Portland, Oregon – A landmark ruling from the U.S. District Court in Oregon on May 20, 2025, has invalidated a state law mandating that licensed cannabis businesses enter into labor peace agreements with unions. The decision strikes down Measure 119, officially known as the United for Cannabis Workers Act, less than six months after it took effect following voter approval.
The court found that Measure 119 is preempted by federal labor law, specifically the National Labor Relations Act (NLRA), which governs most private-sector labor relations nationwide. Furthermore, the court determined that the law infringes upon the First Amendment rights of cannabis businesses, particularly concerning requirements for employer neutrality regarding union organizing efforts.
The Court’s Decision
U.S. District Judge Michael Simon issued the ruling, handing a significant victory to business groups and operators in Oregon’s burgeoning cannabis industry. The decision, rendered on May 20, 2025, centered on challenges arguing that Measure 119 overstepped the state’s authority by regulating labor practices already covered by federal statute and compelled speech and association in violation of constitutional protections.
The court’s finding of federal preemption asserts that state and local laws cannot regulate activity that is either protected or prohibited by the NLRA, nor can they intrude upon areas that Congress intended to leave unregulated. Judge Simon’s analysis reportedly concluded that Measure 119’s requirements directly entered this federally preempted territory.
Additionally, the ruling addressed First Amendment concerns, particularly the law’s mandate for employer neutrality. Opponents argued that requiring businesses to remain neutral effectively restricted their ability to communicate with employees about unionization, violating their right to free speech. The court apparently agreed with this assessment regarding the neutrality clause.
This ruling is reportedly the first time a federal court has blocked a state-level labor peace agreement mandate imposed as a condition for obtaining or renewing a business license. Its novelty and the grounds for the decision – federal preemption and First Amendment rights – lend it significant weight and potential influence beyond Oregon.
Understanding Measure 119
Measure 119, the United for Cannabis Workers Act, was approved by Oregon voters during the November 2024 general election and became effective in December 2024. The law was designed to promote labor harmony and unionization within the state’s cannabis sector, which has seen rapid growth since legalization.
The core requirements of Measure 119 were twofold:
First, it mandated that any business seeking to obtain or renew a state license for cannabis production, processing, or retail sales must enter into a labor peace agreement (LPA) with a labor union that represents or is actively attempting to represent cannabis workers. LPAs are contracts between employers and unions where the union agrees not to strike or picket the employer, and the employer agrees to remain neutral during union organizing campaigns and often provides the union access to employees.
Second, the law explicitly required employer neutrality regarding union organizing efforts. This meant businesses could not express opinions or take actions that could be construed as favoring or opposing unionization, allowing unions to organize without employer interference.
Proponents of Measure 119 argued that it was a necessary step to ensure fair labor practices, protect workers’ rights, and prevent labor disputes from disrupting the cannabis supply chain. They contended that the unique status of cannabis under federal law (still illegal at the federal level) might allow states more latitude in regulation, including labor.
Broader Implications and State Responses
The federal court’s decision carries potentially significant implications for other states that have implemented similar labor peace agreement requirements for licensed cannabis businesses. At least eight other states reportedly have comparable mandates in place. These include major markets such as California, New York, and Minnesota, where similar legal challenges could potentially arise or be emboldened by the Oregon ruling.
The preemption argument is particularly potent because it centers on the NLRA, a federal law applying universally. The First Amendment argument also raises constitutional questions that could be applicable across state lines.
In the immediate aftermath of the ruling, the Oregon Liquor and Cannabis Commission (OLCC), the state agency responsible for regulating the cannabis industry, announced that it would cease requiring labor peace agreements as a condition for issuing or renewing licenses, aligning state practice with the court’s directive.
However, the legal battle is far from over. United Food and Commercial Workers (UFCW) Local 555, a prominent union that supported Measure 119 and advocated for its passage, has publicly stated its intention to appeal the decision. The appeal will be filed with the U.S. 9th Circuit Court of Appeals, which has jurisdiction over federal court decisions in Oregon and several other western states.
An appeal to the 9th Circuit will mean the legal status of cannabis LPA mandates in Oregon, and potentially their viability elsewhere, will remain uncertain as the case proceeds through the federal appellate system. The outcome of the appeal could either solidify Judge Simon’s ruling or potentially reinstate Measure 119’s requirements, further clarifying the complex intersection of state cannabis regulation and federal labor law.
