Licenses

Controversial New Law Restricting Hemp Sales in NJ Spurs Lawsuit by Hemp Businesses

/ Saiber LLC

On September 12, 2024, New Jersey Governor Phil Murphy signed Senate Bill 3235 into law, igniting controversy across the state’s hemp industry. The new legislation restricts businesses from selling hemp products unless they possess a cannabis retail license, a move that prompted hemp businesses to file a lawsuit challenging the law’s restrictions on their ability to operate freely and arguing that it unfairly limits access to the market.

The aim of the new law is to curb the sale of hemp products containing delta-8 THC to minors. Delta-8 THC is a milder cousin of delta-9 THC, the active ingredient in cannabis. While hemp products became federally legal in 2018 under The Agriculture Improvement Act, state-level restrictions are becoming more common as concerns grow over the accessibility of THC-containing products to children.

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New Jersey CRC Approves Rules for Cannabis Consumption Lounges

/ Saiber LLC

In a recent meeting, the New Jersey Cannabis Regulatory Commission approved proposed rules that will allow for the operation of cannabis consumption areas in New Jersey, more commonly referred to as cannabis lounges.

As part of the approved rules, cannabis retailers seeking to operate a consumption lounge will require both NJ-CRC approval and municipal approval. Lounges may be indoors or outdoors but must be enclosed.

Lounges must also require guests to be 21+ years of age and cannot over-sell to its consumers. While no food sales will be allowed at lounges, consumers may bring food or have it delivered to the consumption area. Alcohol and tobacco consumption is prohibited.

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New Jersey CRC Recommends Eliminating Cap on Cultivation Licenses

/ Justin Calta

New Jersey’s Cannabis Regulatory Commission (CRC) recommended eliminating the current cap on the number of cannabis cultivation licenses at its February 8, 2023 meeting, among other actions.  If that recommendation is adopted, the current limit of 37 licenses would expire on February 22, 2023.   According to the CRC, there are only 17 cultivation licenses and awarding additional licenses would help spur New Jersey’s cannabis market.

“The market is developing, and we don’t want to hinder that. The New Jersey canopy is currently only 418,000 square feet – far below the average of other states with legal cannabis. New Jersey currently has only one cultivation license for every 197,000 residents. The national average is one license for every 31,000 residents. We have a lot of room to grow. We expect that lifting the cap will open the space for more cultivators, ultimately resulting in more favorable pricing and better access for patients and other consumers,” Commissioner Maria Del Cid-Kosso stated. 

New Jersey Enacts Bill Permitting NJEDA to Make Financial Incentives Available to Certain Cannabis Businesses

/ Justin Calta

The continuing federal prohibition of marijuana has made cannabis entrepreneurs in New Jersey rely on personal funds or private financing to get their projects up and running.  This has put up a significant barrier to entry into the market for many license applicants. In effort to free up financing while various bills continue to be introduced at the federal level, Governor Murphy signed bill S2945 on June 30, 2022, enacted as P.L.2022, c.48., which permits the New Jersey Economic Development Authority (NJEDA) to extend financial incentives to certain cannabis businesses as detailed below. 

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New Jersey Cannabis Regulatory Commission Sets Licensing Application Dates for Cannabis Businesses

/ Saiber LLC

The New Jersey Cannabis Regulatory Commission recently announced their application process for prospective cannabis businesses, including the dates the Commission will begin accepting applications for growers, processors, testing labs and dispensaries.

The Commission will begin accepting applications for personal use (recreational) cannabis businesses on December 15, 2021 for Class 1 Cultivator Licenses, Class 2 Manufacturer Licenses and Testing Laboratories. Applications will begin to be accepted for Class 5 Retails (Dispensaries) on March 15, 2022.  Licensing applications will be accepted on a rolling basis with no deadline set to file. In addition, there is no limit on the number of cannabis business licenses that will be made available. However, the number of Cultivator licenses will be held to 37 until February 22, 2023.

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What are Cannabis Microbusinesses?

/ Saiber LLC

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

/ Saiber LLC

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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Legal Cannabis and Local New Jersey Government

/ Saiber LLC

Understanding the role of local government is critical to the success of potential legal cannabis businesses.  Not only will cannabis businesses need to obtain a license to operate from the Division of Marijuana Enforcement (“DME”), but cannabis businesses will also have to navigate regulations and ordinances set by local governments.

Picture of city hall.

A provision of Senator Scutari’s Bill (“the Bill”) that will invariably cause headaches for legal cannabis entrepreneurs is the local governments section.  The Bill, § 11.  The most complicating aspect of this section of the Bill is that it allows a local government to decide whether it will allow legal cannabis businesses in its borders.  In other words, even if cannabis businesses are deemed legal by the State of New Jersey, individual towns have the right to prohibit them.  Towns are given one year from the date Governor-Elect Murphy signs the Bill into law to decide if legal cannabis businesses will be able to operate in their borders.  If a town does not make a call one way or another, legal cannabis businesses are allowed to operate in the town for five years, and at the end of the five year period, the town is given the opportunity to prohibit the operation of a cannabis business.

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Cannabis Licenses: What New Jersey Businesses Can Learn from Colorado

/ Saiber LLC

The proposed legalization bill drafted by Sen. Scutari (the “Bill”) outlines the types of licenses that will be available to marijuana businesses, but is generally silent on how to actually obtain those licenses.  The Bill intends to create a state agency called the Division of Marijuana Enforcement (the “DME”) and charge the DME with the task of promulgating legal cannabis regulations.   It will be the DME who determines the nuances of licensure – in other words, when it comes to license application and issuance, the Bill essentially tells the DME to “figure it out.”

Image of Colorado and New Jersey Stat Flags.

While this lack of guidance is understandably upsetting for aspiring recreational marijuana business entrepreneurs, the license application process in Colorado provides a possible preview for what the DME may look for when screening potential marijuana business owners in New Jersey.  After all, it is fair to assume that New Jersey will use Colorado as a model in developing a regulatory framework for recreational marijuana businesses given that multiple New Jersey legislators traveled to Colorado to research its regulatory scheme, returning with favorable impressions.  This article will look at the license application process as it presently functions in Colorado and highlight the key aspects of obtaining a license in Colorado that may eventually also be requirements in New Jersey.

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