New Jersey Makes Major Strides to Expand Cannabis Program
On November 26, 2018, the New Jersey legislature advanced three cannabis-related bills out of committee; the measures now go to the floor of each chamber, and votes could occur as early as December 17, 2018. After a lengthy day of hearings on November 26, 2018, a joint session of the New Jersey Senate and Assembly committees of jurisdiction approved an adult-use (i.e. recreational) cannabis bill, a medical marijuana program expansion bill, and an expungement bill (the marijuana bills). Regardless of whether or not the votes occur in December – and there is speculation as to whether or not the legislation will be ready by December 17th – it cannot be denied that the committee approvals of the marijuana bills represent a major step in advancing New Jersey’s cannabis program.
The New Jersey Cannabis Regulatory and Expungement Aid Modernization Act (S2703/A4497) addresses the authorization of adult use of cannabis in New Jersey. The medical marijuana program expansion bills, S10 and S2426, were combined and contain an overhaul of the State’s current medical program. The third bill, S3205, would revise procedures for expungement of marijuana-related offenses from criminal records and would expedite the expungement process for low-level cannabis offenses. These bills, while significant, do not represent the State’s first foray into expanding its cannabis program. As we discussed previously, on July 16, 2018, the New Jersey Department of Health (NJDOH) announced that the Garden State was opening up licenses for up to six additional vertically integrated medicinal marijuana facilities. The DOH then released a Notice of Request for Applications (Notice) outlining the reason for issuing the licenses, eligibility rules, and information required for the applications. The window for filing such applications closed on August 31, 2018. No decision has been issued yet regarding which of the 146 applicants will be awarded licenses.
Both the medical and recreational bills discussed above call for the establishment of a Cannabis Regulatory Commission, which would “oversee the development, regulation, and enforcement of activities associated with the personal use of cannabis” and “assume responsibility from the Department of Health for the further development and expansion, regulation, and enforcement of activities associated with the medical use of cannabis.” This will include, among other things, granting licenses, as well as adopting, amending, and repealing regulations. As proposed, the Commission would consist of five full-time employees and would be able to wield a significant amount of power over New Jersey’s cannabis program.
The proposed legislation would also establish separate permits for cultivation, manufacturing, and dispensing, moving New Jersey from a vertically integrated cannabis market to a tiered market. However, the legislation would not prevent entities from becoming vertically integrated stating that entities may hold more than one permit and potentially all three permit types after a certain waiting period proscribed in the legislation. With respect to licenses, the previous iteration of the adult-use bill called for a maximum number of licenses. Notably, the current language has no such cap, stating the number of permits issued will be “pursuant to need” and that the Commission would “periodically evaluate whether the number” of permits issued is “sufficient to meet the needs of qualifying patients in the State.” Accordingly the Commission would have sufficient flexibility to expand the program as needed and as it sees fit.
Unlike the most recent Request for Applications that NJDOH issued in August, the proposed legislation includes requirements with respect to New Jersey residency, stating that an applicant must have “at least one significantly involved person who has resided in this State for at least two years as of the date of the application.” There was no such requirement in the previous round of applications.
We will provide updates on the medical and recreational cannabis bills as additional details become available. In the meantime, if you have questions, please contact the authors or the attorney at the firm with whom you are regularly in contact.