Early Cannabis Trends in 2019

With the new year in full swing, New Jersey Cannabis Counsel highlights some of the most impactful news relevant to the potential legalization of cannabis in New Jersey.

New Attorney General Uninterested in Legal Cannabis Businesses?

Photo of William Barr

United States Attorney General Nominee William Barr

New Attorney General nominee William Barr testified at his confirmation hearing that he does not intend to pursue cannabis businesses operating legally pursuant to state regulations.  This is an about-face from former Attorney General Sessions, who rescinded the Cole Memorandum, which was the Obama era policy document that effectively told the Department of Justice to only pursue legal cannabis businesses that were linked to cartels, children or trafficking cannabis to states where it is not legal.  Mr. Barr has also called for additional cannabis cultivation for research purposes, and understands that the new bill legalizing the growth of hemp has implication for cannabis.  Mr. Barr has not formally committed to preparing a revised Cole Memorandum, but if confirmed, Mr. Barr as Attorney General would be a potential boon for the cannabis industry.

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Sen. Scutari Advocates for a New Jersey Cannabis Regulatory Commission

Image of Senator Nick Scutari (D)

Sen. Nicholas Scutari (D)

New Jersey State Senator Nicholas Scutari (D), the architect of the proposed cannabis legalization bill, authored an op-ed advocating for the creation of a Cannabis Regulatory Commission.  The Cannabis Regulatory Commission has been a hotly debated topic in the legalization process.  The various legalization bills that have been drafted have included versions of the Cannabis Regulatory Commission (originally named the “Division of Marijuana Enforcement”), which would be designed to function as the state regulatory body for the adult use legal cannabis industry.  The Cannabis Regulatory Commission would establish the number of licenses to be issued to growers and retailers, process license applications and have the authority to regulate the cannabis industry.

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NJ Awaits Closed Door Session to Determine Next Steps in Cannabis Legalization

Closed DoorThe final push to advance the cannabis legalization agenda will take place in a closed door session on Thursday, December 13.  At that time, the governor will meet with Senate President Sweeney and Assembly Speaker Coughlin to continue to negotiate certain nuances of cannabis legalization.  Front and center will be the proposed Cannabis Regulatory Commission, a state agency legislators want to create to control both the proposed recreational cannabis industry and the medicinal industry.

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What are Cannabis Microbusinesses?

Colorado Grow HouseAs the debate about legalized adult use cannabis continues to take place in Trenton, a new proposal to the legislative bill represents an intriguing potential opportunity to cannabis entrepreneurs: microbusinesses.

As the various drafts of the legislative bills to legalize cannabis have evolved, the barriers for entry to the New Jersey cannabis market have been relaxed for out-of-state operators.  While early drafts of the bill made New Jersey residency a requirement, that is no longer a strict requirement so long as one of the proposed owners of a cannabis business is from New Jersey.  The legislature’s relaxation of this requirement makes sense: operators from other states have more experience and can help better establish New Jersey cannabis businesses.

But that comes with a very real drawback for New Jersey entrepreneurs.  It will not be easy for New Jersey entrepreneurs to compete with the experience and millions of dollars of funding that could potentially come from out-of-state operators.  The concept of microbusinesses may help level the playing field.

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Recent Polls Suggest NJ Residents Support Cannabis Legalization

While New Jersey legislators continue to debate the merits and practicalities of legalizing adult use recreational cannabis, a reElection Check Boxcent poll indicates that New Jerseyans have made up their minds: 58% of state residents favor legalization, whereas only 37% oppose.

The poll also addresses two key issues associated with cannabis reform:

1)  64% of New Jerseyans believe not only that regulation and taxation of cannabis would be a boon for the state’s economy, but also would not be bothered if a dispensary opened in their town; and

2)  45% of New Jerseyans believe that cannabis is less harmful than alcohol, as opposed to merely 12% of New Jerseyans who disagree.

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Out-of-State Partnerships: What is a “Significantly Involved Person”?

New Jersey State Line

FLICKR/MATT HINTSA

Perhaps the most significant change in Sen. Scutari and Sen. Sweeney’s new adult use cannabis legalization bill is the change in residency requirements for cannabis license holders.  In earlier iterations of Sen. Scutari’s legalization bill, cannabis license holders had to be New Jersey residents for two years prior to the date of the license application.  The thought process behind this requirement was to prevent established cannabis businesses from jurisdictions that have already legalized cannabis from entering the New Jersey marketplace and establishing dominance before New Jersey citizens had an opportunity to gain a foothold themselves.

The new bill has changed that.  It creates a defined term known as a “significantly involved person” which essentially means a person or company with a 20% or greater stake in the company applying for a license.  § 9(a)(3) of the new bill states that “[a]n applicant shall have a significantly involved person or persons lawfully residing the State for at least two years as of the date of application to receive a license.” Continue reading

NJ Attorney General Temporarily Suspends Prosecution of Cannabis Related Offenses

Image of Attorney General Gurbir Grewal

Attorney General Gurbir S. Grewal

New Jersey Attorney General, Gurbir S. Grewal, issued a memorandum to New Jersey prosecutors which ordered them to seek adjournments of “any matter involving a marijuana-related offense pending in municipal court.”  The term “adjournment” in legal parlance simply means postponing a court hearing until a future date.  The adjournments being sought are until September 4, 2018.

Attorney General Grewal’s adjournment date seemingly coincides with the general time frame of when Sen. Scutari anticipates that the New Jersey legislature will again consider the issue of legalized adult use cannabis.  Attorney General Grewal has not commented on whether there is an actual connection between the temporary halt in the prosecution of cannabis offenses pending in municipal court and any efforts to legalize cannabis, instead stating that his office is developing “appropriate guidance” for prosecutors.

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Cannabis Law Develops in NJ After Workers Compensation Ruling

Cannabis law continues to develop in New Jersey.  On June 28, 2018, a New Jersey workers’ compensation judge ordered Freehold Township to pay for an injured worker’s medical cannabis.  This is the second time a New Jersey Workers Compensation judge has come to this conclusion, which is a significant step in the development of New Jersey cannabis law.

Freehold Township SealThe attorney arguing for the insurance company who provided workers compensation insurance for Freehold Township argued that the workers compensation court could not order the insurance company to pay for the medical cannabis because cannabis is illegal under federal law.  This argument is called a preemption argument, which means that the Supremacy Clause in the United States Constitution – which makes federal law “supreme” over state law – should not allow the workers compensation judge to rule in the injured worker’s favor.  The insurance company cited to a June 14, 2018 ruling from the Maine Supreme Court which disallowed medical cannabis in the workers compensation context because of federal law.

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Sen. Sweeney Pushes for Legalization this Summer

New Jersey Democrats are now hopeful that a legal cannabis bill could be approved before Labor Day.  Even though the recent state budget passed without including tax revenue from adult use recreational cannabis, Senate President Steve Sweeney said that lawmakers are “rounding the corner on marijuana” and said that “the speaker and I are committed to getting the marijuana bills done this summer.  That’s our goal.”

Image of New Jersey State HouseSen. Sweeney’s comments suggested that preparing the budget actually made the cannabis discussion more difficult.  “I’m thinking late July, August, hopefully,” Sweeney said.  “Now that this budget’s out of the way, not that a lot of this stuff’s out of the way, all the noise is out of the way, hopefully the administration and we all can focus on marijuana.”

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The State of Cannabis Licensing in New Jersey: What Has Changed?

Image of Senator Nicholas P. Scutari (D) and Senator Stephen M. Sweeney (D)

Senator Nicholas P. Scutari (D) and Senator Stephen M. Sweeney (D)

This installment of New Jersey Cannabis Counsel dives into the new Scutari/Sweeney legalization bill (the “Bill” or the “New Bill”) and focuses on what was changed, and what was not changed,  from the predecessor bill (the “Old Bill”) when it comes to cannabis business licenses.

Our inaugural blog post addressed the first step for any legal cannabis business in New Jersey under the Old Bill: licensure.  The New Bill still requires licenses, but has slightly changed the overall licensing structure.  Currently, the New Bill proposes four cannabis licenses:

Class 1: Marijuana Grower License
Class 2: Marijuana Processor License
Class 3: Marijuana Wholesaler License
Class 4: Marijuana Retailer License

Followers of this blog and New Jersey’s efforts to legalize cannabis will be familiar with these licenses.  While the Old Bill had growing and processing under one license, all of the above types of cannabis businesses were included in the Old Bill.  More interesting is what was not included in the New Bill.

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