New York Pot Entrepreneurs Face Added Cost of Union Workers

NEW YORK (MainStreet) — New Yorkers applying for a cannabis license have one more expense to consider that applicants in other states are not required to factor into their overhead costs: wages and benefits for union workers.

“As we see more states coming on board legally, it’s becoming more difficult for the average small business person to own a dispensary, production or processing facility,” said Ata Gonzalez, who launched a marijuana company called GFarmaLabs in California six years ago. “Seems like New York will be a hard state but hopefully that will change.”

Under the Retail, Wholesale, Department Store Union (RWDSU) council, representatives of Local 338 began working on the Compassionate Care Act with patients, advocates and legislative sponsors three years ago.

“Right now a lot of organizations that are looking to get licensed are having conversations and several have signed letters of agreement guaranteeing labor peace,” said Patrick McCarthy, managing director with Mercury, a public strategy firm in Albany. When the Compassionate Care Act was passed this summer, it included language that cannabis workers be granted the opportunity to become part of a union.

“The law says any company applying for a license has to have a labor peace agreement with a bonafide labor organization and, by signing, the company agrees it will give access to their workforce a conversation about joining the union,” said Joseph Fontano, assistant to the president of Local 338 in Mineola.

Unions are known to require employers to pay for health care coverage and fund the retirement pensions of their employees.

“It’s not only a labor bill, it also takes care of patients,” said Fontano who was a featured panelist at the recent International Cannabis Association conference in New York. “The state has a proprietary interest to make sure that jobs created in this industry provide quality medicine to the patients but it is also a jobs bill that ensures jobs created in the industry are full-time, middle class work that will prosper the workers as well as the industry.”

Even recruiting and temp agencies will need to be designated in advance and written into labor peace agreements that will be negotiated with cannabis business owners.

“It’s something that will impact staffing agencies but it will also translate into a better product and safer industry so in the long run everyone will benefit,” McCarthy told MainStreet.

The owner of a staffing agency out of Colorado that specializes in placing workers at growhouses and dispensaries has already met with a few union groups. "Once medical marijuana is up and running, we will recruit through the unions for those jobs to satisfy that need," said Stephen Sullivan, president of Ms. Mary Staffing. "It’s an extra step for us to take but it’s not a major obstacle."

Union benefits may however be an obstacle for smaller business owners hoping to secure a cannabis license.

“Only those who can afford to pay the higher costs associated with union workers will succeed and that’s usually companies or bigger groups that have large amounts of capital to invest,” said Larry Mishkin, an attorney with Silver & Mishkin in Northbrook, Ill.

So far, New York is the only state that has involved a union, and cannabis attorney Mara Felsen who practices in California is stunned.

“I think it’s incredible that there’s a concession like that,” Felsen told MainStreet. “I’m not sure how I feel about such a strong arm tactic. It’s a fascinating twist and may have been the concession that needed to be thrown to the union to gain their significant weight to get this bill passed.”

--Written by Juliette Fairley for MainStreet

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