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Fledgling Marijuana Industry Pressing Through Labor Pains

PHOENIX – The developing national marijuana industry is still sifting through labor disputes long since settled in other lines of work.

Employees have found that no line of work is quite like marijuana – and not always in a good way. Most bosses must pay their workers in cash, hampered by federal laws that prevent many employers from opening bank accounts. For the vast majority, direct deposit is a pipe dream, health insurance a luxury, a matching 401(k) a foreign concept.

“The marijuana industry is actually being treated worse than prostitution rings and gambling organizations, which is ridiculous,” said Kim Houser, a professor of business law at Washington State University, where she studies the marijuana industry.

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Still, successful marijuana business ventures can rake in millions of dollars a year. Marijuana workers are usually compensated well, by minimum-wage standards, for unique work that demands a particular skill set.

“It’s not like making widgets,” said Raymond Hogler, a professor of management at Colorado State University, where he studies marijuana labor relations. “It's not like working on a manufacturing line.”

Though demand for jobs in the field is high, Hogler said, workers skilled in marijuana are becoming harder to find as the industry expands.

With medical marijuana legal in nearly half the country and recreational marijuana legal in four states, cannabis is doing big business in the United States – to the tune of $2.7 billion in sales last year, up from $1.5 billion in 2013, according to the ArcView Group, a cannabis industry investment network.

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Experts expect billions more in future growth from markets where the drug is now illegal. ArcView projects a $10.8 billion legal sales market by 2019, provided more states legalize marijuana in 2016.

Though the federal government doesn’t track job creation figures, as marijuana is illegal under federal law, analysts said the cannabis industry has created thousands of jobs.

Cultivators nurture tiny seedlings into full-grown plants plump with pounds of marijuana. Trimmers armed with scissors prune whole leaves down to usable product. “Budtenders” guide customers through pungent selections of strains.

A few thousand of those workers have joined the United Food and Commercial Workers International Union, according to Jeff Ferro, the leader of Cannabis Workers Rising, the union’s medical marijuana division.

But that’s a drop in the bucket of UFCW's 1.3 million members nationwide.

Ferro said the time for the union to expand in the field is now, while mom-and-pop shops still dominate the industry, before bigger players take over – if and when the federal government legalizes the drug.

“There is some urgency because if the federal law changes and big money and Big Tobacco get into this, we will find ourselves in a race to the bottom again,” Ferro said.

But some say the industry doesn’t need a union to treat its workers well.

Because the drug is still illegal under federal law, employers in the field have an incentive to treat their workers right to avoid unwanted attention, said Renee Grossman, the owner of High Q, an upscale marijuana dispensary in Silt, Colorado.

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“Employers now recognize that they need to have some level of loyalty to their employees. What the union did in the past, the employers are now doing.”

She called unions “a thing of the past,” saying that employers must pay competitively or risk losing employees. The boss of High Q starts her hires at $14 an hour, well over Colorado’s minimum wage of $8.23 an hour.

“I don’t really think (unions) serve the same function they did when they first came about,” Grossman said. “Employers now recognize that they need to have some level of loyalty to their employees. What the union did in the past, the employers are now doing.”

Unions in the United States have been on the decline for decades as they’ve fallen out of favor with policymakers and the public, Hogler said, likening a union resurgence to “turning around the Titanic in the middle of the ocean.”

Union members in 2014 made up 11.1 percent of all U.S. workers, down from 11.3 percent the year before, according to the U.S. Bureau of Labor Statistics. Union workers made up 20 percent of the workforce in 1983, the first year with available comparable data.

For the union, cannabis represents a chance to safeguard workers’ rights in a business that changes each day. Strides so far have mostly been made by local branches.

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In Minnesota, the UFCW has brokered a labor agreement between a dozen workers and Minneapolis’ Minnesota Medical Solutions, one of only two dispensaries open in the state since a law legalizing medical marijuana took effect July 1. Unlike in other industries, the employer welcomed the union.

“This is not your typical bad boss, workers rise up thing,” said Bernie Hesse, director of special projects at UFCW Local 1189, the Minnesota branch that unionized the workers. “It was more like we know a number of people who can help.”

The union lobbied state legislators to legalize medical marijuana in 2014, getting a foot in the door with employers. Since, it has arranged high wages – $18 an hour for the lowest-paying janitorial position – and provided health care options to members.

With employee turnover rampant in the industry, what Minnesota Medical Solutions loses in higher wages, it recoups in a steady supply of union-trained replacements who know what they’re doing, said Kyle Kingsley, CEO of the company.

“Folks who are satisfied aren’t going to steal from you.”

The son of a union household, Kingsley said well-paid workers make for happy workers – and that pays off in the long run with employees who work harder and stay honest.

“Folks who are satisfied aren’t going to steal from you,” Kingsley said.

Because regulations vary so much state-to-state, “labor contracts would be very good for the marijuana industry because it would standardize working conditions,” Hogler said.

“In a fledgling industry, I don't see the downside yet,” Hogler said. “Once they start making a lot of money, and once there's a lot of competition, and once there's some real threat posed by higher wages, that may happen.”

Minnesota is not the only city where UFCW locals have gotten involved in marijuana politics.

In Los Angeles, UFCW Local 770 in 2013 helped rally support for an ordinance that cracked down on illegal dispensaries. The branch has gone on to successfully campaign for labor-friendly members of the city’s government. It’s also entered into labor agreements with several dispensaries there.

Also in Los Angeles, a less-established rival to UFCW is gaining traction in some circles. Scot Bennett, a Los Angeles resident and paralegal of 25 years, is the force behind United Cannabis Workers.

Though the union startup doesn’t yet provide members much in terms of services or benefits, the union’s more than 47,000 Facebook followers dwarfs UFCW’s Cannabis Workers Rising page, which has about 3,500 likes.

Bennett, the self-described “king of the consumers” of cannabis, said he’s building the only union customized from the ground up for marijuana and its unique set of challenges. He’s recruiting a board of directors and working to gain tax-exempt status from the IRS – no luck so far, as it’s proven costly.

“I’m not trying to create conflict. I'm trying to resolve issues. I’m trying to connect people."

Not a fan of old-school union tactics, Bennett said he would never ask members to strike or confront their bosses head-on.

“I’m not trying to create conflict,” he said. “I’m trying to resolve issues. I’m trying to connect people. I’m trying to get people to where they have benefits, to where they are treated fairly.”

As more states legalize and the marijuana economy expands, Hogler said, unions will carve out a larger niche, as long as their efforts support cannabis-friendly legislation that benefits business owners.

“What you're going to see unfold is an unusual relationship between unions and marijuana dispensaries,” he said. “They're going to try and walk down this road hand in hand because it’s good for both of them. … As unions are able to get their foot in the door and help out, they’re going to be welcome. It’s going to set a new kind of tone in industrial relations.”