Author: Alexander Banzhaf

What are Cannabis Microbusinesses?

/ Alexander Banzhaf

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

/ Alexander Banzhaf

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”?

/ Alexander Banzhaf
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

/ Alexander Banzhaf
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

/ Alexander Banzhaf

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

/ Alexander Banzhaf

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?

/ Alexander Banzhaf
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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NJ Senators Consider “Impact Zones” in New Cannabis Legalization Bill

/ Alexander Banzhaf

New Jersey Counties Map

On June 7, 2018, Sen. Scutari and Sen. Sweeney jointly introduced a new cannabis legalization bill (“the Bill”).  Unlike its predecessors, this bill is empowered by the sponsorship of Sen. Sweeney, the New Jersey Senate President, who has been advocating for cannabis legalization for over a year but previously did not take a step this significant toward making cannabis legalization a reality.

 

This blog will analyze various aspects of this new bill in a multi-part series that will begin with a completely new concept proposed in the Bill: Impact Zones. Continue reading →

NJ Cannabis Insider: With Few Options, Cannabis Businesses and Bankruptcy can be as Easy as ABC

/ Alexander Banzhaf

In an article published by NJ Cannabis Insider, Alex Banzhaf explores the limitations of filing for bankruptcy as a cannabis business due to federal law, and a viable alternative that businesses may consider when faced with insolvency.

Click here to read the article. (Subscription required.)

Logo for NJ Cannabis Insider publication

Legalization Delayed, But Not Derailed

/ Alexander Banzhaf

Governor Murphy promised legalized adult use cannabis as one of his first 100 days initiatives.  That time has come and passed.  So what exactly is the status of legal cannabis in New Jersey?

In early March, Gov. Murphy told New Jersey legislators that he wanted to legalize and tax cannabis before the end of 2019.  Money talks, and Gov. Murphy included $60 million in revenue from taxing the legal cannabis industry in his first budget proposal. Recently, however, Gov. Murphy has been less resolute about a legalization bill coming to fruition by his self-imposed deadline, saying that it was “too early to tell.”

Image of NJ Governor Phil Murphy and Senate President Stephen Sweeney

Gov. Murphy and Senate President Sweeney

That is not to say that legal cannabis will not happen in New Jersey.  The initial time frame was ambitious – perhaps overly so – but Gov. Murphy and Senate President Sweeney are still pushing for legalization. “There’s no reason to believe we can’t get there,” Gov. Murphy recently stated.  “This is not one you get overnight.  This takes time.  We’re in that process right now.”  Sen. Sweeney added “I don’t know if we’re going to be able to get it done in the budget session.  I was actually hoping to get it done in the first 100 days.  But we have work to do.  I think it’s time for us to really start putting a plan in place, have hearings, and for the governor to hold some town halls and draw more attention to it.”

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