Since our 2024 update on California’s Labor Peace Agreement (“LPA”) requirement, the landscape for licensees in recreational cannabis states such as California and New York has remained murky. Although the evidence around compliance and enforcement of these rules has been scant, that has not prevented licensees from continuing to lodge legal challenges to these mandates. Some of these challenges have been rejected, some have succeeded based on preemption theories under the National Labor Relations Act (“NLRA”) and violations of the First Amendment, and some remain undecided.

 

California: Federal Lawsuit Dismissed Amidst Unclear Environment of Compliance and Enforcement

As we reported last year, a California cannabis licensee filed a lawsuit in federal court asserting that the state’s LPA mandate violated its constitutional rights. Since then, in March of 2025, the Southern District of California granted the state’s motion to dismiss, ruling that it had no jurisdiction to hear the case under the equitable ‘unclean hands’ doctrine because the state’s entire cannabis industry technically remains illegal under federal law. See Ctrl Alt Destroy, Inc. v. Elliott et. al, Case No. 3:24-cv-00753, ECF 20 (S.D.CA 2025). It is not clear if this will become a defense widely utilized in other states as a means to thwart challenges to LPA mandates, or if those challenging the mandates might pivot by bringing their cases in state court. In the meantime, the California litigants have appealed this ruling to the Ninth Circuit.

Separately, as reported before, the evidence around actual compliance with the LPA mandate in California is extremely minimal. According to Department of Cannabis Control (“DCC”) data live on its website as of mid-November 2025, although there are currently 7,305 active licensees in the state, there are only 974 labor peace agreements on file. That is an even lower percentage of compliance (13.33%) than when we previously reported on this.

Furthermore, there is little evidence that the LPA mandate is being meaningfully enforced across California. Out of the DCC’s 701 enforcement actions, only eight of them have involved violations of the LPA requirements. Moreover, as before, none of these eight offenders who had their licensees suspended or denied suffered these enforcement actions solely because of their lack of LPA; instead, each of them had at least one other pertinent violation. These findings continue to suggest that California’s LPA mandate is not being strictly enforced.

Oregon Court Dismisses LPA Mandate as Unconstitutional, so State Ceases Enforcement

Oregon enacted a very similar LPA requirement as California, and, as happened there, licensees challenged the mandate as unconstitutional. Yet, in a turn of events from California, the Oregon federal district court accepted the licensees’ arguments, when it found that the LPA mandate was illegal and explicitly held that the reasoning of the earlier California case was not persuasive or compelling. The court also rejected the state’s argument that the LPA requirement should stand because it was not even enforcing it.

In particular, the Court granted the challengers’ requests for declaratory and injunctive relief when it concluded that Oregon’s LPA requirement “is preempted by the NLRA in violation of the Supremacy Clause and violates Plaintiff’s First Amendment rights.” See Casala, LLC v. Kotek, 789 F. Supp. 3d 1025, 1031 (D. Or. 2025). As a result, the Oregon Office of Liquor and Cannabis Commission formally postponed its enforcement of the LPA mandate on May 29, 2025.

The suit also highlighted other practical issues with the state’s LPA requirement that have been seen in other states, such as California. Specifically, the litigants highlighted how there were only two “bona fide” labor organizations in the state that would have even been eligible to contract with a licensee regarding the required LPA.

Because these unions’ practical monopoly on access to organizing cannabis workers in Oregon gave them so much perceived leverage, the unions allegedly sought terms which one of the challenging entities felt were both unfair and illegal under state and federal law, such as 24 hour access to facilities and the disabling of cameras during organizing meetings. Meanwhile, the other challenging entity, a smaller operation, never even received a call back from the single eligible union it contacted.

Licensees File Suit in NY and NJ; while CT and RI LPA Requirements Remain Unchallenged

As discussed, these LPA requirements have also been mandated on cannabis licensees in the heavily-populated Northeast states of New York, New Jersey, Connecticut, and Rhode Island.

In New York and New Jersey, licensees have brought lawsuits challenging these mandates raising similar arguments as litigants did in California and Oregon, such as NLRA preemption and denial of First Amendment speech rights. The New York suit was brought in April in the Southern District of New York, see Hybrid NYC LLC v. N.Y. St. Cannabis Control Bd. Et. Al, Case No. 1:25-cv-03067-AKH, ECF 1 (S.D.N.Y. Apr. 14, 2025), while the New Jersey case was lodged recently in October. See Curaleaf Hldgs, Inc. v. N.J. Cannabis Reg. Comm’n, Case No. 3:25-cv-16397, ECF 1 (D.N.J. Oct. 9, 2025). Both cases remain pending at the federal trial court level.

On the other hand, although Connecticut and Rhode Island have similarly instituted LPA mandates, these have yet to be meaningfully challenged. In Rhode Island, a licensee filed suit in mid-2024; however, that case was dismissed in February 2025 before it could be adjudicated on the merits because the Court determined that the claims were not yet ripe against Rhode Island’s Cannabis Control Commission since it had not yet even promulgated rules nor begun accepting licenses under the state’s new recreational cannabis regulation scheme. Therefore, in both these states, it remains unclear whether such mandates are legal and for that reason, we anticipate both states to continue taking a cautious approach towards enforcement.

Ongoing Takeaways for Licensees and Employers

Given the state by state patchwork in which cannabis businesses find themselves operating, care must be taken to approach this issue on a state by state basis. While there is added clarity to the situation on the ground in Oregon, confusion continues to abound in California, New York, New Jersey, Connecticut, and Rhode Island.

We therefore recommend that cannabis operators consult with appropriate management-side labor attorneys and cannabis counsel who can advise any specific business on the risks and considerations about potentially signing a LPA if and when it should be required under a specific state’s cannabis regulatory regime. Please contact Seyfarth’s labor and cannabis specialists with any specific questions or concerns.

Update on LPA Requirements for Licensure in Legal Cannabis States