We’ve talked plenty about the headaches endured by cannabis industry employers. Recreational cannabis use remains federally illegal, yet these businesses must still navigate federal labor law and adhere to state regulations, which differ wildly throughout the U.S. In several states, licensing laws require that these employers enter into Labor Peace Agreements (LPAs), which mandate or strongly encourage companies to remain neutral during union organizing campaigns.
Multiple unions, primarily the UFCW and Teamsters, aggressively lobby state lawmakers into rolling out LPA laws, which interfere with retailers and distributors’ right to run their businesses.
That brings us to today’s subject, which is an update on challenges to LPAs that have been ongoing in multiple states.
A second LPA law has been deemed illegal
In New Jersey, a U.S. District Court judge ruled that federal labor law preempted the state’s LPA mandate. In other words, the NLRA already covers workers’ organizing activity and governs collective bargaining of private industry, and therefore New Jersey’s applicable 2021 law cannot require employers to enter into LPAs. Nor can the law force businesses to bargain with unions within 200 days of a dispensary’s opening.
New Jersey is expected to appeal this case in the Third Circuit, so further updates will surely come, but that’s not the only state LPA that has fallen. Oregon’s LPA law, Measure 119, was struck down in May 2025, also due to NLRA preemption. That happened after two businesses sued on the grounds that the LPA law violates employers’ free-speech rights.
Elsewhere, courts have been divided, with a California law surviving on the grounds that an employer cannot claim that federal labor law should prevail over a federally illegal industry. In October 2025, the National Right to Work Foundation filed an amicus brief with the Ninth Circuit in that case with further updates pending. Meanwhile, a similar state argument is ongoing in a New York case, and let’s just say that this split between states won’t be resolved in federal court anytime soon.
Why employers beyond cannabis should be watching
Given how heavily unions will lobby for laws favorable to organizing, no employer should assume that their industry will remain immune to LPA laws, which have already touched multiple industries:
- Gaming: A New York law governing commercial casinos requires all license applicants to either enter into an LPA or sign an affidavit stating that they’re willing to do so. (Separately, the Ninth Circuit ruled that tribal casinos fall under the NLRA, so state laws cannot force LPAs upon them.)
- Transportation: This sector has been plagued by city ordinances zeroing in on certain groups of workers at airports. For example, the Los Angeles-owned LAX requires employers to agree to an LPA to do business at the airport as a concessionaire and receive a no-strike commitment from unions. And in Chicago, the city’s Municipal Code requires a similar agreement at the O’Hare and Midway airports.
Where to go next for employers
LPAs are all the rage in labor-watching circles for the cannabis industry, but other sectors are not immune. Any employer in an industry that requires licensing or concession agreements could be vulnerable to being forced into an LPA by a state or city law. The lesson here is to stay aware, and we’ll be watching for further rulings from appeals courts on those cannabis cases, which could very well determine the future of LPAs in many more industries.
FAQs
Why are employers challenging LPAs in court?
Employers argue that the NLRA, which has authority over collective bargaining and union organizing, preempts LPAs. Additionally, businesses argue that LPAs, which mandate neutrality toward unions, violate free-speech rights.
Why are some states using “market participant” rationales to defend against these lawsuits?
This answer touches constitutional law, but some states are claiming that they aren’t intentionally trying to regulate labor law with LPAs. Rather they claim that they are using the dormant commerce clause as an attempt to justify economic regulation of an industry, which is what some states claim to be doing with LPA laws. Courts in New Jersey and Oregon haven’t bought this argument for the cannabis industry in the above cases.
Should non-cannabis employers be worried about LPAs in their industry?
Any business that requires state or city licensing to operate is potentially vulnerable to an LPA law. As mentioned above, this an issue of particular concern to cannabis, airport, and gaming employers, but don’t count this issue out elsewhere.
