It’s an exciting time for Minnesota cannabis and hemp. Governor Walz’s signature to HF 100 set into a motion a multi-year process that will culminate in a licensed and regulated cannabis industry as well as preserve the unique lower potency hemp edible industry that the state has pioneered over the past year. Every state has peculiar qualities and landscapes to their cannabis industries, but one condition that Minnesota will share with several other licensed cannabis states is the requirement of labor peace agreements (LPAs) for most types of licensed cannabis and hemp operations.
What’s an LPA?
One of the provisions in the bill is related to “labor peace agreements”., This provision determines which types of cannabis and hemp businesses will be required to sign labor peace agreements (“LPAs”) as part of their license application. For the unfamiliar, the LPA in Minnesota’s bill is defined as:
- an agreement
- between a cannabis or hemp business and a bona fide labor organization, that
- protects MN interests by prohibiting the labor organization from picketing, work stoppages, or boycotts against the cannabis and industry
The state defines a “bona fide labor organization” as “a labor union that represents or is actively seeking to represent cannabis workers,” and a determination of being bona fide is important—the problem of “company unions” and other fraudulent groups posing as legitimate groups representing workers is already an issue in other states with adult-use cannabis, like California.
In other words, an LPA is a signed agreement between cannabis businesses and a certified labor union, as determined under the provisions of the National Labor Relations Act. Most of the details of a particular LPA are not mandated, beyond the minimum agreement to prohibitions on certain picketing, work stoppages, and boycotts against the state’s cannabis industry.
What’s a Lower-Potency Hemp Edible (LPHE)?
In 2022, Minnesota became the only state in the US with an in-between system of permitting some non-cannabis operators to produce and sell products with delta-9 THC (that is derived from federal legal hemp). The formal definition of a “lower-potency hemp edible” is any product intended to be consumed as a beverage by humans that contains hemp concentrates or artificially derived cannabinoids. The single-serving limits on LPHEs are a maximum of 5mg of delta-9 THC, 25mg of CBD, 25mg of CBG, or any combination of those, within those limits (e.g., 5 mg THC and 25mg of CBD in a serving). LPHEs may not contain any artificially derived cannabinoid other than delta-9 THC, and they may not contain any cannabinoids derived from cannabis plants or cannabis flowers—only from federally legal hemp plants.
These low-potency hemp beverages might already be familiar to you in Minnesota, as the products have already developed a significant presence in the year since their creation. It’s worth reiterating, the particular arrangement — delta-9 THC, produced from hemp, and sold in retail locations alongside other products like alcohol – is unique in the nation, and could potentially mean that Minnesota is able to develop a THC beverage market unlike any other jurisdiction.
What kind of cannabis and hemp businesses are required to sign an LPA?
Minnesota’s new licensing and regulatory system for cannabis and hemp products includes 16 license types– 14 for cannabis and medical cannabis businesses, and two for lower potency hemp edibles. What do the new regulations say about each of those groups?
First, for cannabis and medical cannabis businesses, the requirements are clear:
“any application to obtain or renew a cannabis license shall include… an attestation signed by a bona fide labor organization that the applicant has entered into a labor peace agreement.”
MN Statute 342.14 Subd. 1(a)(9)
In other words, for every initial application and for every license renewal application, cannabis businesses must submit a signed letter from a labor union that the relevant business is already in a binding LPA. And, while the new applications have not been created or released yet, the legislative language in 342.14 Subd. 1(d) makes clear that an applicant’s commitments in their application to maintaining an LPA will be an “ongoing material condition” of maintaining and renewing a cannabis license in Minnesota.
While that language sounds like all license types must submit an LPA with their applications, there is a cannabis license type that is exempted— microbusinesses. What is a cannabis microbusiness? In Minnesota, microbusinesses are a license type that allows its holder to conduct activities that range across the supply chain, from cultivation all the way to sales. The microbusiness is the smallest license, with some of the greatest restrictions on the size of its cultivation canopy; it is also limited to a single retail location. Per MN Statute 342.28 Subd. 4, cannabis microbusinesses (vertically integrated and small cannabis operators) are not required to submit a signed attestation from a labor union with any application.
Next, we look at the two LPHE licenses coming into effect: LPHE manufacturers and retailers. While the new bill makes clear that LPHE businesses are not presumed to be covered by all of the same requirements and rules as the cannabis license types, MN Statute 342.44 Subd. 1(d) does state that applicants for LPHE manufacturer licenses must submit a signed attestation from a labor union that the applicant has entered into an LPA with a labor union. The LPA requirement, however, is not mentioned as a condition of an LPHE retailer license application.
Do Other States Have LPAs as Part Of Their Cannabis Regulations?
In fact, several of them do, and several other states have movements in their legislatures to add LPA requirements as a condition of cannabis licensing. California’s requirement includes additional agreements from cannabis applicants, including agreeing to not disrupt efforts by labor organizations’ attempts to communicate and organize employees and agreeing to provide labor organizations access to work spaces to discuss workers’ rights and conditions of employment. In Illinois, preferential scoring is given to applicants that submit LPAs with their applications. Connecticut and New York also require LPAs as a condition of receiving final licensure for a cannabis business.
Summary
Out of the 16 total cannabis and hemp business licenses that Minnesota will be unveiling in the next year, only two license types are exempt from the two-fold requirement of (i) signing a labor peace agreement with a bona fide labor organization, and (ii) submitting a signed attestation from the labor union with every license application and every license renewal. Those two exempted licenses are cannabis microbusinesses and lower-potency hemp edible retailers. Per the statutes, if the Office of Cannabis Management receives an application that fails to include the required attestation, they will issue an initial notice of a deficiency to which the applicant has 10 business days to submit the additional necessary information. If the information is not provided, the OCM will reject the application.
Given the inevitable flood of applications to the office with a new licensing scheme, interested individuals and organizations do not want their first applications to suffer delays from foreseeable requirements and risk falling behind or out of the running for one of the earliest licensing windows.
The current regime of cannabis and hemp products in Minnesota is beginning to draw to a close, and the new rules will begin to dawn over the next 12-18 months. On July 1, the state began the complex process of developing its new agency, creating rules for licenses and applicants, and onboarding existing hemp edible retailers and producers. By March 2025 at the latest, all of the new licensed cannabis retailers and producers will be preparing to launch. Compiling an application for any cannabis or hemp license is a long and difficult process, and it will be important for groups and people to determine all of the new requirements for their business. Many of those requirements will be written and published over much of the rest of this year, but the Labor Peace Agreement requirement is one of few that has already been established, and savvy parties will avoid the easy mistakes and have that LPA ready for their first application.