervisor employees must provide a statement or demonstrate that they already entered into an LPA. AB 1291 does not expand the content of current regulations significantly, rather it clarifies the timeframe under which an expanding business must enter into an LPA.

2. Proponent Arguments

The California Labor Federation writes in support:

“Cannabis license applicants with 20 or more employees are required to enter into a labor peace agreement as a condition of doing business. Currently, the three cannabis licensing agencies (the Bureau of Cannabis Control, the Department of Food and Agriculture, and the Department of Public Health) require applicants to offer proof to regulators that the applicant has entered or will enter into such an agreement. However, the regulations do not offer affected stakeholders enough certainty to know how to comply with this law, whether a business is operating in compliance, or when this law is being violated.

As well, enforcement between the three agencies—all of which must enforce similar language—could differ under this regulation, and even enforcement within the same department could differ, depending on what an agency official believes is ‘reasonable’ and ‘practicable.’ Also, under the ‘reasonably practicable’ standard, no union will know when the time has come to highlight the absence of the legally required labor peace agreement, and no business will know with certainty whether it is or is not operating within the law.”

3. Opponent Arguments:

None received.

4. Double Referral:

This bill passed out of the Senate Business and Professions Committee on June 17, 2019.

5. Prior Legislation:

None.

SUPPORT

United Food and Commercial Workers, Western States Council (Sponsor)

California Labor Federation

OPPOSITION

None received.

-- END --

SENATE COMMITTEE ON

BUSINESS, PROFESSIONS AND ECONOMIC DEVELOPMENT

Senator Steven Glazer, Chair

2019 - 2020 Regular

Bill No: AB 1291 Hearing Date: June 17, 2019

Subject: Adult-use cannabis and medicinal cannabis: license application: labor peace agreements

SUMMARY:

Establishes a 60-day window for a cannabis license applicant with 20 or more employees to enter into, and abide by, a labor peace agreement, and requires a cannabis license applicant with less than 20 employees to provide a notarized statement that it will enter into a labor peace agreement and abide by the terms of the agreement within 60 days of employing its 20^th employee.

NOTE: This bill is referred, second, to the Senate Committee on Labor, Public Employment and Retirement.

Existing law:

1. Establishes the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) to regulate the cultivation, distribution, transport, storage, manufacturing, processing, and sale of both medicinal cannabis and adult-use cannabis. (Business and Professions Code (BPC) § 26000))
2. Establishes the Bureau of Cannabis Control (Bureau) under the Department of Consumer Affairs (DCA) to regulate cannabis with the sole authority to create, issue, deny, renew, discipline, suspend, or revoke licenses for microbusinesses, transportation, storage unrelated to manufacturing activities, distribution, testing, and sale of cannabis and cannabis products within the state. (BPC §§ 26010, 26012 (a)(1))
3. Requires the California Department of Food and Agriculture (CDFA) to administer the portions of MAUCRSA related to and associated with the cultivation of cannabis. Delegates to CDFA the authority to create, issue, deny, and suspend or revoke cultivation licenses for violations of MAUCRSA. (BPC § 26012 (a)(2))
4. Requires the State Department of Public Health (DPH) to administer the provisions of MAUCRSA related to and associated with the manufacturing of cannabis products. Delegates to DPH the authority to create, issue, deny, and suspend or revoke manufacturing licenses for violations of MAUCRSA. (BPC § 26012 (a)(3))
5. Requires each applicant for any type of state cannabis license with 20 or more employees to provide a statement that the applicant will enter into, or demonstrate that it has already entered into, and abide by the terms of a labor peace agreement. (BPC § 26051.5 (a)(5)(A))
6. Defines “supervisor” to mean an individual having authority, in the interest of the applicant, to hire, transfer, suspend, lay off, recall, promote, discharge, assign, reward, or discipline other employees, or responsibility to direct them or to adjust their grievances, or effectively to recommend such action, if, in connection with the foregoing, the exercise of that authority is not of a merely routine or clerical nature, but requires the use of independent judgment. States that an “employee” does not include a supervisor. (BPC § 26051.5 (a)(5)(B)(C))
7. Declares the policy of the State of California to encourage and protect the right of agricultural employees to full freedom of association, self-organization, and designation of representatives of their own choosing, to negotiate the terms and conditions of their employment, and to be free from the interference, restraint, or coercion of employers of labor, or their agents, in the designation of such representatives or in self-organization or in other concerted activities for the purpose of collective bargaining or other mutual aid or protection. (Labor Code § 1140.2)
8. Requires applicants who have not yet entered into a labor peace agreement to provide a notarized statement indicating that the applicant will enter into and abide by the terms of a labor peace agreement as soon as reasonably practicable after licensure. (Title 16, California Code of Regulations (CCR) § 5002 (c)(23))

This bill:

1. Requires an applicant for any type of state cannabis license with 20 or more employees to provide a statement that the applicant will enter into a labor peace agreement within 60 days of employing 20 or more employees, or demonstrate that it has already entered into, and abide by the terms of a labor peace agreement.
2. Requires an applicant with less than 20 employees at the time of application and who has not yet entered into a labor peace agreement, to provide a notarized statement as a part of the application indicating that the applicant will enter into and abide by the terms of a labor peace agreement within 60 days of employing 20 or more employees.
3. Makes technical changes.
4. Makes legislative findings and declarations that this bill furthers the purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act (Act) because it enacts protections for employees and other workers of licensees that are in addition to those provided for in the Act.

FISCAL EFFECT:

According to the Assembly Appropriations Committee analysis dated May 8, 2019, this bill has a negligible fiscal effect.

COMMENTS:

1. Purpose. This bill is sponsored by the UFCW Western States Council. According to the author’s office, “Current statute does not provide a timeframe for when an applicant needs to enter a labor peace agreement after the business has provided a statement of its intent to do so. Additionally, statute also fails to specify when applicants with less than 20 employees need to enter a labor peace agreement if they hire a 20th employee.

“A labor peace agreement is an agreement between a business and a labor organization that prescribes the obligations of both parties. These agreements tend to include mutually beneficial provisions that protect businesses and facilitate the ability for employees to organize.

“A clear timeframe is needed to prevent arbitrary enforcement against cannabis businesses. The only guidance that regulations provide is that cannabis applicants and licensees need to comply with labor peace agreement requirements “as soon as reasonably practicable,” which is ambiguous and open to interpretation. This bill provides important clarity designed to protect businesses.

“AB 1291 clarifies a clear timeframe for when cannabis businesses need to comply with certain labor requirements. This bill requires that a cannabis license applicant with 20 employees or more enters a labor peace agreement within 60 days.

“This bill also requires that cannabis license applicants with less than 20 employees provide a statement, as part of their application, that they will enter a labor peace agreement within 60 days of hiring their 20th employee.”

1. Cannabis Regulatory Background. California first legalized cannabis for medical consumption via Proposition 215, also known as the Compassionate Use Act, in 1996. Proposition 215 protected qualified patients and primary caregivers from prosecution related to the possession and cultivation of cannabis for medicinal purposes.

The Legislature passed the Medical Cannabis Regulation and Safety Act (MCRSA) in 2015. MCRSA established for the first time, a comprehensive statewide licensing and regulatory framework for the cultivation, manufacture, transportation, testing, distribution, and sale of medicinal cannabis to be administered by the Bureau within DCA, DPH, and CDFA.

Shortly following the passage of MCRSA in November 2016, California voters passed Proposition 64, the "Control, Regulate and Tax Adult Use of Marijuana Act" (Proposition 64), which legalized adult-use cannabis.

Less than a year later in June 2017, the California State Legislature passed a budget trailer bill, SB 94 (Committee on Budget and Fiscal Review, Chapter 27, Statutes of 2017), that integrated MCRSA with Prop 64 to create MAUCRSA, the current regulatory structure for both medicinal and adult-use cannabis.

Current statutes do not provide a timeline for compliance with labor peace agreement requirements and regulations state only that a licensee must submit evidence “as soon as reasonably practicable.” This bill requires a cannabis license applicant with 20 employees or more enter a labor peace agreement within 60 days, and that a cannabis license applicant with less than 20 employees provide a statement, as part of their application, that they will enter a labor peace agreement within 60 days of hiring their 20th employee.

Specifically, the current regulations (16 CCR § 5002 (c)(23)) specify that:

For an applicant with 20 or more employees, the applicant shall attest that the applicant has entered into a labor peace agreement and will abide by the terms of the agreement. The applicant shall submit a copy of the page of the labor peace agreement that contains signatures of the union representative and the applicant. For applicants who have not yet entered into a labor peace agreement, the applicant shall provide a notarized statement indicating the applicant will enter into and abide by the terms of a labor peace agreement as soon as reasonably practicable after licensure.” However, the author and sponsor note that “reasonably practicable” is ambiguous; therefore, narrowing the timeframe will clarify that licensees need to abide by the labor peace agreement requirements of current law within 60 days as opposed to a timeframe that is considerably more open-ended which is currently specified in regulations.

Given that existing law allows for those with 20 or more employees to apply for, and receive, a license prior to having a labor peace agreement in place and does not specify a time by which the labor peace agreement must be adopted, the sponsor notes that for those applicants with fewer than 20 employees who are not required to abide the same requirements as those cannabis license applicant with 20 employees or more, there may be a significant delay in notifying the Bureau or entering into a labor peace agreement once they have met the 20 employee threshold. In an effort to ensure that new applicants who do not have 20 or more employees, understand the requirements for a labor peace agreement, this bill will require, as part of a cannabis license application, that an applicant with less than 20 employees provide a notarized statement indicating that an applicant will enter into and abide by the terms of a labor peace agreement within 60 days of employing 20 employees.

1. Prior related legislation. AB 2799 (Jones-Sawyer, Chapter 971, Statutes of 2018) required an applicant for any type of state cannabis license to provide a statement upon initial licensure and renewal that the applicant employs, or will employ within one year of receiving a license, one supervisor and one employee who have successfully completed a 30-hour Cal-OSHA general industry outreach course offered by a training provider authorized by an Occupational Safety and Health Administration (OSHA) Training Institute Education Center.

AB 1686 (Gloria of 2017) would have required a labor peace agreement statement to be signed, notarized, and electronically submitted for a state medical cannabis license. (Status: This bill was held by the Senate Appropriations Committee.)

1. Arguments in Support. The California Labor Federation writes, “Cannabis license applicants with 20 or more employees are required to enter into a labor peace agreement as a condition of doing business. Currently, the three cannabis licensing agencies (the Bureau of Cannabis Control, the Department of Food and Agriculture, and the Department of Public Health) require applicants to offer proof to regulators that the applicant has entered or will enter into such an agreement. However, the regulations do not offer affected stakeholders enough certainty to know how to comply with this law, whether a business is operating in compliance, or when this law is being violated.

“For example, the Bureau’s regulation 5002(c)(23) provides ‘…that the applicant will enter into and abide by the terms of a labor peace agreement as soon as reasonably practicable after licensure.’ The ‘as soon as reasonably practicable’ language is so subjective that licensing agencies struggle to take consistent enforcement actions against applicants, except in the most extreme cases. Worse, because there is no basis for predicting whether an enforcement action will be successful, regulators will likely be reluctant to bring such cases.

“As well, enforcement between the three agencies—all of which must enforce similar language—could differ under this regulation, and even enforcement within the same department could differ, depending on what an agency official believes is “reasonable” and “practicable.” Also, under the “reasonably practicable” standard, no union will know when the time has come to highlight the absence of the legally required labor peace agreement, and no business will know with certainty whether it is or is not operating within the law.

“The legislative intent of requiring a labor peace agreement is far better served by a certain standard of compliance than one that makes identifying violations elusive and subjective or relegated to non-enforcement. Regulators benefit by being able easily to distinguish between a valid complaint and an invalid one; businesses always benefit by knowing with precision how to comport their behavior to avoid government sanction. And, the workers who may elect to choose to be represented by a union if afforded the opportunity likewise benefit by a law that offers certainty.

“AB 1291 (Jones-Sawyer) simply directs a cannabis employer to enter into labor peace agreement within 60 days of employing 20 or more employees. For those businesses with fewer than 20 employees at the time of application, AB 1291 requires a notarized statement committing to a labor peace agreement within 60 days of employing 20 workers. With this clear standard, the above referenced confusion can be avoided, and all parties can focus on helping the business succeed, not on whether or how to comply with unclear direction.”

1. Suggested Technical Amendments. The technical amendments outlined below help clarify the application requirement related to a labor peace agreement for a cannabis license applicant with less than 20 employees; require a notarized statement for compliance with a labor peace agreement for cannabis license applicants with more than 20 employees; and, per the author’s request maintain current licensing requirements for a cannabis license applicant with more than 20 employees and clarify the Bureau’s enforcement authority.

(5) (A) (i)  For an applicant with 20 or more employees, provide a notarized statement that the applicant will enter into, or into, or  into a labor peace agreement within 60 days of employing 20 or more employees, or demonstrate that it has already entered into, and abide by the terms of a labor peace agreement.

(ii) For an applicant with less than 20 employees at the time of application and that has not yet entered into a labor peace agreement, provide a notarized statement as a part of its application indicating that the applicant will enter into and abide by the terms of a labor peace agreement within 60 days of employing its 20^th employee 20 or more employees.

Nothing in this section shall be construed to limit the bureau's authority to revoke or suspend a license for a violation of this section.

SUPPORT AND OPPOSITION:

Support:

United Food and Commercial Workers Western States Council (sponsor)

California Labor Federation

California Teamsters Public Affairs Council

Opposition:

None on file as of June 12, 2019.

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 1291

Author:(Jones-Sawyer)

As Introduced Ver:February 21, 2019

Majority vote

SUMMARY:

Requires an applicant for a license classification within the cannabis industry to provide a statement that the applicant will enter into a labor peace agreement, as currently required by existing law, within 60 days of employing 20 employees.

COMMENTS:

Under current law, a cannabis license applicant must submit a statement as part of their application that the applicant will enter into a labor peace agreement, or has already done so, and will abide by its terms. However, the law does not set forth any specific timelines associated with that requirement; instead, the Bureau of Cannabis Control regulations state simply that the agreement must be entered into "as soon as reasonably practicable" following licensure. This bill would require that the statement include a commitment that a labor peace agreement will be entered into within 60 days.

Additionally, applicants often may not yet have 20 employees at the time of their application, but will subsequently employ 20 employees after obtaining a license. This bill would add an additional required statement for such applicants stating that the applicant will enter into a labor peace agreement within 60 days of employing 20 employees. This statement must be notarized.

As defined in the Medicinal and Adult-Use Cannabis Regulation and Safety Act, a labor peace agreement is an agreement between a licensee and any bona fide labor organization that, at a minimum, protects the state's proprietary interests by prohibiting labor organizations and members from engaging in picketing, work stoppages, boycotts, and any other economic interference with the applicant's business. In the agreement, the applicant pledges not to disrupt efforts by the bona fide labor organization to communicate with, and attempt to organize and represent, the applicant's employees. The agreement also must provide a bona fide labor organization 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. A labor peace agreement cannot mandate a particular method of election or certification of the bona fide labor organization.

According to the Author:

"AB 1291 will prevent arbitrary enforcement against cannabis businesses and will provide employees with clarity on when an employer is failing to comply with this laws and a complaint needs to be filed. Every stakeholder benefits from certainty."

Arguments in Support:

This bill is sponsored by the United Food and Commercial Workers Union (UFCW) Western States Council, which represents "over 170,000 members, many thousands of which work in licensed cannabis businesses." UFCW states that current law regarding labor peace agreements "confusingly do not offer cannabis businesses, cannabis government enforcers, or labor unions, enough certainty." UFCW argues that "the legislative intent of requiring a labor peace agreement is far better served by a certain standard of compliance than one that makes identifying violations elusive and subjective or relegated to non-enforcement because of an uncertain prospect of winning."

Arguments in Opposition:

None on file.

FISCAL COMMENTS:

According to the Assembly Committee on Appropriations, negligible costs.

VOTES:

ASM BUSINESS AND PROFESSIONS: 15-3-2

YES: Low, Bloom, Chen, Chiu, Cunningham, Gipson, Gloria, Grayson, Holden, Irwin, McCarty, Medina, Mullin, Quirk-Silva, Ting

NO: Brough, Fong, Obernolte

ABS, ABST OR NV: Dahle, Eggman

ASM LABOR AND EMPLOYMENT: 6-1-0

YES: Kalra, Flora, Carrillo, Gonzalez, Jones-Sawyer, Luz Rivas

NO: Diep

ASM APPROPRIATIONS: 13-5-0

YES: Gonzalez, Bloom, Bonta, Calderon, Carrillo, Chau, Eggman, Gabriel, Eduardo Garcia, Maienschein, Petrie-Norris, Quirk, Robert Rivas

NO: Bigelow, Brough, Diep, Fong, Obernolte

UPDATED:

VERSION: February 21, 2019

CONSULTANT: Robert Sumner / B. & P. / (916) 319-3301 FN: 0000415

Date of Hearing: May 8, 2019

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Lorena Gonzalez, Chair

ABPCA Bill Id:AB 1291

Author:(Jones-Sawyer) – As Introduced Ver:February 21, 2019

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill requires an applicant for a cannabis-related commercial license with 20 or more employees provide a statement that the applicant will enter into a labor peace agreement within 60 days and, if employing less than 20 at the time of application, provide a statement that the applicant will enter into such agreement upon employing 20 employees.

FISCAL EFFECT:

Negligible.

COMMENTS:

1. Purpose. According to the author, a clear timeframe is needed to prevent arbitrary enforcement against cannabis businesses. The author states the only guidance that regulations provide is that cannabis applicants and licensees need to comply with labor peace agreement requirements ‘as soon as reasonably practicable,’ which is ambiguous and open to interpretation.
2. Background. Under current law, a cannabis license applicant must submit a statement as part of their application attesting the applicant will enter into a labor peace agreement, or has already done so, and will abide by its terms. However, the law does not set forth any specific timelines associated with the requirement. This bill would require the statement include a commitment that a labor peace agreement will be entered into within 60 days.

As defined in state law, a labor peace agreement is an agreement between a licensee and any bona fide labor organization that, at a minimum, protects the state’s proprietary interests by prohibiting labor organizations and members from engaging in picketing, work stoppages, boycotts and any other economic interference with the applicant’s business. In the agreement, the applicant pledges not to disrupt efforts by the bona fide labor organization to communicate with, and attempt to organize and represent, the applicant’s employees. The agreement also must provide a bona fide labor organization 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.

Analysis Prepared by: Lisa Murawski / APPR. / (916) 319-2081

Date of Hearing: April 24, 2019

ASSEMBLY COMMITTEE ON LABOR AND EMPLOYMENT

Ash Kalra, Chair

ABPCA Bill Id:AB 1291 (

Author:Jones-Sawyer) – As Introduced Ver:February 21, 2019

SUBJECT: Adult-use cannabis and medicinal cannabis: license application: labor peace agreements

SUMMARY: Requires that an applicant for a cannabis-related commercial license with 20 or more employees provide a statement that they will enter into a labor peace agreement within 60 days and, if employing less than 20 at the time of application, provide a statement that they will enter into such agreement upon employing 20 employees.

EXISTING LAW:

1. Establishes the Control, Regulate and Tax Adult Use of Marijuana Act of 2016 (AUMA) by statewide initiative, to authorize a person who obtains a state license under AUMA to engage in commercial adult-use cannabis activity pursuant to that license and applicable local ordinances.
2. Establishes the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) that provides for, among other things, the consolidation of the licensure and regulation of commercial medicinal and adult-use cannabis activities.
3. Requires an applicant for any type of license issued under MAUCRSA to provide to the licensing authority specified information, including a statement, signed by the applicant under penalty of perjury, that the information provided is complete, true, and accurate.
4. Requires that an applicant with 20 or more employees also provide a statement that the applicant will enter into, or demonstrate that it has already entered into, and abide by the terms of a labor peace agreement.

FISCAL EFFECT: Unknown

COMMENTS: Labor peace agreements are not unique to the commercial cannabis industry. Labor unions and government officials have reached such agreements for airport or concession workers in the City of Chicago, San Francisco, and Los Angeles, as well as in the hospitality industry in various municipalities. In addition, labor peace agreements may be a component of a Community Benefits Agreement, which is a legally enforceable contract, signed by community groups and a developer, setting forth a range of community benefits that the developer agrees to provide as part of a development project.^[1]

According to the author, “A labor peace agreement is an agreement between a business and a labor organization that prescribes the obligations of both parties. These agreements tend to include mutually beneficial provisions that protect businesses and facilitate the ability for employees to organize.

A clear timeframe is needed to prevent arbitrary enforcement against cannabis businesses. The only guidance that regulations provide is that cannabis applicants and licensees need to comply with labor peace agreement requirements ‘as soon as reasonably practicable,’ which is ambiguous and open to interpretation. This bill provides important clarity designed to protect businesses.”

Arguments in Support

According to the United Food and Commercial Workers Western States Council (UFCW), sponsor of the bill, refining the timeframe to execute a labor peace agreement in cannabis-related commercial activity will provide clarity for all parties to the agreement. The UFCW states, “The legislative intent of requiring a labor peace agreement is far better served by a certain standard of compliance than one that makes identifying violations elusive and subjective or relegated to non-enforcement because of an uncertain prospect of winning. Regulators benefit by being able easily to distinguish between a valid complaint and an invalid one. Businesses always benefit by knowing with precision how to comport their behavior to avoid government sanction. And, the workers who may elect to choose to be represented by a union if afforded the opportunity likewise benefit by a law that offers certainty.”

No known opposition on file.

Prior Legislation

AB 2799 (Jones-Sawyer) Chapter 971, Statutes of 2018 requires an applicant for initial licensure or renewal of a state license under MAUCRSA to provide a statement that the applicant employs, or will employ within one year of receiving a license or renewal, one supervisor and one employee who have successfully completed a Cal-OSHA 30-hour general industry course offered by an authorized training provider.

REGISTERED SUPPORT / OPPOSITION:

Support

California Labor Federation
California Teamsters Public Affairs Council
United Food And Commercial Workers, Western States Council (sponsor)

Opposition

None on file.

Analysis Prepared by: Megan Lane / L. & E. /

1. An example is the 2008 Community Benefits Agreement between various community groups and a developer for a major development project in the Bayview-Hunters Point neighborhood of San Francisco. ↑

Date of Hearing: March 26, 2019

ASSEMBLY COMMITTEE ON BUSINESS AND PROFESSIONS

Evan Low, Chair

ABPCA Bill Id:AB 1291

Author:(Jones-Sawyer) – As Introduced Ver:February 21, 2019

SUBJECT: Adult-use cannabis and medicinal cannabis: license application: labor peace agreements.

SUMMARY: Requires an applicant for a license classification within the cannabis industry to provide a statement that the applicant will enter into a labor peace agreement, as currently required by existing law, within 60 days of employing 20 employees.

EXISTING LAW:

1. Enacts the Medicinal and Adult-Use Cannabis Regulation and Safety Act to provide for a comprehensive regulatory framework for the cultivation, distribution, transport, storage, manufacturing, processing, and sale of medicinal and adult-use cannabis. (Business and Professions Code (BPC) §§ 26000 et al.)
2. Defines an “A-license” as a state license issued for cannabis or cannabis products intended for adults 21 years of age and older and “M-license” as a state license for commercial cannabis activity involving medicinal cannabis. (BPC § 26001)
3. Provides for twenty total types of cannabis licenses including subtypes for cultivation, manufacturing, testing, retail, distribution, and microbusiness; requires each licensee except for testing laboratories to clearly designate whether their license is for adult-use or medicinal cannabis. (BPC § 26050)
4. Establishes the Bureau of Cannabis Control (BCC) within the Department of Consumer Affairs, previously named the Bureau of Marijuana Control, the Bureau of Medical Cannabis Regulation, and the Bureau of Medical Marijuana Regulation, for purposes of regulating microbusinesses, transportation, storage, distribution, testing, and sale of cannabis and cannabis products within the state. (BPC § 26010)
5. Requires the BCC to convene an advisory committee to advise state licensing authorities on the development of standards and regulations for legal cannabis, including best practices and guidelines that protect public health and safety while ensuring a regulated environment for commercial cannabis activity that does not impose such barriers so as to perpetuate, rather than reduce and eliminate, the illicit market for cannabis. (BPC § 26014)
6. Provides the Department of Food and Agriculture with responsibility for regulating cannabis cultivators. (BPC § 26060)
7. Provides the Department of Public Health with responsibility for regulating cannabis manufacturers. (BPC § 26130)
8. Establishes grounds for disciplinary action against cannabis licensees, including failures to comply with state licensing requirements as well as local laws and ordinances. (BPC § 26030)
9. Subjects cannabis businesses operating without a license to civil penalties of up to three times the amount of the license fee for each violation in addition to any criminal penalties. (BPC § 26038)
10. Expresses that state cannabis laws shall not be interpreted to supersede or limit the authority of a local jurisdiction to adopt and enforce local ordinances to regulate cannabis businesses. (BPC § 26200)
11. Authorizes the Legislature to, by majority vote, enact laws to implement the state’s regulatory scheme for cannabis if those laws are consistent with the purposes and intent of the Control, Regulate and Tax Adult Use of Marijuana Act (Proposition 64). (BPC § 26000)
12. Requires applicants for a license classification under the Medicinal and Adult-Use Cannabis Regulation and Safety Act who employs 20 or more employees to provide a statement that the applicant will enter into, or demonstrate that it has already entered into, and abide by the terms of a labor peace agreement. (BPC § 26051.5)
13. Defines “labor peace agreement” as an agreement between a licensee and any bona fide labor organization in which the applicant agrees not to disrupt efforts by the bona fide labor organization to communicate with, and attempt to organize and represent, the applicant’s employees.

THIS BILL:

1. Requires that the statement required to be provided by an applicant with 20 or more employees must state that it will enter into the required labor peace agreement within 60 days.
2. For applicants with fewer than 20 employees, requires that a notarized statement be provided stating that the applicant will enter into a labor peace agreement within 60 days of employing 20 employees.

FISCAL EFFECT: Unknown; this bill is keyed fiscal by the Legislative Counsel.

COMMENTS:

Purpose. This bill is sponsored by the United Food and Commercial Workers Union (UFCW) Western States Council. According to the author:

AB 1291 will provide clarity in law by creating a timeframe for cannabis businesses to comply with labor peace agreement requirements. The law currently requires cannabis businesses with 20 employees or more to enter a labor peace agreement with an organized labor group. However, regulations for cannabis licensees state that businesses need to comply with this law “as soon as reasonably practical.” This term is vague and can be interpreted differently by stakeholders.

AB 1291 will prevent arbitrary enforcement against cannabis businesses and will provide employees with clarity on when an employer is failing to comply with this laws and a complaint needs to be filed. Every stakeholder benefits from certainty.

Background.

Early History of Cannabis Regulation in California. Consumption of cannabis was first made lawful in California when voters approved Proposition 215 in 1996, or the Compassionate Use Act. Prop 215 protected qualified patients and caregivers from prosecution related to the possession and cultivation of cannabis for medicinal purposes, if recommended by a physician. The initiative prohibited physicians from being punished or denied any right or privilege for making a medicinal cannabis recommendation to a patient. Prop 215 also included findings and declarations, including encouragement of the federal and state government to implement a plan to provide for the safe and affordable distribution of cannabis to patients with medical needs.

The regulatory scheme for medicinal cannabis was further refined by SB 420 (Vasconcellos) in 2003, which established the state’s Medical Marijuana Program (MMP.) Under the MMP, qualified patients were eligible to obtain a voluntary medical marijuana patient card, which could be used to verify that the patient or a caregiver had authorization to cultivate, possess, transport, or use medicinal cannabis. Under the MMP, a patient would obtain a recommendation for medicinal cannabis from a physician and submit proof to their county of residence to receive a card. The MPP’s identification cards were intended to help law enforcement officers identify and verify that cardholders were allowed to cultivate, possess, and/or transport limited amounts of cannabis without being subject to arrest. The MMP also created protections for qualified patients and primary caregivers from prosecution for the formation of collectives and cooperatives for medicinal cannabis cultivation.

Since the state did not adopt a formal framework to provide for appropriate licensure and regulation of medicinal cannabis until late 2015, a proliferation of informally regulated cannabis collectives and cooperatives were largely left to the enforcement of local governments. As a result, a patchwork of local regulations was created with little statewide involvement. More restrictive laws and ordinances by cities and counties were ultimately upheld by the California Supreme Court in City of Riverside v. Inland Empire Patients (2013) 56 Cal. 4^th 729, which held that state law did not expressly or implicitly limit the inherent authority of a local jurisdiction, by its own ordinances, to regulate the use of its land, including the authority to provide that facilities for the distribution of medicinal cannabis be prohibited from operating within its borders.

Even after several years of legal cannabis cultivation and consumption under state law, a lack of a uniform regulatory framework led to persistent problems across the state. Cannabis’s continued illegality under the federal Controlled Substances Act, which classifies cannabis as a Schedule I drug ineligible for prescription, generated periodic enforcement activities by the United States Department of Justice. The constant threat of action by the federal government created apprehension among California’s cannabis community.

A document issued by the United States Attorney General in 2013 known as the “Cole memorandum” indicated that the existence of a strong and effective state regulatory system, and a cannabis operation’s compliance with such a system, could allay the threat of federal enforcement interests. Federal prosecutors were urged under the memo to review cannabis cases on a case-by-case basis and consider whether a cannabis operation was in compliance with a strong and effective state regulatory system prior to prosecution. The memo was followed by Congress’s passage of the Rohrabacher-Farr amendment, which prohibits the United States Department of Justice from interceding in state efforts to implement medicinal cannabis.

MCRSA. After several attempts to improve the state’s regulation of cannabis, the Legislature passed the Medical Cannabis Regulation and Safety Act (MCRSA) in 2015. MCRSA consisted of a package of legislation: AB 243 (Wood); AB 266 (Bonta, Cooley, Jones-Sawyer, Lackey, and Wood); and SB 643 (McGuire). MCRSA established, for the first time, a comprehensive statewide licensing and regulatory framework for the cultivation, manufacture, transportation, testing, distribution, and sale of medicinal cannabis to be administered by the newly established BCC within Department of Consumer Affairs, the Department of Public Health, and the Department of Food and Agriculture, with implementation relying on each agency’s area of expertise.

MCRSA vested authority for:

• The BCC to issue licenses and regulate dispensaries, distributors, and transporters, and to provide oversight for the state’s regulatory framework;
• The Department of Public Health to license and regulate testing laboratories and manufacturers; and
  
• The Department of Food and Agriculture to license and regulate cultivators.

While entrusting state agencies to promulgate extensive regulations governing the implementation of the state’s cannabis laws, MCRSA fully preserved local control. Under MCRSA, local governments may establish their own ordinances to regulate medicinal cannabis activity. Local jurisdictions may also choose to ban cannabis altogether.

AUMA. Not long after the Legislature enacted MCRSA, California voters passed Proposition 64, the Adult Use of Marijuana Act (AUMA). The passage of the AUMA legalized cannabis for non-medicinal adult use in a private home or licensed business, allowed adults 21 and over to possess and give away up to approximately one ounce of cannabis and up to eight grams of concentrate, and permitted the personal cultivation of up to six plants. The law sustained prohibitions against smoking in or operating a vehicle while under the effects of cannabis, possessing cannabis at a school or other child oriented facility while kids are present, growing in an unlocked or public place, and providing cannabis to minors.

The proponents of the AUMA sought to make use of much of the regulatory framework and authorities set out by MCRSA while making a few notable changes to the structure still being implemented. In addition, the AUMA approved by the voters adopted the January 1, 2018 deadline for state implementation of non-medicinal cannabis in addition to the regulations required in MCRSA that are scheduled to take effect on the same date. The same agencies given authority under MCRSA remain responsible for implementing regulations for adult use.

Under the AUMA, the BCC within the Department of Consumer Affairs continues to serve as the lead regulatory agency for all cannabis, both medicinal and non-medicinal. The AUMA includes 19 different license types compared to the 17 in MCRSA and authorizes Department of Consumer Affairs (and the BCC) the exclusive authority to create and regulate a license for transportation of cannabis. The AUMA also allows for vertical integration models which allow the holding of multiple license types previously prohibited under MCRSA. Additionally, while MCRSA requires both a state and local license to operate, the AUMA only stipulates a state license; however, the state is also directed not to issue a license to an applicant if it would “violate the provisions of any local ordinance or regulation.”

The language of the AUMA allows for legislative modifications that “implement” or “give practical effect” to the law by a majority vote. However, what constitutes “implementing” has been interpreted to be very limited. Consequently, proposed changes on the whole, require a two-thirds vote and of those, some may be deemed to require subsequent voter approval.

MAUCRSA. In the spring of 2017, SB 94 (Committee on Budget and Fiscal Review) was introduced to reconcile the distinct systems for the regulation, licensing, and enforcement of legal cannabis that had been established under the respective authorities of MCRSA and the AUMA. The single consolidated system established by the bill—known as the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA)—created a unified series of cannabis laws and deleted redundant code sections no longer necessary due to the combination of the two systems. MAUCRSA also clarified a number of components, including but not limited to licensing, local control, taxation, testing, and edibles.

Labor Peace Agreements. Under current law, a cannabis license applicant must submit a statement as part of their application that the applicant will enter into a labor peace agreement, or has already done so, and will abide by its terms. However, the law does not set forth any specific timelines associated with that requirement; instead, BCC regulations state simply that the agreement must be entered into “as soon as reasonably practicable” following licensure. This bill would require that the statement include a commitment that a labor peace agreement will be entered into within 60 days.

Additionally, applicants often may not yet have 20 employees at the time of their application, but will subsequently employ 20 employees after obtaining a license. This bill would add an additional required statement for such applicants stating that the applicant will enter into a labor peace agreement within 60 days of employing 20 employees. This statement must be notarized.

As defined in the Medicinal and Adult-Use Cannabis Regulation and Safety Act, a labor peace agreement is an agreement between a licensee and any bona fide labor organization that, at a minimum, protects the state’s proprietary interests by prohibiting labor organizations and members from engaging in picketing, work stoppages, boycotts, and any other economic interference with the applicant’s business. In the agreement, the applicant pledges not to disrupt efforts by the bona fide labor organization to communicate with, and attempt to organize and represent, the applicant’s employees. The agreement also must provide a bona fide labor organization 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. A labor peace agreement cannot mandate a particular method of election or certification of the bona fide labor organization.

Current Related Legislation. AB 690 (Aguiar-Curry) would authorize cannabis businesses to sell products containing CBD derived from hemp. This bill is pending in the Business and Professions Committee.

AB 286 (Bonta) would reduce the excise tax rate on cannabis and suspend the cultivation tax until June 1, 2022. This bill is pending in the Revenue and Taxation Committee.

AB 141 (Cooper) would authorize cannabis licensees to participate in informational, educational, or training event for government officials and their employees. This bill is pending in the Business and Professions Committee.

AB 420 (Lackey) would allow the University of San Diego Center for Medicinal Cannabis Research to cultivate cannabis for research purposes. This bill is pending in the Business and Professions Committee.

AB 404 (Stone) would authorize a testing laboratory to amend a certificate of analysis or retest a sample under certain conditions. This bill is pending in the Business and Professions Committee.

AB 545 (Low) would require the Bureau of Cannabis Control to undergo sunset review. This bill is pending in the Business and Professions Committee.

AB 1288 (Cooley) would require cannabis delivery to be included in track and trace. This bill is pending in the Business and Professions Committee.

AB 1530 (Cooley) would allow local governments to ban cannabis delivery within a jurisdiction. This bill is pending in the Business and Professions Committee.

Prior Related Legislation. SB 94 (Committee on Budget and Fiscal Review, Chapter 27, Statutes of 2017) combined AUMA and MCRSA into one system for the regulation of cannabis, resulting in MAUCRSA.

ARGUMENTS IN SUPPORT:

This bill is sponsored by UFCW Western States Council, which represents “over 170,000 members, many thousands of which work in licensed cannabis businesses.” UFCW states that current law regarding labor peace agreements “confusingly do not offer cannabis businesses,

cannabis government enforcers, or labor unions, enough certainty either to know how to comply

with this law.” UFCW argues that “the legislative intent of requiring a labor peace agreement is far better served by a certain standard of compliance than one that makes identifying violations elusive and subjective or relegated to non-enforcement because of an uncertain prospect of winning.”

ARGUMENTS IN OPPOSITION:

None on file.

REGISTERED SUPPORT:

UFCW Western States Council (Sponsor)

California Labor Federation

California Teamsters Public Affairs Council

REGISTERED OPPOSITION:

None on file.

Analysis Prepared by: Robert Sumner / B. & P. / (916) 319-3301