NLRB General Counsel's Office Rolls Medical Marijuana Industry and Processing Employees Into NLRB's Jurisdiction | Practical Law

NLRB General Counsel's Office Rolls Medical Marijuana Industry and Processing Employees Into NLRB's Jurisdiction | Practical Law

The Office of General Counsel of the National Labor Relations Board (NLRB) released an advice memorandum recommending that an NLRB regional office investigate unfair labor practice (ULP) charges against Wellness Connection of Maine, an employer involved in the marijuana industry after concluding that it and a portion of its employees should be covered by the National Labor Relations Act (NLRA). The Division of Advice found that the NLRB should assert jurisdiction over employers in this industry that meet the NLRB's commerce-based jurisdictional standards and their marijuana processing assistants, as distinguished from their agricultural workers.

NLRB General Counsel's Office Rolls Medical Marijuana Industry and Processing Employees Into NLRB's Jurisdiction

by Practical Law Labor & Employment
Published on 25 Jan 2021 • USA (National/Federal)
The Office of General Counsel of the National Labor Relations Board (NLRB) released an advice memorandum recommending that an NLRB regional office investigate unfair labor practice (ULP) charges against Wellness Connection of Maine, an employer involved in the marijuana industry after concluding that it and a portion of its employees should be covered by the National Labor Relations Act (NLRA). The Division of Advice found that the NLRB should assert jurisdiction over employers in this industry that meet the NLRB's commerce-based jurisdictional standards and their marijuana processing assistants, as distinguished from their agricultural workers.
On August 7, 2014, the Office of General Counsel of the NLRB released an advice memorandum dated October 25, 2013, recommending that an NLRB regional office investigate unfair labor practice (ULP) charges against Wellness Connection of Maine, an employer involved in the marijuana industry after concluding that it and a portion of its employees should be covered by the NLRA. The Division of Advice found that the NLRB should assert jurisdiction over employers in this industry that meet the NLRB's commerce-based jurisdictional thresholds and their marijuana processing assistants, as distinguished from their agricultural workers.
Wellness Connection of Maine, Maine's largest medical marijuana dispensary operator, grows, processes and retails medical marijuana products. Wellness Connection employs three production assistants who primarily perform tasks during the growing cycle and eight processing assistants who primarily perform tasks during the processing stage.
In NLRB Region 1, the United Food and Commercial Workers International Union, alleged that the employer violated Sections 8(a)(1) and 8(a)(3) of the NLRA by engaging in unlawful surveillance, interrogation and retaliatory discipline and discharge. An NLRB regional director inquired from the Division of Advice:
  • Whether the NLRB should assert jurisdiction over Wellness Connection of Maine, an employer involved in the marijuana industry.
  • Whether marijuana processing assistants are agricultural laborers (exempted from the NLRA's definition of employee) or employees under Section 2(3) of the NLRA (29 U.S.C. § 152(3)).
The Division of Advice found that there was no legal reason for the NLRB not to assert jurisdiction over an enterprise involved in the marijuana industry, noting that:
  • Section 2(2) of the NLRA gives the Board jurisdiction over any employer doing business in the country aside from those excepted by Congress (29 U.S.C. § 152(2)).
  • Section 14(c)(1) of the NLRA gives the Board the power to decline jurisdiction over certain matters, but most of the Board's historical declinations have been reversed or narrowed (29 U.S.C. § 164(c)(1)).
  • The Board has clear authority to regulate the marijuana industry even where production and consumption are intended to be intrastate.
  • A labor dispute involving the medical marijuana industry could have a substantial effect on interstate commerce, because:
    • the medical marijuana industry is a large growing interstate industry;
    • Wellness Connection purchases enough out-of-state supplies to meet the NLRB's non-retail jurisdictional standard and has enough revenue to meet the Board's retail standard; and
    • labor unrest in this industry could interfere with the federal government's regulation of the intrastate marijuana market.
  • Policy considerations do not compel the Board to decline jurisdiction. Specifically:
    • Maine's regulation of the business does not preclude the Board from asserting jurisdiction;
    • the employer is a year-round operation with a steady workforce;
    • OSHA has exercised jurisdiction over this industry and employer; and
    • the NLRB can exercise jurisdiction over Wellness Connection even though it violates the federal Controlled Substance Act (5 U.S.C. § 801). Other agencies have exercised jurisdiction over employers that violate federal laws.
The Division of Advice found that marijuana processing assistants are employees covered by the NLRA, noting that:
  • Section 2(3) of the NLRA defines employees broadly but does not include agricultural workers.
  • The NLRB interprets "agricultural" based on Section 3(f) of the FLSA's definition of agricultural work, which includes:
    • primary agriculture, which includes production, cultivation, growing and harvesting of agricultural or agricultural commodities; and
    • secondary agriculture, which includes other work performed by farmers or on a farm as an incident to or in conjunction with farming operations.
  • Determining whether a practice is incident to or in conjunction with farming operations requires an evaluation of factors such as whether the practice:
    • constitutes an established part of agriculture;
    • is subordinate to the employer's farming operations;
    • does not amount to an independent business; and
    • is more related to agriculture than manufacturing.
    (29 C.F.R. §780.144.)
  • Other relevant factors to consider in determining whether practices are incident to or in conjunction with farming operations are listed in other DOL regulations (29 C.F.R. §780.145 and 29 C.F.R. §780.147).
  • For commodity processing to be considered manufacturing rather than secondary agriculture, the natural state of the commodity has been substantially transformed.
  • Wellness Connection's marijuana processing assistants significantly break down the cannabis plant into its component parts, transforming it from its raw and natural state. They engage in a manufacturing process rather than secondary agriculture activity.
  • Wellness Connection's processing function is not subordinate to its farming operations because:
    • the company employs more processing assistants than production assistants;
    • the employer has separate facilities for production and processing; and
    • the processing function adds significant value to the product, rather than just preparing it for market.
  • Wellness Connection ultimately retails the product under its own label, which may indicate that the practice is conducted as a separate business activity apart from its agricultural business.
  • Wellness Connection's marijuana processing assistants should also be covered under the NLRA because they spend a substantial amount of time performing non-agricultural work.
Based on its analysis, the Division of Advice recommended that the Region should investigate and determine the merits of the ULP charges against Wellness Connection related to its marijuana processing employees.
(Advice Mem. (Ne. Patients Group d/b/a Wellness Connection of Maine) 01-CA-104979 (Jan. 25, 2021).)

Practical Implications

Advice memoranda are not binding precedent on the panel (Board) heading the judicial functions of the NLRB. However, this advice memorandum provides guidance to employers on which parties (and industries) the NLRB is likely to exercise jurisdiction over and what factors the NLRB will consider when determining whether NLRA rights extend to particular workers. Based on this advice memo, counsel should expect that NLRB regional offices will consider medicinal marijuana producers and dispensaries meeting the NLRB's commerce-based jurisdictional thresholds and their production or sales employees to be covered by the NLRA. Accordingly, counsel should also expect that NLRB regional offices will process ULP charges and election petitions stemming from this growing industry.

UPDATE

On January 25, 2021, the Office of General Counsel of the NLRB released an advice memorandum in AgriKind, dated October 21, 2020, concluding that two employees of a marijuana enterprise were exempt agricultural workers because they engage in the primary agricultural functions of harvesting, pruning, and sorting of plants. Unlike the workers in Wellness Connection of Maine, the employees handled the plants by hand and did not use machines to transform the raw plants to retail product. (Advice Mem. (AgriKind), 04-CA-260089 (Oct. 21, 2020).)