Oregon State Officials File Appeal to Reinstate Cannabis Industry Labor Peace Agreement Law

State Moves to Challenge Federal Ruling That Struck Down Voter-Approved Labor Neutrality Measure

Oregon officials have formally filed notice that they will appeal a federal judge’s decision to overturn a voter-approved law that mandated labor peace agreements within the state’s licensed cannabis sector. The law, known as Measure 119, required marijuana businesses to remain neutral in unionization discussions and to enter into agreements ensuring non-interference with organizing efforts by employees.

In a submission to the U.S. Court of Appeals for the Ninth Circuit, state attorneys representing Governor Tina Kotek (D), Attorney General Dan Rayfield (D), and officials from the Oregon Liquor and Cannabis Commission (OLCC)—Dennis Doherty and Craig Prins—signaled their intent to contest the ruling handed down last month by the U.S. District Court for the District of Oregon.

Federal Judge Previously Struck Down the Law as Unconstitutional and Conflicting with Federal Labor Protections

The legal battle stems from a lawsuit filed by two marijuana businesses—Bubble’s Hash and Ascend Dispensary which challenged the enforceability of Measure 119. The plaintiffs argued that the law infringed upon both federal labor rights and constitutional free speech protections.

In a detailed ruling, Judge Michael Simon agreed with the plaintiffs and found that the law violates the National Labor Relations Act (NLRA). The NLRA, which governs collective bargaining and union-related activities nationwide, explicitly safeguards the right to “uninhibited, robust, and wide-open debate” in labor disputes. According to the ruling, by requiring employers to maintain neutrality, Measure 119 went beyond permissible restrictions and into territory that limited lawful employer speech.

The judge emphasized that the law made no distinction between coercive, misleading employer behavior and lawful, constitutionally protected speech. Instead, it broadly barred any non-neutral statements made by employers regarding unionization, thereby breaching the NLRA and the First Amendment.

Oregon’s Appeal Aims to Uphold Voter Intent and Reassert State Authority Over Labor Standards in the Cannabis Sector

Although the court struck down the law, state officials are determined to uphold the will of the voters, who approved the measure by a margin of approximately 57% in the November 2023 election. The measure was placed on the ballot after United Food and Commercial Workers (UFCW) Local 555 submitted more than 160,000 signatures, following a failed effort to push similar legislation through the state legislature earlier that year.

The appeal does not yet include detailed legal arguments, but the court has issued a briefing schedule. The state must submit its opening brief by September 3, while the cannabis business plaintiffs will have until October 3 to file a response.

The outcome of the appeal will be closely watched, not just in Oregon, but across other states where labor rights intersect with cannabis regulation. As more jurisdictions legalize marijuana and attempt to regulate labor practices in the industry, the boundaries between state labor policy and federal labor law will remain a highly contested issue.

Cannabis Business Licenses Could Be Affected as Law Required Proof of Labor Peace Agreements for Compliance

Measure 119 was designed to ensure that cannabis employers actively facilitate rather than obstruct unionization. It stipulated that if a marijuana business could not show proof of a labor peace agreement, the state could deny or revoke its cannabis license.

This aspect of the law represented a strong regulatory stance, placing economic consequences on employers who resisted union-related transparency. In contrast to voluntary engagement models in other sectors, Measure 119 positioned compliance with labor neutrality as a prerequisite for doing business within Oregon’s regulated cannabis industry.

The law’s immediate enforcement, however, has been paused pending the resolution of litigation. Should the Ninth Circuit uphold the lower court’s decision, Oregon would be prevented from requiring labor neutrality clauses in cannabis business licensing, marking a significant setback for labor advocates.

Labor Union Behind the Measure Has Played a Pivotal Role in Organizing and Political Strategy

The UFCW Local 555, a major union representing cannabis workers in Oregon and other states, has been the driving force behind Measure 119. Following the Oregon legislature’s refusal to pass a similar bill during its 2023 session, the union pivoted to a citizen-led ballot campaign to secure the labor protections through direct democracy.

Their efforts were successful in qualifying the measure for the ballot and in earning majority support from voters. The union has argued that requiring neutrality is essential to empowering workers in a rapidly commercializing industry—one where many employees face low wages, limited benefits, and job insecurity.

When legislative efforts were blocked, reportedly by a top Democrat in the Oregon House, UFCW announced a recall campaign against the lawmaker, underscoring the group’s willingness to use both electoral and political tools to protect labor rights in cannabis.

Legal Arguments Center on First Amendment and Federal Preemption Concerns

In their successful challenge, cannabis businesses contended that Measure 119 represented a content-based restriction on employer speech, thus subject to strict scrutiny under the First Amendment. They argued that the state had not demonstrated a sufficiently compelling government interest to justify such a restriction, and that the law’s blanket neutrality mandate stifled legitimate business expression.

The judge concurred, stating that while states can regulate labor conditions to some extent, they cannot impose speech restrictions that conflict with federal law or constitutional protections. The NLRA, the judge noted, already provides a balanced framework for protecting both union and employer rights, and state-level attempts to tilt that balance may be federally preempted.

This interpretation has become a focal point for legal experts and activists debating how far states can go in regulating labor standards, especially in newly legalized industries like cannabis.

Appeal Outcome May Shape National Dialogue on Labor Standards in the Cannabis Industry

The Ninth Circuit’s decision in this case could have national implications. If the appellate court affirms the lower ruling, it could deter other states from pursuing similar labor mandates in cannabis. Alternatively, a reversal could empower states to enforce stricter labor regulations in industries where unionization has traditionally been difficult.

As the legal battle continues, both cannabis business owners and labor organizers will be watching closely. The case reflects broader tensions in the cannabis economy, including concerns about corporate consolidation, worker protections, and state autonomy in regulating emerging markets.

Oregon’s Fight to Uphold Cannabis Labor Law Enters Critical Phase

With the appeal now officially underway, Oregon’s leaders are taking a firm stance in defense of Measure 119, signaling that they view labor neutrality not just as a policy choice, but as a core value of the state’s approach to cannabis regulation. Whether the courts ultimately uphold that vision remains to be seen, but the battle over labor peace in the cannabis industry is far from over.