{"id":1785,"date":"2026-08-17T17:23:00","date_gmt":"2026-08-17T21:23:00","guid":{"rendered":"https:\/\/blogs.duanemorris.com\/cannabis\/?p=1785"},"modified":"2026-08-18T12:32:30","modified_gmt":"2026-08-18T16:32:30","slug":"federal-court-strikes-down-new-jerseys-union-labor-requirement-for-cannabis-businesses","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/cannabis\/2026\/08\/17\/federal-court-strikes-down-new-jerseys-union-labor-requirement-for-cannabis-businesses\/","title":{"rendered":"Federal Court Strikes Down New Jersey\u2019s Union Labor Requirement for Cannabis Businesses."},"content":{"rendered":"\n

By: Paul Josephson<\/a>, Eve Klein<\/a>, James Hearon<\/a> and Kayla Handt<\/a><\/p>\n\n\n\n

Like many other jurisdictions, New Jersey imposed union organizing and negotiating requirements on most cannabis licensees when it legalized adult use cannabis\u2014a mandate that has shaped workforce decisions across the industry for nearly a decade.  Last week, a federal judge in New Jersey confirmed what many attorneys have said all along: state-mandated labor peace and collective bargaining requirements are preempted by federal law.[1]<\/a><\/p>\n\n\n\n

The implications for operators and applicants are substantial.<\/p>\n\n\n\n

New Jersey\u2019s LPA Requirement<\/strong><\/p>\n\n\n\n

Under New Jersey\u2019s Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (\u201cCREAMMA\u201d), cannabis businesses have been required to sign a labor peace agreement (\u201cLPA\u201d) with a qualifying labor union as a condition of obtaining\u2014and retaining\u2014a license. An LPA grants the designated union broad access to attempt to organize employees, and usually requires the employer to remain neutral and remain silent as to the merits of union representation.<\/p>\n\n\n\n

New Jersey further required licensees to enter into a collective bargaining agreement within 200 days of opening for business. Failure to comply could result in fines, license suspension, or revocation. New Jersey cannabis regulators regularly and intensely monitored whether licensees were engaged in good faith negotiations towards a CBA as part of their annual license renewal process.<\/p>\n\n\n\n

The Curaleaf Dispute<\/strong><\/p>\n\n\n\n

Though most cannabis companies chafed at the union requirements imposed in many states, few wished to challenge the law and incur the wrath of regulators, elected officials, and powerful union interests. New Jersey\u2019s requirement was challenged only once state regulators overplayed their hand.<\/p>\n\n\n\n

Curaleaf, one of the largest cannabis companies in the country, became the focal point when its LPA with UFCW Local 360 expired in April 2025 and renewal negotiations broke down. Members of the Cannabis Regulatory Commission reacted very strongly, imposing a $610,000 civil penalty\u2014calculated at $5,000 per day\u2014and threatened to suspend or revoke Curaleaf\u2019s licenses.<\/p>\n\n\n\n

Curaleaf filed suit in October 2025, arguing the LPA requirement was preempted by the National Labor Relations Act (NLRA). Curaleaf was not alone. Cannabis companies in Oregon (Casala, LLC v. Kotek<\/em>), California (Ctrl Alt Destroy, Inc. v. Elliott<\/em>), and New York (Hybrid NYC LLC v. New York State Cannabis Control Board<\/em>) had already filed similar lawsuits challenging their states\u2019 union mandates on federal preemption grounds. Most notably, in Casala, LLC v. Kotek<\/em>, a federal court in Oregon granted a permanent injunction striking down that state\u2019s LPA requirement just months before Curaleaf filed its complaint.[2]<\/a><\/p>\n\n\n\n

Curaleaf\u2019s Arguments<\/strong><\/p>\n\n\n\n

Curaleaf advanced four arguments why the LPA requirement exceeded the state\u2019s authority:<\/p>\n\n\n\n

First, it forced cannabis companies to surrender \u201ceconomic weapons\u201d like the right to lock out workers during a dispute\u2014tools that federal law deliberately leaves available to both sides.<\/p>\n\n\n\n

Second, it regulated union organizing and collective bargaining (areas exclusively governed by federal law) by forcing employers to recognize a union based on signed cards rather than allowing them to insist on a secret-ballot election supervised by the National Labor Relations Board.<\/p>\n\n\n\n

Third, it imposed state-level fines and license penalties for conduct that only the federal government is authorized to regulate.<\/p>\n\n\n\n

Fourth, it restricted employees\u2019 right to choose their union representative by limiting eligible unions to large, established organizations meeting the state\u2019s narrow criteria.<\/p>\n\n\n\n

The Court\u2019s Analysis<\/strong><\/p>\n\n\n\n

In May 2026, United States District Judge Michael A. Shipp issued a detailed memorandum opinion addressing the preemption question directly. The court found the NLRA\u2019s reach extends to the cannabis industry\u2019s labor market, notwithstanding that cannabis is federally prohibited, because the workers and their labor rights are still protected by federal law.<\/p>\n\n\n\n

The court ruled that the LPA requirement was preempted for two reasons. First, the requirement impermissibly regulated activity arguably protected by the NLRA. Second, the requirement restricted economic tools that Congress deliberately left unregulated. On August 10, 2026, Judge Shipp entered final judgment holding that the LPA requirement was preempted as applied to Curaleaf.<\/p>\n\n\n\n

Key Takeaways<\/strong><\/p>\n\n\n\n

For cannabis business owners and license applicants in New Jersey, this decision carries significant weight. The court has declared that the state cannot condition licensure on LPAs and collective bargaining, and cannot impose penalties for operating without an LPA and CBA. <\/p>\n\n\n\n

Though New Jersey filed a formal notice of appeal on August 13, 2026, the following consequences remain in effect unless and until New Jersey convinces the Third Circuit to rule otherwise:<\/p>\n\n\n\n