UFCW Goes to Pot; Northern California Organizer Indicted

Marijuana dispensaryMarijuana has become a labor issue as well as a legal and commercial one.  In one union, that means corruption.  On September 17, Daniel Rush, an organizer for the United Food and Commercial Workers, was indicted in Oakland, Calif. by a federal grand jury for bribe-taking, attempted extortion, honest services fraud, and money-laundering related to his receipt of over $500,000 in cash and other things of value from marijuana dispensary employers in return for his advice to the employers on how to avoid being unionized.  Arrested on August 11 after a lengthy FBI probe, Rush pleaded not guilty on September 23.  A spokesperson for the U.S. Attorney’s Office for the Northern District of California told NLPC today that a status conference is set for December 14.

Over the past several decades, and with gathering speed, attitudes in this country toward marijuana (cannabis sativa and related species) have evolved in a libertarian direction.  We’re well beyond the time when simple possession of at least an ounce was an almost sure ticket to jail.  During 1930s and beyond, the federal government and the states passed legislation outlawing the production, sale, possession and use of marijuana.  The drug's newfound classification as contraband owed heavily to a misleading public information campaign whose most noteworthy artifact was “Reefer Madness,” an oft-seen 1936 film whose preposterousness eventually would propel it to camp cult status.  As usage became widespread during the 1960s and 70s, pressure to decriminalize the drug mounted.  The last several years have witnessed an acceleration of this trend despite continuing hardline opposition from the Drug Enforcement Administration.  Several states – most notably, Colorado – have legalized marijuana for use by the general population.  A number of other states either have decriminalized marijuana or allowed its use for the treatment of specified medical conditions.

With the marijuana industry sprouting above ground, workers have begun to organize for better wages and benefits.  One union, the United Food and Commercial Workers (UFCW), hears opportunity knocking.  The UFCW, in fact, for several years has had its own medical cannabis division.  And it’s achieved results.  This June, workers at the Cannabis Club Collective, a Tacoma medical marijuana dispensary, unanimously voted to join UFCW Local 367.  “We’re going to set a high bar for our industry with a contract that’s fair to both workers and owners,” said a member of the bargaining committee.  Making the organizing possible was Washington State voter approval by 56-44 percent in November 2012 of Initiative 502, which gave eligible medical patients of at least age 21 a right to carry up to one ounce of marijuana and/or grow up to 15 marijuana plants.

In Ohio, meanwhile, the UFCW and a nonprofit group, Responsible Ohio, campaigned this year to put a constitutional amendment on the ballot, Issue 3.  The measure, defeated by 64-36 percent, would have legalized marijuana by granting 10 growers control of all marijuana production in the state.  One backer and potential grower, equity fund manager Woody Taft, explains:  “Over the course of history, owners of these businesses have taken advantage of these workers, and we want to be clear that we’re not going to do that.  We’re going to give them a fair wage and fair benefits.”  There is irony here; Taft is a descendant of U.S. Senator Robert Taft, the driving force behind the Taft-Hartley Act of 1947, which reined in certain union excesses.  Marijuana is becoming big business.  As such, not only growers and retailers, but also unions, want a piece of the action.  In the case of the UFCW, it may be too big of a piece.

That brings us to the case of Daniel Rush.  Until his termination not long ago, Rush had been chief organizer since 2011 for the United Food and Commercial Workers medical cannabis division, and before that, an organizer for the Hayward, Calif.-based UFCW Local 5.  According to the FBI and federal prosecutors, Rush, 54, a resident of Oakland, illegally used his position as a union organizer during 2010-15 to obtain money and other things of value by way of a scheme by which he received forgiveness of $550,000 of a $600,000 loan from a representative of area medical marijuana dispensaries in exchange for giving the dispensaries favorable treatment during organizing drives.  It was classic quid pro quo:  An employer enriches a union official's bank account, and in return, the official allows the employer to remain nonunion.  This type of arrangement is illegal under the Taft-Hartley Act.  Rush, to his misfortune, was unaware that the industry representative had been cooperating with the FBI.

The indictment contains several additional allegations.  First, Rush accepted financial kickbacks from an attorney to whom he had referred the dispensaries as clients.  In so doing, he committed honest services fraud against dues-paying UFCW members.  Second, Rush, as an officer of a nonprofit low-income group, Instituto Laboral de la Raza, took kickbacks from the attorney in exchange for having the attorney represent clients in Worker's Compensation cases.  He steered clients to the lawyer; in return, the lawyer provided Rush with a credit card on which he charged thousands of dollars of items at the lawyer's expense.  Third, Rush, as a member of the Berkeley Medical Cannabis Commission, a city agency that licenses and regulates medical marijuana operations, demanded a well-compensated job from a prospective dispensary.  In return, he would use his position on the commission to provide the dispensary with favorable treatment. This arrangement constituted extortion, noted the indictment.  Fourth, Rush participated in a money-laundering and financial structuring conspiracy to conceal the origin of the $600,000 loan.  The indictment states: “Rush and the attorney engaged in a series of structuring transactions designed to obscure the origin of the money.”  It specified further that Rush “required the attorney to fund interest payments on the loan and, when Rush ultimately was not able to repay the loan, he offered favorable union benefits in exchange for forgiveness of the loan.”

After his August 11 arrest, Daniel Rush was fired from his $121,124-a-year UFCW position and indicted on September 17.  Six days later, he pleaded not guilty to all charges.  William Osterhoudt, a public defender, thinks his client has gotten a bum rap.  He stated:  “This treatment of Mr. Rush is entirely unjustified.  He has given the better part of his adult life to the union movement and has served the UFCW honorably for many years.”  The details of the charges suggest, however, that Rush will have a tough job convincing a jury of that.  If convicted, he faces up to 20 years in prison and a fine of up to $500,000 in addition to payment of restitution.  Marijuana legalization has its side effects, not all of them good.