Late in Albany’s last budget session at some ungodly hour in Albany, union Local 338 pushed legislation through that would replace the mandatory LPA (labor peace agreement) that every cannabis business must sign to get a license. It was passed, as most who voted for it probably had no idea what they were voting on or were strong-armed, and it now sits on Governor Hochul’s desk awaiting a signature or a veto.
Here’s what it does: it kills the labor peace agreement requirement that every cannabis dispensary in New York has been forced to sign since day one. In exchange, it creates a three-person Cannabis Wage Board — one industry rep and two union members — with the power to set wages across the entire industry. Let that sit for a second. Name me another private industry in this state where a union gets a permanent seat on a government board that sets wages for government-regulated businesses. I can’t think of one. This didn’t happen by accident.
Here’s the backstory to understand why this happened now. When I first got into this business, I was genuinely righteous about the labor peace agreement. I am always righteous, so there is that too. These are small stores and farms — some of them employ three or four people, in total. Not three or four hundred. The state forced every one of them to sign an agreement with a union before they could even open. What happened next, in stores that size, was predictable: the union attempted to move in by trying to convince employees that they deserve more and their employers are not doing right by them. This rhetoric changes the culture of these tiny businesses overnight. Not in a good way. It has been disruptive to owners who are already fighting for their lives just to keep the lights on.
So Gotham sued. We took the Office of Cannabis Management to federal court, arguing that federal labor law is clear: employees get to choose their own union, or choose none at all. New York’s law gave cannabis workers exactly one option — one union, take it or leave it — and that’s not legal under the National Labor Relations Act. This unlawfully preempts federal authority over private-sector labor relations. We haven’t won outright yet, but a federal judge has already agreed with us that dispensaries shouldn’t be forced to renew these agreements, and we’re waiting on the final written decision.
Instead of letting a court sort out whether the mandate was even legal, they went and attempted to get something arguably bigger — a permanent hand on the wage lever for the whole industry. Meanwhile, nobody in this business is making money. Price compression is brutal right now — the same customers who spent freely last year are back buying the same amount, but stores are pulling in 20 to 30% less from them because the state itself created the conditions for that compression. The OCM continues to issue licenses, effectively enabling people to lose money. And on top of it, dispensaries still can’t do anything outside their four walls. No weddings, no venues, no concerts — because the law that governs cannabis states that cannabis can’t be sold or distributed anywhere alcohol is served, and that’s been read broadly enough to choke off almost every path to additional revenue.
Look to California if you want to see where this all leads. It’s been legal there for consumers for almost a decade now, and the illicit market is bigger than the legal one — not close, either. Licensed growers are producing a fraction of what unlicensed operators are still pumping out. Ten years in, and the state hasn’t come close to killing the market it was supposed to replace. Whose fault is that? Not the consumers. Not the operators trying to build real businesses under real rules. It’s the state — every time you tax a legal product until it can’t compete with the guy who pays no tax at all, every time you bury a small operator in compliance costs while the illegal seller has none, you’re not protecting a nascent industry that pays taxes to the state. And when no one is truly working to shut down the illegal market, then the state is subsidizing the illicit market.
New York has the exact same problem brewing, and nobody in Albany wants to say it out loud: you cannot regulate and tax an industry into oblivion and then act shocked when its underground version thrives. There are illegal shops everywhere, from countless websites that sell products and ship across the country, to bodegas all over the city selling products, to trucks selling products, to illegal dispensaries selling products. So here’s where we are: an industry that employs people and pays taxes, but can’t grow beyond its own storefronts, and that may soon have a union sitting on the board that decides what everyone gets paid — a union with no capital in these businesses and no risk if they fail.
I’m not anti-union. I’m very much pro-labor. There is a big difference. What I’m against is telling small business owners they have no say in who represents their employees, and telling those employees they don’t get a choice either. If you think this is as backward as I do, call your state senator, your assembly member, and the governor’s office. Tell them the data that came out last week is clear: cannabis is used by more Americans than tobacco or alcohol, and it’s time the industry stopped being treated like a second-class citizen just because it doesn’t have the lobbying money the alcohol and tobacco industries do. What we do have is the ability to grow, employ people, and pay our taxes, unlike the illicit market.
As a country and a state, we should be investing in the next wave of industries, not holding them back by clinging to past vice competition. If Hochul signs this into law, it will destroy the cannabis industry. The industry is already angry at every misstep; it will scream loud and clear to everyone that the leaders in the state don’t care about the future of cannabis, and we will all wonder (as we all do these days) what tit-for-tat was given to get this signed?
