Campaign contributions fuel UFCW bid to unionize cannabis workers

Dan Rush, a former union organizer for United Food and Commercial Workers Local 5, was recently named in a federal arrest warrant that alleges he engaged in bad-faith negotiations with cannabis dispensary owners while acting in his capacity as a union official. (Affidavit.) Rush is also accused of holding a private financial interest in a medical cannabis company seeking a dispensary permit in Oakland in 2010.

Dan Rush Filing

Rush is a prominent figure in the California medical cannabis community, and he has traveled throughout the state to conduct union organizing activities. A review of campaign finance records shows UFCW Locals 5 and 770, and a regional UFCW political action committee, made targeted contributions to state and local candidates in an apparent bid to open up new dispensary regulations and permits.

Among other issues, the review raises questions about:

• UFCW support for a Los Angeles dispensary ordinance (Proposition D), including a $125,000 "loan" that was never repaid.
• UFCW support for Assembly Member Rob Bonta (D-Oakland), the chief author of Assembly Bill 266, and for other state lawmakers.
• The AB 266 "neutrality agreement" to allow union organizers free access to cannabis businesses and workers.
• The AB 266 exemption clause for the City of Los Angeles, possibly to protect union dispensaries.
• Union preference in selection of new and existing Oakland cannabis businesses.
• UFCW support for local candidates and ballot initiatives in Southern California.

The arrest of Dan Rush on corruption charges has raised concerns about whether he, by himself or in concert with others, attempted to exert undue influence on state and local elected officials and candidates to help facilitate the issuance of dispensary permits. Among other allegations, Rush is accused of holding an ownership interest in a company applying for an Oakland dispensary permit. Rush is also accused of reneging on a $600,000 loan from Martin Kaufman, who operates the Blum Oakland dispensary with Derek Peterson. Kaufman and Peterson later formed MediFarm, which successfully applied for a Nevada medical cannabis permit, apparently with Rush's assistance. Both Kaufman and Peterson cooperated with the FBI probe, according to the affidavit, and likely will not be prosecuted. (See Peterson comments on Rush indictment.)

Political contributions from cannabis supporters and businesses represent a small but growing fraction of the campaign money raised by state and local officials. UFCW Local 5 has condemned Rush's alleged activities, and the federal warrant makes no allegations regarding campaign contributions. Even so, contributions provide a useful frame of reference to examine the union's activities during Rush's tenure as a UFCW organizer.

UFCW starts marijuana campaign committee

In 2012, the UFCW national organization contributed $50,000 to a campaign committee dubbed Californians to Regulate Medical Marijuana, with major funding from United Food and Commercial Workers International. UFCW Locals 8 (Sacramento) and 770 (L.A.) kicked in $2,500 each. Most of the committee's 2012 expenditures were paid out to polling and campaign consultants.

The Coalition for Cannabis Policy Reform kicked in $5,000 in January 2014. The UFCW committee spent nearly $5,000 for polling and surveys. The committee appeared to go dormant in 2015 and reported ending cash of $36. Rush was listed as a CCPR board member until shortly after the FBI affidavit became public this August. (He's still listed as a "founding member and secretary" on this web page.)

Los Angeles: UFCW spends big on Proposition D

The Proposition D campaign committee was named "Yes on D/No on F, Citizens Coalition to Protect Patients & Neighborhoods, Major Funding by UFCW Local 770 and Sponsored by Patients, Greater Los Angeles Collective Alliance & Americans for Safe Access." The Yes-on-D campaign reports are available online.

Highlights of the Yes-on-D effort include:

• Cash contributions: $232,200
• Loan contribution: $125,000 (UFCW Local 770)
• Non-monetary contributions: $121,423
• Total contributions: $478,729
• Total expenditures: $611,126

In April 2013, the UFCW Western States Issues PAC donated $25,000 to the campaign committee supporting Proposition D. The PAC reported total contributions of $212,601 by the addition of non-monetary staff time. Ricardo Icaza, president of UFCW Local 770, signed the ballot argument in favor of Proposition D.

On May 1, 2013, the Hayward-based UFCW Local 5 PAC made a late $5,000 contribution to the Committee for a Safer L.A. Supporting Eric Garcetti for L.A. Mayor 2013, which was 20 days before the city's election. It was one of the PAC's largest contributions that year. Eric Garcetti is the son of former Los Angeles District Attorney Gil Garcetti, who also signed the ballot argument in favor of Prop. D. Eric Garcetti won the May 13, 2013, election and is now the incumbent mayor of Los Angeles.

On May 17, 2013, the Los Angeles County Federation of Labor AFL-CIO Council on Political Education sponsored a Yes-on-D campaign rally at Los Angeles City Hall, four days before the election. UFCW 770's field organization director, Rigo Valdez, was present. The AFL-CIO Council reported more than $58,000 in non-monetary contributions to the Prop. D campaign, presumably for staging the "field program" at City Hall. In July 2013, the L.A. County labor council received a $10,000 contribution from the UFCW Western States Issues PAC.

UFCW 770 declared the Garcetti race and Proposition D as "top-priority" contests in 2013. The UFCW 770 website now lists 62 medical cannabis dispensaries as having UFCW worker contracts in place as of August 2015. (See sidebar.) This represents nearly half of the city's 135 permitted dispensaries.

Oakland: Union preference for issuance of cannabis business permits

The allegations against Rush include attempts to disguise his ownership interest in a collective that was seeking an Oakland dispensary permit in 2010. The Oakland City Administrator used a union preference policy when ranking former applicants for dispensary permits, according the FBI affidavit.

Five years later, Oakland is now considering whether to permit more dispensaries, cannabis processors and delivery services by means of a grandfather clause for "pre-existing" businesses analogous to the "pre-ICO" clause used to thin the herd of L.A. dispensaries eligible for licensure. (The "ICO" refers to a 2007 interim control ordinance.) Although Oakland regulations do not state so explicitly, the same City Administrator who used union status as a ranking criteria for earlier dispensaries may have the authority to do so for new businesses. Pending permits also will be reviewed by the city's Measure Z Cannabis Regulatory Commission.

On July 16, the commission discussed a draft ordinance to grandfather in "pre-existing" cannabis businesses, a policy that could prevent new businesses from opening after the existing businesses apply for licenses. Although no union preference policy is discussed, the draft ordinance allows "environmental criteria" to be used for ranking. There also appears to be some zoning limitations on which pre-existing businesses may qualify for permits.

In January, Oakland City Council Member Rebecca Kaplan received a $500 contribution from Martin Kaufman, the Blum Oakland dispensary operator who had loaned $600K to Rush several years before, according to the federal affidavit. Mayor Libby Schaaf's campaign committee received several cannabis-themed contributions in 2014, including UFCW Local 5, $700; Wise Education Technology (Oaksterdam University), $700; and $700 each from the operators of Telegraph Health Center and Richmond Patients Group. Schaaf's campaign also received $100 from Marc Terbeek, the Rush attorney who is likely facing prosecution himself.

UFCW, state candidates and AB 266

UFCW uses a separate "candidates PAC" to support state and local candidates, primarily Democrats. The majority of these contributions are unrelated to cannabis, with some possible exceptions. In the 2013-2014 reporting cycle, the union's candidate PAC made scores of contributions to campaign committees, including:

So far this year, Bonta has received $4,200 from the UFCW candidate PAC (report). Ken Cooley, his Assembly Bill 266 co-sponsor, has received $1,300. Sen. Mark McGuire, author of Senate Bill 643, and Assemblymember Jim Wood, author of AB 243, received $1,000 each.

Newsom for California Governor 2018 received $500 in June from the UFCW candidate PAC. On June 30, the campaign committee for Assembly Member Reggie Jones-Sawyer, another AB 266 co-sponsor, received $4,200 from UFCW Local 770, which campaigned heavily for L.A.'s Proposition D in 2013.

Also this year, the UFCW Western States Issues PAC contributed a total of $9,300 to the Rob Bonta Advancing California Ballot Measure Committee. Bonta's officeholder committee has received contributions from dispensary operators and makers of cannabis edibles, including $500 from Kenny Morrison of the Venice Cookie Co.; $500 from Ryan Hudson, president of the Apothecarium dispensary in San Francisco; and $250 from Kristi Knoblich of San Leandro-based Kiva Confections.

Union language in pending cannabis regulation bills

Three cannabis regulation bills are pending in the California Legislature, although they all have been stripped down to placeholder language pending a major rewrite from the office of Gov. Jerry Brown. Assembly Bill 266 (Bonta, D-Oakland) has received the most attention, in part because of apparent pro-union language that has been retained in the governor's remix.

19300 (s). “Labor peace agreement” means an agreement between a licensee and a bona fide labor organization that, at a minimum, protects the state’s proprietary interests by prohibiting labor organizations and members from engaging in picketing, work stoppages, boycotts, and any other economic interference with the applicant’s business. This agreement means that the applicant has agreed not to disrupt efforts by the bona fide labor organization to communicate with, and attempt to organize and represent, the applicant’s employees. The agreement shall provide a bona fide labor organization access at reasonable times to areas in which the applicant’s employees work, for the purpose of meeting with employees to discuss their right to representation, employment rights under state law, and terms and conditions of employment. This type of agreement shall not mandate a particular method of election or certification of the bona fide labor organization.

19320 (a)(11)(A) For an applicant with 20 or more employees, (it is required to) provide a statement that the applicant will enter into, or demonstrate that it has already entered into, and abide by the terms of a labor peace agreement.

19320 (a)(13) For an applicant seeking a cultivation license, (it is required to) provide a statement declaring the applicant is an “agricultural employer,” as defined in the Alatorre-Zenovich-Dunlap-Berman Agricultural Labor Relations Act of 1975 (Part 3.5 (commencing with Section 1140) of Division 2 of the Labor Code), to the extent not prohibited by law.

The "labor peace agreement" described in AB 266 is similar to a "neutrality agreement," which was mentioned by Rush in a recorded conversation discussed on page 14 of the FBI affidavit.

During a monitored conversation on April 24, 2014, Rush proposed that MediFarm sign a toothless neutrality agreement with the UFCW. A neutrality agreement obligates the signatory employer from actively resisting an organizing campaign of the signatory union of the employer's employees. Rush produced a proposed neutrality agreement with Peterson and said "... that bullshit fucking neutrality agreement ... I wrote it specifically so you could pull away from it." Then Rush proceeded to advise Peterson how Peterson could secretly tell MediFarm's employees to not vote for UFCW affiliation.

The L.A. exemption doesn't appear in the governor's remix, but there is provision for existing dispensaries to continue operating on an interim basis.

111(c) A facility or entity that is operating in compliance with local zoning ordinances and other state and local requirements on or before January 1, 2018, may continue its operations until its application for licensure is approved or denied pursuant to this part. The bureau shall prioritize when issuing licensees, any facility or entity that can demonstrate to the bureau’s satisfaction that it was in operation and in good standing with the local jurisdiction by January 1, 2016.

The governor's remix also retains the "labor peace agreement" definition and requires license applicants who employ 20 persons or more to adopt one as a condition for licensure.

UFCW and the cannabis apprenticeship clause

Before they were gutted, AB 266 and SB 643 also contained provisions for an apprenticeship program, which would require special training programs for cannabis employees on the path to "certification." Starting in 2019, most employees would have to be certified or enrolled in an apprenticeship program.

19352. (a) By January 1, 2017, the Division of Labor Standards Enforcement shall develop a certification program for cannabis employees. Commencing January 1, 2019, except as provided in subdivision (c), certification shall be required of all persons who perform work as cannabis employees. (emphasis added)
(b) Individuals desiring to be certified shall submit an application for certification and examination.
(c) (1) Certification is not required for registered apprentices working as cannabis employees as part of a state-approved apprenticeship program. An apprentice who is within one year of completion of his or her term of apprenticeship shall be permitted to take the certification examination and, upon passing the examination, shall be certified immediately upon completion of the term of apprenticeship.
(2) Commencing January 1, 2019, an uncertified person may perform work for which certification is otherwise required in order to acquire the necessary on-the-job experience for certification provided that the person shall be under the direct supervision of a cannabis employee certified pursuant to this section who is responsible for supervising no more than one uncertified person.
(3) The Division of Labor Standards Enforcement may develop additional criteria governing this subdivision.

Unions can apply to receive state training funds to offer apprenticeship programs for "non-traditional" occupations. In March, UFCW Locals 5 (Hayward) and 8 (Sacramento) submitted a successful training proposal seeking $125,000 in Employment Training Panel funding to train 45 apprentice meat-cutters. "Apprentice training has been offered in California by the United Food and Commercial Workers (UFCW) for 75 years in this industry sector," stated the application from the UFCW Northern California Meat Apprenticeship Trust Fund. The apprentices will receive employer-paid health benefits during their training.

The governor's remix deletes the cannabis apprenticeship clause.

Los Angeles exempted from AB 266

The UFCW candidate PAC and Locals 5 and 770 invested heavily in the Proposition D campaign in 2013. The City of Los Angeles -- and its largely unionized "pre-ICO" dispensaries -- were exempted from the latest working version of AB 266. No other city or county received a similar exemption.

19312. (a) This chapter shall in no way supersede the provisions of Measure D, approved by the voters of the City of Los Angeles on the May 21, 2013, ballot for the city, which provides potential limited immunity to medical cannabis businesses as defined by Measure D consistent with the terms of the measure and local ordinances. Notwithstanding the provisions of this part, cannabis businesses within the City of Los Angeles shall continue to be subject to Measure D and any and all other applicable ordinances and regulations of the City of Los Angeles.
(b) It is the intent of the Legislature to recognize the unique circumstances of the City of Los Angeles with respect to Measure D and associated rules related to commercial cannabis activity. In light of these unique circumstances, the provisions of Sections 19319 and 19338 shall apply in the City of Los Angeles.
(c) The State Board of Equalization shall enter into a memorandum of understanding with the City of Los Angeles to establish protocols for the following:
(1) Tracking businesses granted immunity pursuant to Measure D, as approved by the voters of the City of Los Angeles at the May 21, 2013, general election.
(2) Tracking medical cannabis and medical cannabis products to and from the City of Los Angeles. (3) Allowing for the legal transfer of medical cannabis and medical cannabis products from outside the jurisdiction of the City of Los Angeles to within the city by licensees conducting commercial cannabis activities outside of the city.

19318.5. (a) A licensing authority shall not issue a license to an applicant who proposes to operate within the City of Los Angeles, regardless of the activity for which the license is sought.
(b) A medical cannabis business, as defined by Measure D, within the City of Los Angeles shall comply with all standards and regulations applicable to the commercial cannabis activity or activities engaged in by that medical cannabis business with respect to all of the following:
(1) Standards for the production, labeling, and manufacture of medical cannabis and medical cannabis products, in accordance with Article 7 (commencing with Section 19332) and Article 10 (commencing with Section 19342).
(2) Standards regarding the application of pesticides, in accordance with Article 7 (commencing with Section 19332).
(3) Regulations to be promulgated by the State Board of Equalization, in accordance with Article 8 (commencing with Section 19334), governing dispensing facilities and transporters to the extent that those regulations relate to health and safety standards, environmental standards, worker protections, or security requirements.
(4) Security measures regarding transported medical cannabis, in accordance with Section 19337.
(5) Standards to be promulgated by the Division of Medical Cannabis Manufacturing and Testing regarding health and safety, in accordance with Article 10 (commencing with Section 19342).
(c) The City of Los Angeles shall have the full power, authority, and discretion to enforce all standards and regulations required by this section.

The impact of these provisions is unclear. On the one hand, Los Angeles is exempted from AB 266 as a whole. On the other hand, several provisions of AB 266 are applied to L.A., including those addressing "worker protections." Last year's Senate Bill 1262 did not exempt Los Angeles, but it would have granted provisional license status to the Prop. D dispensaries and dispensaries in other local jurisdictions.

The governor's remix takes a broader view of the state's existing dispensaries without specifically mentioning Los Angeles or Proposition D:

106.(a) For facilities issued a state license that are located within the incorporated area of a city, the city shall have full power and authority to enforce this chapter and the regulations promulgated by the bureau or any licensing authority. Notwithstanding Sections 101375, 101400, and 101405 of the Health and Safety Code or any contract entered into pursuant thereto, or any other law, the city shall further assume complete responsibility for any regulatory function relating to those licensees within the city limits that would otherwise be performed by the county or any county officer or employee, including a county health officer, without liability, cost, or expense to the county.

111(c). A facility or entity that is operating in compliance with local zoning ordinances and other state and local requirements on or before January 1, 2018, may continue its operations until its application for licensure is approved or denied pursuant to this part. The bureau shall prioritize when issuing licensees, any facility or entity that can demonstrate to the bureau’s satisfaction that it was in operation and in good standing with the local jurisdiction by January 1, 2016.

Contributions to local races in Southern California

In 2013, the UFCW Western States Council Candidate PAC contributed $1,500 to Desert Hot Springs City Council candidate Joe McKee. Mayor Adam Sanchez received $1,000. Sanchez, McKee and other city officials signed the argument in support of Measure HH, the 2014 ballot measure establishing a new tax on marijuana cultivation facilities.

The UFCW candidate PAC also contributed to council races in cities where dispensaries are (or were) banned:

• Three Riverside City Council members -- Andy Melendrez, Jim Perry and Mike Soubirous -- received $1,000 each in 2013, but this year Perry and Soubirous both opposed a June ballot measure to rescind the city's dispensary ban.
• Also in 2013, Ginny Foat received $1,000 from UFCW for her Palm Springs City Council campaign, the same year local voters approved a plan to open and tax dispensaries.
• Robert Garcia got $750 in his winning bid to become mayor of Long Beach. The campaign of City Councilwoman Lena Gonzalez got $350. The Long Beach City Council created a Medical Cannabis Task Force this year.