The Current and Future State of Cannabis Law In New Jersey

Cannabis law in New Jersey has developed rapidly over the past few years, and recently proposed legislation could mean that even more changes are on the way. Before looking at potential new law impacting the Garden State’s existing medicinal marijuana industry and creating an adult use cannabis market, let’s focus on how the law looks now.

CUMMA

The New Jersey Compassionate Use Medical Marijuana Act (“CUMMA”) facilitates creating medical marijuana alternative treatment centers (“ATCs”) within the state. Under the current law, an ATC may “possess, cultivate, plant, grow, harvest, process, display, manufacture, deliver, transfer, transport, distribute, supply, sell, or dispense marijuana, or related supplies to qualifying patients or their primary caregivers who are registered with the [Department of Health and Senior Services]. . . .”

To become a licensed ATC, the facility must apply to the state Department of Health (“DOH”), which reviews requests according to the following criteria:

1.     Submission of mandatory organizational information.
2.    Documented involvement of a New Jersey acute care general hospital in the ATC’s organization.
3.    Ability to meet overall health needs of qualified patients and safety of the public.
4.    Community support and participation.
5.    Ability to provide appropriate research data.

In addition to a Twenty Thousand and 00/100 Dollar ($20,000.00) application fee (Eighteen Thousand and 00/100 Dollars ($18,000.00) of which is refundable if the application is denied), applicants must provide criminal background checks of the owner, director, officer, and employees of the potential ATC as well as extensive additional information, including documentation of a valid business registration certificate on file with New Jersey’s Division of Revenue and a map of the applicant’s proposed service areas.

Impact of Rohrbacher-Blumenauer Amendment

The Rohrbacher-Blumenauer Amendment, originally passed by Congress in 2014, prohibits the Department of Justice (the “DOJ”) from using funding to prevent states’ implementation of medical marijuana laws. The amendment must be renewed each fiscal year and expired in December 2018 with the partial government shutdown. This lack of congressional action leaves the present state of potential DOJ marijuana prosecution unclear, although many observers do not anticipate an increase in federal enforcement against state compliant medical marijuana companies. This remains an issue to keep an eye on, however, moving forward.

Despite the federal complications, the New Jersey legislature is considering passing the Cannabis Regulatory and Expungement Aid Modernization Act (“CREAMA”), which would permit adult marijuana use under state law.

Cannabis Regulatory Commission

If enacted, CREAMA would allow individuals to possess up to one (1) ounce of cannabis (or the equivalent in cannabis infused products) and consume or smoke cannabis in designated public cannabis consumption areas. The law would also create an adult use cannabis market framework, which would be overseen by the Cannabis Regulatory Commission (the “Commission”).

CREAMA would authorize the Commission to issue several different types of usage licenses, which would be broken down into several classifications covering growers, processors, wholesalers, retailers, and testing facilities. The Commission would also handle licensing all “cannabis establishments” and “microbusinesses,” which are each defined within the proposed statute and will be discussed more fully below. Significant participation by New Jersey residents in the company is required in both categories.

The Commission would also have several additional functions, including:

• Investigating and prosecuting cannabis-related offenses.
• Adopting and enforcing regulations concerning product and warning labels, sourcing information, and general health and safety.
• Issuing subpoenas.
• Establishing licensing fees.
• Seizing and disposing of cannabis items.

CREAMA would also authorize the Commission to implement a tracking system for following transfers of cannabis items between licensed premises. The tracking system will also monitor processing by and the sale of items between licensees.

Minorities and Women

CREAMA would also establish the Office of Minority, Disabled Veterans, and Women Cannabis Development, with the goal of issuing at least Thirty Percent (30%) of new cannabis company licenses to minorities, women, or disabled veterans.

Cannabis Establishments

Under CREAMA, a “cannabis establishment” includes cannabis growers, processors, wholesalers, and retailers. Establishments would obtain licenses for each location where the establishment would operate. To qualify for a conditional license, an applicant must provide background information, a business plan, and a management profile for the establishment as well as:

• One (1) significantly involved person who has resided in New Jersey for at least two (2) years.
• A list of everyone with both a financial interest and decision-making authority in the company.
• Proof that significantly involved persons and persons with a financial interest are at least twenty-one (21) years old.
• Names, addresses, dates of birth, resumes, IDs, and background checks of all executive officers and others with both a financial interest and decision-making authority.
• Proof that those with both a financial interest and decision-making authority had an adjusted gross income below Two Hundred Thousand and 00/100 Dollars ($200,000.00) (or Four Hundred Thousand and 00/100 Dollars ($400,000.00) if filing jointly) or received federal or state assistance in the previous five (5) years.

The Commission also requires further certifications regarding the existence of other pending applications, tax status, and liability insurance coverage.

Microbusinesses

To qualify as a microbusiness under CREAMA, the entity must be small scale, which under the act means no more than ten (10) employees; fewer than one thousand (1,000) cannabis plants per month for growers; less than one thousand (1,000) pounds in dried cannabis per month for processors, wholesalers, and retailers; and occupying a space of no more than two thousand five hundred (2,500) square feet in size.

CREAMA also requires that the entire microbusiness entity be owned by New Jersey residents living in the state for the past two (2) years and that Fifty-One Percent (51%) of the owners, directors, officers, or employees be residents of the local government entity or bordering local government entity where the microbusiness is located, among other requirements.

The proposed legislation is full of intricacies and details that demand a much closer look if you’re interested in starting a New Jersey cannabis business. First, however, CREAMA has to make it through the legislature – and with Sixty-Two Percent (62%) of the public for it, that outcome seems likely.

But for now, we wait.