On May 20, 2025, a federal district court in Oregon issued a landmark decision invalidating Measure 119, also known as the United for Cannabis Workers Act. This law, approved by Oregon voters in November 2024 and effective as of December 2024, required all state-licensed cannabis businesses to enter into labor peace agreements (“LPAs”) with unions as a condition for obtaining or renewing their licenses. The law also mandated employer neutrality regarding union organizing efforts.

Background

Two cannabis businesses, Bubble’s Hash and Ascend Dispensary, challenged Measure 119 in court, naming several Oregon state officials as defendants. The plaintiffs argued that the law infringed on their constitutional rights and was preempted by federal labor law, specifically the National Labor Relations Act (“NLRA”).

Court’s Analysis and Ruling

The court granted a permanent injunction, barring Oregon from enforcing Measure 119.

NLRA Preemption

The court determined that the NLRA preempted state law based on two primary grounds:

• Garmon Preemption: The court found that Measure 119 was preempted by the NLRA under the doctrine established in San Diego Building Trades Council v. Garmon^[1]. This doctrine prohibits states from regulating conduct that is either protected or prohibited by the NLRA, or even arguably so. The court determined that the LPA requirement directly implicated rights protected by the NLRA, particularly an employer’s right to express views about unionization (as protected by Section 8 of the Act).
• Machinists Preemption: The court also found that Measure 119 was preempted under the Machinists^[2] doctrine, which bars states from regulating areas that Congress intended to leave to the “free play of economic forces.” The court found that conditioning license renewal on signing an LPA and mandating employer neutrality, upset the balance of power between labor and management that Congress intended to preserve.

Violation of First Amendment Rights

The court also held that Measure 119’s requirement for employer neutrality violated plaintiffs’ First Amendment rights to free speech. The law did not merely prohibit coercive or threatening speech, but instead broadly required employers to remain “neutral” on unionization, effectively silencing any non-coercive, non-threatening opinions or arguments against unionization.

The court cited Supreme Court precedent affirming that employers have a First Amendment right to communicate their views about unionization to employees, so long as the communication is not coercive or threatening. Measure 119’s neutrality mandate was found to infringe on this right.

Irreparable Harm and Public Interest

The court found that the plaintiffs faced irreparable harm because they were forced to choose between complying with an unconstitutional law (and incurring costs or unfair bargaining leverage) or risking the loss of their business licenses and customer goodwill.

The public interest, the court concluded, is best served by upholding the Supremacy Clause and protecting constitutional rights, even if it means enjoining a law enacted by popular vote.

Key Takeaways

Cannabis is heavily regulated at the state level and remains illegal federally. However, the court here found that the NLRA still applies to cannabis businesses that meet its jurisdictional thresholds. This decision, which invalidated the requirement to enter into LPAs in the cannabis industry, could be persuasive to courts in other jurisdiction evaluating the constitutionality of similar restrictions on obtaining or renewing business licenses in other industries. However, a critical determination in this analysis is whether the state or locality is regulating public safety or violence, as opposed to labor relations. The Oregon court struck down the law because the judge held that it focused on labor relations, and thus did not fall under the “local responsibility” preemption exception.

An appeal to the Ninth Circuit could be filed, however, after the order was issued, the Oregon Liquor and Cannabis Commission announced that it is no longer requiring cannabis businesses to enter into LPAs in order to obtain or renew a cannabis license.

FOOTNOTES

[1] 359 U.S. 236 (1959).

[2] 427 U.S. 132 (1976).