It’s the 2025 International Year of Cooperatives. Does your state have a good co-op statute?

Many states in the U.S. only have statutes that allow for the creation of agricultural marketing cooperatives or rural electric or telecom cooperatives. They have no statutes which would allow for new cooperative businesses that are in other industries or that allow for employees to become owners in a worker cooperative.  Then there are other States that have good or even excellent statutes for the formation of all kinds of cooperatives, including producer, marketing, consumer, purchasing, housing and worker cooperatives in industries that include retail, wholesale, manufacturing, professional services, healthcare and more.

In recent years, some States have adopted in whole or in part the Uniform Limited Cooperative Association Act (ULCAA) that was adopted by the Uniform Law Commissioners in 2007. For example, the state of Washington adopted ULCAA in 2019 and most recently, the U.S. Territory of Guam adopted a revised version of ULCAA in December, 2024. Guam’s LCA statute is fairly different from the uniform law, but it meets the specific needs of their community. Of course, there are other forms of cooperative entities, such as cooperative corporations, and some states have enacted both these types of specific cooperative statutes as well as different variations on ULCAA.

Getting a new piece of legislation through any state congress is a long-term project that requires the effort and dedication of local community groups and legislative sponsors who see the value and the need for cooperative business formations. Here in Colorado, it took approximately 2 years to find sponsors in both houses of Congress and obtain the general approval and go-ahead from the state bar association. Then another long year was spent in month meetings by a committee of attorneys (myself included) and interested parties in revising ULCAA so that it fit Colorado’s then current corporate and cooperative statutes. For example, ULCAA refers to Organic Law and Organic Rules. Those terms are not used in Colorado so the statutes were revised to refer to the LCA statutes for the Organic Law and the articles of organization and bylaws for the Organic Rules. Those terms had to be changed through the statutes.

The bar association and its legislative liaison were instrumental in finding sponsors, reviewing and revising the draft legislation provided by the committee and working with the staff of the sponsors. The head of the bar association committee was my old partner James B. Dean who was also one of the co-authors (associate reporter) of ULCAA. Our committee was lucky to have him guide the group and give background on the meaning and intentions of the terminology in the uniform law.

In other states, the bar association may not be available, so who is going to help draft the legislation? Drafting does not require a committee of attorneys. In Guam, a couple of community groups who were impassioned about finding a business model to form worker cooperatives reached out to states in the U.S. (Colorado, New York and Washington) who had either adopted a form of ULCAA or who had worked extensively in forming worker cooperatives to obtain their advice and guidance as they reviewed and revised ULCAA to fit their needs. The Guam community groups had a legislative sponsor and with the advice and assistance of the mainland cooperative community, they were able to draft legislation that fit their goals of democratic ownership and member control of cooperative business entities. They then reached out to the business and nonprofit communities to obtain their input as well as support of the proposed legislation. The support from those community groups was instrumental in obtaining the final approval of the legislature. In addition, the sponsor, Senator Sabina Perez, and her staff spent a great deal of time and energy convincing the business community and the legislature of the benefits of cooperative ownership. The timeline from when I was first approached by the folks in Guam and the enactment of their form of ULCAA in December of 2024 was a little less than two years.

So yes, if your state is not lucky enough to have good cooperative statutes that are flexible and allow formation of cooperative businesses for any industry or sector, then there is a pathway to getting cooperative statutes enacted. There are many state cooperative statutes that you can use as a starting point, not just ULCAA. It takes time, dedication and passion about democratic ownership, but it can be done. Let us know if you have questions about the process, or how to get started in your state!