As 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.
While New Jersey legislators continue to debate the merits and practicalities of legalizing adult use recreational cannabis, a recent 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.
The issue of whether an employer is required to accommodate an employee’s alleged disability by allowing the use of medical marijuana for chronic pain and waive the requirement that he pass a drug test as a condition of employment, was recently addressed by a New Jersey federal court. In Cotto, Jr. v. Ardagh Glass Packing, Inc., the plaintiff, a forklift operator, hit his head and was asked to take a drug test to continue his employment. The plaintiff employee told his employer that he could not pass a drug test because he used medical cannabis for pain management to recover from back and neck injuries. His employer responded that passing a drug test was a condition of his employment, and he was indefinitely suspended. The employee filed a lawsuit alleging that the New Jersey Law Against Discrimination (“NJLAD”) required that his employer waive the requirement that he pass a drug test as a condition of employment in order to accommodate his disability.
The employer filed a motion to dismiss the plaintiff’s complaint on the basis that the Compassionate Use Medical Marijuana Act (“Medical Marijuana Act”) did not require the employer to accommodate the employee and allow him to continue working while he was unable to pass a drug test based on the use of a substance that is illegal under federal law. The United States District Court for the District of New Jersey, Camden Vicinage, granted the employer’s motion to dismiss, finding that neither the Medical Marijuana Act nor NJLAD compelled the employer to waive the employee’s drug test requirement.
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
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.
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.
The 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.
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.”
Sen. 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.”
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.
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
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.)