Rahool Patel

Ansell Grimm & Aaron, PC October 2022 Cannabis Law Update

Ansell Grimm October 18, 2022

Joshua S. Bauchner flanked by his Ansell Grimm & Aaron PC colleagues, as he was recently honored as one of the “Innovators of the Year” by the New Jersey Law Journal. — Joshua S. Bauchner, center, flanked by his Ansell Grimm & Aaron PC colleagues, was recently honored by the New Jersey Law Journal as one of its “Innovators of the Year” for 2022. Bauchner is a leading voice in the legal cannabis community, aiding clients in navigating state regulations to find success in the growing cannabis marketplace.

CRC Issues Guidance On WIRES; Raises More Questions Than Answers

On September 9, 2022, the Cannabis Regulatory Commission (CRC) issued long-awaited guidance regarding workplace impairment arising from cannabis use. While the guidance does not address all the issues that employers have faced in recent years, it does provide some needed clarity.

By way of background, on February 22, 2021, Governor Murphy signed the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (CREAMMA) into law. In addition to legalizing the use of marijuana for anyone aged 21 and over, CREAMMA prohibited employers from taking adverse employment action against an employee, such as termination, solely “due to the presence of cannabinoid metabolites in the employee’s bodily fluid.” In other words, under CREAMMA, a positive drug test result for marijuana is insufficient for an employer to conclude that an employee is impaired and to take disciplinary action. Instead, CREAMMA requires the employer to use a Workplace Impairment Recognition Expert (“WIRE”) to conduct “a physical evaluation in order to determine an employee’s state of impairment.”

However, CREAMMA did not establish what credentials, experience, or training a WIRE would need and instead directed the CRC to design and implement a certification process. After much delay, the CRC finally published some guidance to assist employers. While the new guidance does not formulate and approve standards for WIRE certification, it does state that a positive drug test result combined with “evidence-based documentation of physical signs or other evidence of impairment during an employee’s prescribed work hours may be sufficient to support an adverse employment action.”

While WIRE certification is unavailable, the CRC recommends that employers “[d]esignate an interim staff member to assist with making determinations of suspected cannabis use during an employee’s prescribed work hours.” The designated employee “[s]hould be sufficiently trained to determine impairment and qualified to complete [a] Reasonable Suspicion Observation Report [which is a form created by the CRC].”

The report should document “the behavior, physical signs, and evidence that support the employer’s determination that an employee is reasonably suspected of being under the influence during an employee’s prescribed work hours.” The CRC recommends that a second person in addition to the observer, such as a manager or supervisor, be involved as well. Employers should consider using “cognitive impairment test, a scientifically valid, objective, consistently repeatable, standardized automated test of an employee’s impairment, and/or an ocular scan, as physical signs or evidence to establish reasonable suspicion of cannabis use or impairment at work.”

Although this guidance is helpful in some respects, it still leaves employers with much uncertainty. The best course of action is for the CRC to adopt WIRE certification standards as soon as possible as the Legislature intended with the passage of CREAMMA.

Ansell Expands Cannabis Law Practice Group

The Firm added a number of new attorneys to the Practice Group to best serve clients in this multidisciplinary field. Kelsey Barber has taken the lead on applications, Irina Moin is assisting with corporate formation, structure, and governance, and Melanie Scroble and David Lang represent cannabis clients with commercial real estate needs, including leasing, site acquisition, and zoning. Rahool Patel also continues to represent clients in litigation matters, including the still ongoing (and successful) appeal of the 2018 Request for Applications, as well as challenges to municipalities for failing to employ objective criteria in awarding resolutions of support to prospective state applicants.

As a full-service law firm, Ansell attorneys are able to bring their collective experience and skills to serve every client need in this ever-growing, and ever-changing, area of the law.

Second Circuit Holds Classifying Cannabis As A Schedule I Narcotic Is Irrational; Does Nothing About It

According to a ruling recently handed down by the United States Court of Appeals for the Second Circuit, the federal government’s classification of cannabis as a Schedule I controlled substance without medical utility isn’t unconstitutional, but it is “irrational.”

In the matter of United States of America v. Green, Nos. 19-997(L), 19-1027 (Con), __F.4th__ , 2022 WL 3903654 (2d Cir. Aug. 31, 2022), defendants were charged by the United States District Court for the Western District of New York with conspiracy to possess with intent to distribute 100 kilograms or more of marijuana, in violation of 21 U.S.C. §§ 841(a)(1), (b)(1)(B) and 846. Defendants filed a motion to dismiss the narcotics conspiracy count on the grounds that the classification of marijuana under Schedule I of the Controlled Substances Act violates their Fifth Amendment due process and equal protection rights, and that marijuana’s scheduling has no rational basis because it does not meet the statutory criteria for inclusion on Schedule I. The District Court therein denied defendants’ motion, finding they incorrectly sought to tether the rational basis inquiry to the statutory criteria.

On appeal the U.S. Court of Appeals for the Second Circuit affirmed the lower court’s decision, determining:

“[T]he Act’s scheduling criteria are largely irrelevant to our constitutional review because the rational basis test asks only whether Congress could have any conceivable basis for including marijuana on the strictest schedule. Because there are other plausible considerations that could have motivated Congress’s scheduling of marijuana, we conclude that its classification does not violate the [plaintiffs’] due process or equal protection rights.

While the Judges acknowledged that defendants “convincingly argued that it is irrational for the government to maintain that marijuana has no accepted medical use,” they ruled that defendants were required to “do more than show that the legislature’s stated assumptions are irrational; [they] must discredit any conceivable basis which could be advanced to support the challenged provision, regardless of whether that basis has a foundation in the record, or actually motivated the legislature.”

While disheartening, the Second Circuit’s ruling is consistent with other federal courts’ refusal to strike Schedule I classification, reasoning instead that it is the responsibility of federal lawmakers, not federal courts to repeal the prohibition on marijuana.

Psilocybin May Be Next On The List Of Legalized Substances In NJ

In recent years, efforts to decriminalize and legalize the use of psilocybin (colloquially known as “hallucinogenic mushrooms”) for medical, recreational and scientific purposes has been advancing rapidly. In the State of New Jersey, the potential passage of the “Psilocybin Behavioral Health Access and Services Act” (the “Psilocybin Behavioral Act”), introduced by Senate President, Nick Scutari in June of 2022 would see such legalization and sale of hallucinogenic mushrooms in New Jersey businesses and medical facilities, similar to the State’s recent success in recreational cannabis facilities.

If passed, the Psilocybin Behavioral Act would authorize the production of psilocybin for therapeutic use under a controlled environment, and decriminalize and expunge past convictions for certain psilocybin related conduct, including possession.

Although the Psilocybin Behavioral Act posits itself as mental health, rather than revenue generation for the State, it does take some inspiration from the current Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization (CREAMM) Act. Specifically, applicants will be eligible to pursue four different types of licenses, including, a psilocybin product manufacturer, psilocybin service center operator, psilocybin testing laboratory, and psilocybin service facilitator, as well as a psilocybin worker permit.

Ansell Launches Psychedelics Practice

On the heels of its successful cannabis practice, which has included numerous granted licenses for its clients as well as successes in Court litigating cannabis matters, the Firm is excited to announce it is expanding into the realm of psychedelics.

The Firm has an established record in the cannabis space enabling us to serve our clients unlike any other area law firm. By example, we co-hosted the first-ever Cannabis Symposium in New Jersey which drew nearly a thousand people (two other Symposia followed). Joshua S. Bauchner, head of the practice group, is co-chair of the New Jersey State Bar Association Cannabis Law Committee, has spoken at the Cannabis World Congress and Business Expo at the Jacob Javits Center, and has presented CLE’s on cannabis at the NY and NJ State Bar Associations, and at the NORML Legal Conference in Aspen, among other fora across the country.

The Firm also recently was honored by the New Jersey Cannabis Insider as one of three finalists for Excellence in Cannabis Law and has been covered by numerous media outlets and published on the topic.

Now, with the federal government and many states looking to legalize psychedelics, Ansell is expanding the practice to include this emerging area of law. Please contact us at (973) 247-9000 if you are interested in exploring opportunities.

Biden Administration Open to Health Department Role in Potential Use of Psychedelic Therapies

The Biden Administration’s Department of Health and Human Services is actively anticipating that the FDA will approve psychedelic therapies — using psilocybin and MDMA — in the next two years, leading the way for alternative mental health treatments on a federal level.

The plan was revealed in a document coined the “May letter,” a correspondence sent by Assistant Secretary for Substance Abuse and Mental Health Services Administration (SAMHSA), Miriam Delphin-Rittmon to Rep. Madeleine Dean, D-Pa.

Dean had contacted HHS and proposed an interagency task force to lead a public-private partnership to address issues associated with anticipated approval by the FDA of MDMA for the treatment of PTSD and psilocybin for depression “within approximately 24 months,” the letter notes.

Delphin-Rittmon responded:

“SAMHSA agrees that too many Americans are suffering from mental health and substance use issues, which have been exacerbated by the ongoing COVID-19 pandemic, and that we must explore the potential of psychedelic-assisted therapies to address this crisis.”

Delphin thereafter confirmed that SAMHSA was exploring the prospect of establishing a Federal Task Force to monitor and address the numerous complex issues associated with emerging substances including the private sector, and that “collaboration across federal agencies with outside stakeholders will be the most effective way to ensure we are thoughtfully coordinating work on emerging substances.”

The letter marks an about-face from decades of federal drug policy, which classified psychedelics like MDMA and psilocybin as Schedule I narcotics, with no currently accepted medical use and a high potential for abuse.

About Ansell Grimm & Aaron, PC
Ansell Grimm & Aaron, PC was founded in 1929 and has a long history of delivering for clients who come to us to resolve legal matters that are often urgent, stressful, and of great importance. A general practice law firm, Ansell Grimm & Aaron is powered by experienced attorneys who understand that the best outcome is the one that serves the needs of each client.

About the Cannabis Law Practice
Among the leading cannabis firms on the East Coast, we work with cannabis entrepreneurs, industrial hemp producers, ancillary businesses and governing bodies seeking regulatory counsel.

The above is for informational purposes only and does not constitute legal advice. Transmission of the materials and information contained herein is not intended to create, and receipt thereof does not constitute the formation of, an attorney-client relationship. Attorney advertising.

NJ Medical Pot Hopefuls Say Agency Snubbed Court Ruling

Ansell Grimm February 23, 2022

Law360 recently reported on Ansell Grimm & Aaron, PC’s challenge to the New Jersey Cannabis Regulatory Commission’s decisions on remand after the Commission’s initial decisions were reversed by the Appellate Division on November 25, 2020. Below is the article.

By Sarah Jarvis

Medical marijuana permit applicants have urged a New Jersey appellate court to direct the state’s cannabis regulators to award them licenses to operate facilities, arguing the agency failed to change a single score after an appellate panel remanded the matter over the state’s flawed scoring system.

In Wednesday filings with the Superior Court of New Jersey’s Appellate Division, applicant GGB New Jersey LLC said the state’s Cannabis Regulatory Commission doubled down on previous flawed scoring and didn’t adjust any scores after GGB and other applicants made “comprehensive supplemental submissions” challenging the commission’s scores and their scoring process. The CRC also ignored concerns previously raised by the appellate court about a substantial degree of relative error “by declaring the concept inapplicable to its selection process,” GGB said.

“The commission asserted that the scoring is what it says it is and, strikingly, is beyond judicial review,” GGB said. “The commission’s cursory review also focused on only two of the numerous scoring criteria challenged by appellants, and either rehashed the same arguments that had already been rejected by this court or ignored appellants’ other arguments.”

GGB and the other appellants are seeking an order directing the CRC to award them licenses to operate alternative treatment centers, or medical marijuana dispensaries. Alternatively, they want the matter remanded to the CRC with the appointment of a special master to conduct an investigation, per the company’s filings.

Counsel for GGB called the CRC’s ruling on remand ridiculous and said the company coordinated with other appellants to file nearly identical briefs, but it wasn’t immediately clear Friday which parties had also lodged filings.

The companies had alleged in their initial appeal that the scoring process was inconsistent and arbitrary. The applications were scored on a 1000-point scale by a panel of six unnamed officials from the Department of Health and two other state departments, according to court records.

The appealing companies that received their scores after they were rejected found that the scores were hard to parse, with some judges giving full marks in sections where another judge gave zero points. The numbers were averaged, and the total score determined where the applicant fell in the ranking, so the zeroes brought the scores down dramatically, the companies said.

Once a score was awarded, there was no opportunity to challenge it, according to the companies.

In November 2020, a panel from the Superior Court of New Jersey’s Appellate Division handed down its decision in eight combined appeals from companies that failed to make the cut for the six dispensary licenses the state awarded in 2018. The panel said there were serious problems with the way regulators scored the applications and sent officials back to reconsider the applications of rejected companies, but didn’t specifically tell regulators how to handle the applications after the remand or how to change the application process.

But GGB argued Wednesday that the CRC carried out “a superficial exercise seeking only to justify its own prior, flawed conclusions without actually abiding by the court’s instructions or addressing any of the appellants’ concerns.” Last month, the CRC issued new final agency decisions reaffirming the denials issued to the appellants in the 2018 decisions.

“Despite this court’s opinion and the supplemental submissions, the commission concluded that the process this court found unacceptable had been free from error,” GGB said. “As a result, the commission continues to deprive appellants of due process and neither the public nor this court can have confidence in the commission’s licensing process and the final agency decisions it has reached.”

GGB argued among other things that a recommendation report issued last month by the CRC lacks substantive analysis of the scoring issues the appellants had raised, including “wildly divergent scores and/or zero or low scores” the appellants said were unwarranted compared to the high marks successful applicants received.

“This court should not have to act again in this matter, but the commission has proven that it cannot — and will not — conduct a full and fair review of appellants’ applications,” GGB said. “The commission has proven by its own actions that a further remand will be futile because the agency apparently regards itself as beyond the jurisdiction of this court.”

A representative of the CRC didn’t immediately respond to a request for comment Friday.

GGB New Jersey LLC is represented by Joshua S. Bauchner and Rahool Patel of Ansell Grimm & Aaron PC.

Counsel information for the CRC and other applicants wasn’t immediately available Friday.

The case is In the Matter of Application of Medicinal Marijuana Alternative Treatment Center of GGB New Jersey LLC, case number A-2219-18T4, in the Superior Court of New Jersey, Appellate Division.

–Editing by Dave Trumbore.

Ansell Grimm & Aaron 2021 Litigation Roundup

Ansell Grimm January 20, 2022

As the world continues to struggle with the coronavirus pandemic, and millions of small and mid-sized businesses continue to be confronted with unprecedented challenges, the attorneys in Ansell Grimm & Aaron’s Litigation Department assisted the Firm’s clients in protecting their businesses and livelihoods. Led by co-chairs Lawrence Shapiro and Joshua Bauchner, and assisted by attorneys Barry Capp, Anthony D’Artiglio, Stefan Erwin, Rahool Patel, Seth Rosenstein, and Ashley Whitney, the Department is pleased to share its numerous successes.

Bankruptcy Litigation & Debtor/Creditor Matters

Ansell Grimm & Aaron successfully compelled conversion of a meritless Chapter 11 Bankruptcy to a Chapter 7 and convinced the Court to vacate an extension of the automatic stay to principal’s of the Debtor company. Debtor filed a Chapter 11 petition in the District of New Jersey just before it and its principals were scheduled to face trial in the Western District of Missouri on multi-million dollar fraudulent scheme related to the sale of a business. Led by Joshua S Bauchner and Anthony J. D’Artiglio, the firm successfully convinced the Court to vacate an extension of the automatic stay to the principals of Debtor who sought to utilize the Bankruptcy to shield themselves from liability. Furthermore, we vigorously opposed confirmation of a meritless Plan of Reorganization, culminating in Debtor voluntarily converting its Chapter 11 reorganization to a Chapter 7 liquidation requiring the appointment of a Trustee to pursue our client’s and other creditors’ interests. As a result, the adversary complaint and related Bankruptcy matters were dismissed in New Jersey permitting the action to proceed to trial in Missouri.

Breach of Contract Litigation

The Ansell Grimm & Aaron team continued its efforts to recover sums owed to its clients in connection with finance agreements and contracts for the provision of certain services. We doggedly pursued our clients’ counterparties who absconded with loaned funds and enjoyed the benefit of services rendered, resulting in substantial recoveries and settlements for our dedicated and hard-working clients. By way of example, in one action brought on behalf of a trucking insurance agency that guaranteed payments for its client, the insured failed to make millions of dollars in payments under its finance agreement and created a new entity to hide its property and assets from collection. We aggressively tracked down the fraudulently transferred assets, brought the insured’s owner and his new entity into the action, and secured a favorable settlement prior to trial.

Partnership Dispute Litigation

The firm successfully obtained temporary restraints enacted to avoid continued irreparable harm to our client in a derivative action asserting claims against our client’s former business partners for, inter alia, unfair competition, fraud, and breach of fiduciary duty, based on their acts of engaging in direct competition with their shared business and allowing their family members to use the company’s proprietary information to siphon clients and profits from the business. The temporary restraints prevented all competition with our client’s business and provided the leverage necessary to negotiate a dissolution of the business which allowed our client to extricate himself and pursue independent ventures.

Real Estate Litigation

The firm works closely with real estate professionals across the region to protect their rights and put practices in place to minimize potential liability. In an action filed earlier this year on behalf of a Hudson County-based real estate broker, the Firm sued a national real estate developer after the failure to pay a referral fee offered under the developer’s agreement with local brokers. These efforts resulted in our client recovering a substantial portion of the referral fee owed to it, and the same broker subsequently engaged our team to revise their agreements used with clients — and to speak with the broker’s team of agents about mitigating risk and general best practices.

FINRA Matters

In addition to serving as a Financial Industry Resolution Authority (FINRA) Dispute Resolution Services arbitrator, associate Seth Rosenstein also practices before FINRA arbitration panels. In an arbitration filed against a national broker-dealer, the Firm sought an award requiring removal of incorrect and misleading information set forth on the broker-dealer’s Form U5 issued for our client, and for the expungement and removal of the information from FINRA’s Central Registration Depository and BrokerCheck system. Our efforts resulted in the broker-dealer issuing an amended Form U5 that removed the incorrect and misleading information, correcting an injustice that falsely besmirched our client’s reputation.

Police Benevolent Association Matters

Earlier this year, Attorney Ashley V. Whitney filed an appeal with the New Jersey Supreme Court challenging an opinion from the Appellate Division which upheld the termination of a police officer with no prior discipline for alleged violations of the Criminal Justice Information System through his use of full-disclosure vehicle registration searches despite the police department’s failure to identify a single full-disclosure search conducted without justification. The Appellate Division’s decision may have a lasting impact upon the law enforcement community as the performance of searches by police has not been significantly addressed by New Jersey Courts since the decision in State v. Donis, 157 N.J. 44 (1998). The decision is especially pertinent to the issues facing police as it comes on the heels of the Supreme Court’s decision in the matter of In re AG Law Enf’t Directive Nos. 2020-5 & 2020-6, 2021 N.J. LEXIS 486 (June 7, 2021), which upheld the New Jersey Attorney General’s Directives requiring the release of the names of police officers who receive major discipline.

Ms. Whitney continued her prior practice of the representation of police officers as a member of the PBA Legal Protection Plan at the Firm’s Woodland Park office, which included the defense of a high-ranking correctional police officer served with inflated disciplinary charges seeking termination. Following a departmental hearing and the presentation of favorable witness testimony, the employer decreased the proposed penalty from termination to suspension and we are awaiting a final decision.

Class Action Litigation

Ansell Grimm & Aaron successfully obtained dismissal of a nationwide class action in the District of New Jersey for lack of subject matter jurisdiction. Plaintiff brought claims against related to beauty products against the seller, shipper, and a host of individuals and entities. We filed a Motion to Dismiss pursuant to Federal Rule 12(b)(1) asserting the Court lacks subject matter jurisdiction as a result of a pre-litigation, full refund offer by our client to the aggrieved consumer. The Court agreed that the full refund offer made in the ordinary course of business operated to moot Plaintiff’s claims, and dismissed the entire action.

Public Entity Litigation

Ansell Grimm & Aaron successfully secured summary against Plaintiff on a multi-million dollar claim against the City of Bayonne, wherein Plaintiff alleged that Bayonne discriminated against him when it condemned and subsequently demolished a rental property he owned because it was unsafe. We successfully convinced the Court that the claims were barred by the statute of limitations, that the demolition did not constitute a taking within the meaning of 11 U.S.C. 1983, and that Plaintiff’s tort claims could not be asserted against a municipality as a matter of law, leading to dismissal of the entire case.

Ansell Grimm & Aaron Welcomes Lateral Hire to Woodland Park Office

We are pleased to announce Stefan J. Erwin, Esq. has joined Ansell Grimm & Aaron. Mr. Erwin is a Trial Attorney who came to Ansell from an established Newark practice where he represented the largest cities in New Jersey. Mr. Erwin brings nearly a decade of experience to the firm specializing in complex commercial litigation, criminal defense, appellate practice, labor and employment law, public entity, and civil rights. Mr. Erwin graduated from Rutgers University with dual degrees in Political Science and Criminal Justice, and then attended Rutgers Law School where he interned for the Honorable Noel Hillman in the United States District Court for the District of New Jersey. After law school, he clerked for the Honorable James Hely, J.S.C. of the Superior Court Law Division in Union County. He has taught public school children a course in Constitutional Law, founded a local community garden, and sat on the board of a charter school. Mr. Erwin has received several favorable jury verdicts for his clients in the Public Defender’s Office where he litigated cases from inception through appeal.

Best of the Best

It is with great pleasure that Ansell Grimm & Aaron, PC has been named “Best of the Best” Law Firm in the 2021 Official Community Choice Awards published by the Asbury Park Press. This recognition is greatly appreciated as it was not determined by the Bar or another professional organization, but rather by the community we serve on a daily basis.

Cannabis Law October Update

Ansell Grimm October 19, 2021

New Jersey Weekly Bar Report

On Monday, October 18, 2021, the New Jersey Law Journal’s weekly Bar Report spoke with NJSBA Cannabis Law Committee Co-Chairs Joshua S. Bauchner, Esq. (of Ansell Grimm & Aaron, PC) and Lisa Gora, Esq. (of Wilentz, Goldman & Spitzer, PA) about the legal landscape surrounding the new state law and what can be expected in the early days of this new industry. The Report includes a Q&A that touches on the new law’s impact on attorneys, opportunities for New Jersey entrepreneurs, municipal involvement, and current expected timelines. A copy of the report can be viewed here.

Cannabis Regulatory Commission Meeting

On Friday, October 15, 2021, the New Jersey Cannabis Regulatory Commission held a meeting during which they voted on and issued recommendations for applicants for Cultivator and Vertically Integrated Licenses as part of the 2019 RFA round. The Commission did not take any action with regard to applicants for Dispensary Licenses. Initially, it was expected that five (5) Cultivator Licenses and four (4) Vertically Integrated Licenses would be awarded. At the meeting, the Commission announced that they would be recommending double the number of Cultivator Licenses. The Commission stipulated that these Cultivator Licensees will need to operate for one (1) year prior to being able to begin adult-use sales. A recording of the meeting will be available on the Commission’s website shortly.

New Jersey Law Journal

On Monday, October 18, 2021, the New Jersey Law Journal published HIGH-lights: A Look at Personal Use Cannabis Rules Adopted by the Cannabis Regulatory Commission. The article, a collaboration between Zachary L. Windham, Esq., of Ansell Grimm & Aaron, PC and Lisa Gora, Esq., of Wilentz, Goldman & Spitzer, PA, focuses on the upcoming adult-use application process in light of the initial regulations released by the Cannabis Regulatory Commission. The article discusses who will receive “prioritization” in the application process and the impact of receiving such priority, as well as surmising when and what to expect for application submission window(s) given the limited details on the topic within the Commission’s initial rules. A copy of the article can be found here.

2018 RFA Awards Still Outstanding

Despite the Commission’s award of 14 new licenses to applicants from the 2019 RFA, the results of the 2018 RFA are still pending. It has been nearly three (3) years since several rejected applicants filed suit against the state due to lack of transparency and endemic errors in the scoring process implemented by the Department of Health. Last November, a three-judge appellate court vacated the initial 2018 awards and ordered the DOH to develop a new rating system for applications and to increase transparency. The responsibility for reevaluating these applications has been transferred to the Cannabis Regulatory Commission. The Commission has stated that the 2018 RFA applications are still under review. Appellants recently wrote the CRC requesting information on resolving this three-year old matter, however there is no indication of when this review might be completed.

Cannabis Regulatory Commission Cannabis Informational Webinar

On Wednesday, October 13, 2021, the New Jersey Cannabis Regulatory Commission held an informational webinar. During the webinar, the Commission briefly explained the equity and safety provisions in the initial rules as well as providing general guidance for municipalities. The Commission also discussed basic application requirements and what preliminary steps businesses can take to prepare for applying. The biggest news from the webinar was likely the Commission’s statement that Class 5 Retail License holders will be permitted to provide delivery services for their own products without holding a separate Class 6 Delivery Service License. A recording of the webinar can be viewed here.

NJSBA CLE: Latest Developments In Cannabis Law

On Thursday, October, 28 2021 the New Jersey State Bar Association’s Cannabis Law Committee will be hosting a seminar to discuss The Latest Developments In Cannabis Law, including the Cannabis Regulatory Commission’s initial regulations for the industry. In addition to the personal use cannabis regulations, there will be a panel of township officials to discuss Municipalities and Town Councils, as well as a discussion of corporate and real estate transactions; whether that be the acquisition or disposition of a cannabis operation or the real estate considerations when acquiring real property for, and when leasing to or by, a cannabis operation.

Program Chairs are Joshua S. Bauchner, Esq. of Ansell Grimm & Aaron, PC, and Lisa Gora, Esq. of Wilentz, Goldman & Spitzer, PA. Speakers will include John Barree AICP, PP of Heyer, Gruel & Associates, Jack Fersko, Esq. of Greenbaum Rowe Smith & Davis, LLP, Mollie F. Hartman Lustig, Esq. of Cappuzzo, PC, Michael A. Hoffman, Esq. of The Hoffman Centers, PC, Mayor Ryan Martinez of Butler, Morris County, Ronald P. Mondello, Esq. of Law Offices of Ronald P. Mondello, Robert E. Schiappacasse, Esq. of Sills Cummis & Gross P.C, Mayor Domenick Stampone of Haledon, Passaic County, and Sarah Trent, Founder and CEO of Valley Wellness.

For more information and to register for the NJICLE Seminar – Latest Developments In Cannabis Law click here.

Quarterly Litigation Department Roundup: April 2021

Ansell Grimm April 6, 2021

As the world continues to face the coronavirus pandemic, and millions of small businesses remain confronted with unprecedented challenges, the attorneys in Ansell Grimm & Aaron’s Litigation Department assisted dozens of clients in protecting their businesses and livelihoods. Led by co-chairs Lawrence Shapiro and Joshua Bauchner, and assisted by attorneys Barry Capp, Anthony D’Artiglio, Rahool Patel, Seth Rosenstein, Ashley Whitney, and, our newest member, Courtney Dunn, the Department is pleased to share its numerous successes.

Real Estate Litigation

In a recent matter before the Honorable Henry P. Butehorn in Monmouth County, Lawrence Shapiro and Seth Rosenstein were successful in securing summary judgment in favor of their clients as to all claims prior to trial. Plaintiffs asserted causes of action sounding in common law fraud, violations of the New Jersey Consumer Fraud Act, Unjust Enrichment, Negligence, Breach of Contract, and Equitable Servitude in connection with their purchase of real property in Ocean Grove, New Jersey. The sellers, who own the property sold to Plaintiffs as well as an adjoining property, prohibited the buyers from utilizing a walkway on sellers’ adjoining property to access the rear entrance to buyers’ home. The buyers asserted that representations were made by sellers as to their ability to utilize sellers’ walkway, and that they overpaid for their property if there was no access through the rear entrance.

Judge Butehorn’s Order found that there was no basis upon which to establish claims for common law fraud or Consumer Fraud against the defendants. Specifically, the Court agreed with AGA’s argument that any representation as to walkway access on adjacent property was not part of the transaction at issue and thus could not serve as a basis for a claim of fraud or consumer fraud.

Plaintiffs subsequently filed a motion for reconsideration of the Court’s summary judgment order, which was denied, confirming the victory for our client.

Appellate Litigation

Barry Capp succeeded before the Appellate Division in upholding the validity of the City of Asbury Park’s short-term rental (Air BnB) ordinance, which permitted and established procedures for the short-term rental of residential properties. The plaintiff filed a complaint in the Law Division, Monmouth County, alleging that the ordinance was adopted improperly and that Ordinance itself was facially invalid.

The Ordinance defines those classifications of properties where short-term rentals are both permitted and prohibited. It further establishes a permitting process for property owners who wish to utilize their properties as short-term rentals. Plaintiff asserted a challenge to the manner in which the Ordinance was adopted, claiming that it creates a “new” use of residential property that is a non-permitted and, therefore, was required to be adopted as a zoning ordinance pursuant to the procedures contained in the Municipal Land Use Law (MLUL). Plaintiff further claimed that the use of residential property for short-term rentals violates the City of Asbury Park’s zoning ordinance and therefore was required to be invalidated.

In a thirteen (13) page unanimous decision, and a major victory for the City of Asbury Park, the Appellate Division upheld the City’s actions in adopting the Ordinance and its validity pursuant to its municipal police powers. In so doing, the Appellate Division affirmed the right of owners of certain classifications of property to use their properties as short-term rentals pursuant to procedures established by the City of Asbury Park and its governing body.

Bankruptcy Litigation

Joshua Bauchner and Anthony D’Artiglio are pursuing a multi-million dollar cure dispute in Southern District of New York Bankruptcy Court, seeking to compel a retail Debtor who operated a chain of grocery stores to pay for numerous, needed repairs to a large production and distribution facility. The Debtor failed to maintain the property in the condition required by the Lease, leading to large scale deterioration. The case presents interesting legal questions at the intersection of commercial landlord-tenant law and Bankruptcy law, particularly in light of the new tenant’s assumption of the Lease “as is” as part of the Bankruptcy proceedings.

Class Action Litigation

Joshua Bauchner and Rahool Patel continue the defense of multiple class actions filed against New Jersey Retrofitness gym franchises. This now seven-year old litigation is on remand from the Appellate Division, where the firm successfully secured the dismissal of seven of the eight claims, dramatically narrowing the scope of the litigation. As a result of numerous procedural challenges encountered by plaintiffs, the matter is back at the pleading stage ensuring our already strapped gym clients are not at risk of liability anytime soon.

COVID-19 Litigation

Department attorneys continue to represent national retail and restaurant tenants in numerous COVID-19 Pandemic-related litigations, securing temporary restraints and preliminary injunctive relief to prevent self-help lockouts, restore utilities, permit outdoor dining, and stay eviction actions. As pandemic law remains largely unsettled, the Firm presented novel legal arguments to secure favorable decisions and settlements on behalf of many clients, and are preparing for what is understood to be the first trial in the State addressing the impact of Governor Murphy’s Executive Orders restricting operations.

Policeman Benevolent Association Litigation

Ashley Whitney is waiting on a decision from the Appellate Division involving the termination of a police officer with no prior discipline for alleged Criminal Justice Information Systems violations under State v. Donis, through his use of full-disclosure searches despite the police department’s failure to identify a single full-disclosure search conducted without justification. The Appellate Division’s decision could have lasting implications for police officers as there is little case law addressing the application of Donis in this context.

Ms. Whitney also is continuing her prior practice of the representation of police officers as a member of the PBA Legal Protection Plan at the Firm’s Woodland Park office and is currently defending a high-ranking correctional police officer served with inflated disciplinary charges.

Personnel Successes

Courtney Dunn joined as an associate with the Firm. Prior to joining Ansell Grimm & Aaron, Ms. Dunn practiced commercial litigation along with sports and entertainment law, labor and employment law, and toxic tort law at a firm in New York City. Ms. Dunn received her juris doctor, cum laude, from the Elisabeth Haub School of Law at Pace University where she was a Pro Bono Scholar and worked as a research assistant to Professor Donald L. Doernberg. During law school, Ms. Dunn interned for Justice Terry J. Ruderman, J.S.C. of the Supreme Court of New York. She also served as an Articles Editor on the Pace International Law Review and was a member of the Moot Court Honors Board.

Following law school, Ms. Dunn served as a law clerk to The Honorable Judge Craig L. Wellerson, the Presiding Civil Division Judge of the Ocean Vicinage of the Superior Court of New Jersey. Ms. Dunn is admitted to practice in New Jersey and New York as well as the Southern District of New York and the Eastern District of New York

Anthony D’Artiglio was named as “One To Watch” by Best Lawyers Magazine, for commercial litigation. We congratulate Mr. D’Artiglio on this remarkable achievement.

Rejected Medical Marijuana Dispensaries Revive Legal Fight Over 2018 Application Process By Sam Sutton

Ansell Grimm March 8, 2021

Politico (March 5, 2021) – – Businesses that lost out on a highly competitive application process for medical marijuana licenses in 2018 are reviving their legal battle against New Jersey’s Department of Health, claiming the department hasn’t adhered to a November ruling that called its handling of the request for applications process “arbitrary, capricious and unreasonable.”

On Thursday, Superior Court Appellate Division Judge Clarkson Fisher granted six applicants that had been rejected in the 2018 RFA the ability to file for emergent relief. Motions are due no later than March 9.

Why it matters: If the Appellate Division grants the motions, the health department’s attempts to develop the state’s medical marijuana program will be mired in even more litigation at a time when oversight of the industry is set to transition to the Cannabis Regulatory Commission. Jeff Brown, who oversees the medical marijuana program for the health department was named executive director of the new, as-yet unformed commission by Gov. Phil Murphy last year.

A health department spokesperson did not immediately respond to a request for comment.

What they want: The plaintiffs — five businesses that submitted a combined six applications in the 2018 RFA — want the department to further clarify the process it used to award six available licenses out of a pool of nearly 150 applicants. They also say the November ruling could merit the awarding of additional permits.

The health department announced the winners for the six permits in late 2018, however, and while the court’s November decision found there was nothing precluding the department from issuing additional permits — the department held another RFA offering for medical marijuana cultivation and dispensing licenses in 2019 — “we have no license to increase the number of successful applicants beyond six as the means for moving these proceedings more quickly to the next step. In fact, it is far from clear that any further proceedings will move any appellant into the top six,” according to the previous ruling.

What happened next: The department ultimately responded to the November ruling by setting up a supplemental submission process whereby the plaintiffs could challenge the scores they were awarded. It also set up a “Quality Control Committee” to review the RFA process and scoring criteria, which the November ruling had found to be problematic.

That isn’t enough, according to the applicants’ attorneys.

“The Department’s recalcitrance leaves the 2018 Appellants stuck on a treadmill,” Joshua Bauchner and Rahool Patel of Ansell Grimm & Aaron, wrote in a letter to the court. “The Department has refused to provide Appellants with the most basic additional information regarding the remand process, again leaving Appellants with more questions than answers.”

To view online:
https://subscriber.politicopro.com/states/new-jersey/story/2021/03/05/rejected-medical-marijuana-dispensaries-revive-legal-fight-over-2018-application-process-1367055

Pro Football Players, Military Veterans, and Mothers Join Fight to Legalize Marijuana Nationwide

Ansell Grimm September 14, 2020

Ansell Grimm & Aaron files amicus brief to ask U.S. Supreme Court to weigh in on the ‘arbitrary and irrational classification of cannabis as a Schedule 1 drug,’ preventing injured athletes and wounded veterans from accessing medical treatment for debilitating, life-threatening conditions

OCEAN, N.J. (September 2020) – In a landmark appeal that could change U.S. drug policy forever, Ansell Grimm & Aaron has filed an amicus brief before the U.S. Supreme Court demanding that the federal statute that criminalizes marijuana, the Controlled Substances Act, be declared unconstitutional.

Filed in the case Washington v. Barr, the brief represents the interests of injured pro football players, wounded military veterans, and mothers whose lives, quite literally, depend upon the outcome of the case.

“Patients today face an untenable choice,” said leading cannabis attorney Joshua S. Bauchner. “They can either risk federal prosecution for using medical cannabis in accordance with state and local laws at the advice of their doctors, or risk serious, even fatal, health consequences. This is an unacceptable trade off that no one should be forced to make any longer.”

Bauchner, the Honorable Anthony J. Mellaci, Jr. (ret.), and Rahool Patel, Ansell, Grimm & Aaron attorneys, represent five organizations with a vested interest in the outcome of the issue.

Athletes for CARE, a nonprofit organization founded by former professional athletes who are united in using their influence to advocate for research, education, and compassion in addressing vital health issues for the next generation of athletes, including the availability of medical cannabis.
After The Impact Fund, a nonprofit organization that helps military veterans and retired professional athletes receive customized treatment for unseen traumatic injuries from the field, including anxiety, depression, post-traumatic stress disorder, addiction, and thoughts of suicide.
Canna Research Foundation, a nonprofit organization focused on comprehensive and evidence-based epidemiological research of medical cannabis with the ultimate goal of providing better pain relief and improved quality of life for patients in need.
NFL Sisters in Service, Inc., a non-profit organization comprised of the spouses, daughters, and mothers of current and former NFL players who advocate on behalf of those players and their families. In particular, the Sisters have assisted dozens of players and their loved ones with disability-related issues arising from their time in the NFL, including but not limited to chronic traumatic encephalopathy and amyotrophic lateral sclerosis.
ISIAH International, LLC, a holding company founded and wholly owned by former Detroit Pistons NBA Hall of Famer Isiah Thomas that has interests in various companies, including two in the medical cannabis and hemp industries.

Each of these organizations has a strong interest in advocating for the legalization and decriminalization of cannabis for medical use. Many of their members have depended on medical cannabis to treat debilitating conditions and manage pain when other prescription medications or treatments have failed or resulted in unbearable side effects. They are far from alone. More than 3 million people in the United States require medical cannabis on a regular basis to manage chronic conditions, reduce debilitating pain, and, in some instances, to survive from one day to the next.

Former NHL star and four-time Stanley Cup winner Darren McCarty is one of them. The longtime Detroit Red Wings player credits cannabis with saving his life.

Injured after 17 years of professional hockey, McCarty was unable to use legal, medical cannabis to treat his debilitating pain. He relied on prescription drugs and alcohol, which, while having the benefit of being legal, wreaked their own havoc on his body. By November 2015, his doctor told him he was on the verge of multiple organ failure and at high risk of death if he did not significantly change his lifestyle. After stints in rehab, therapy, and substance abuse programs, McCarty was able to stop drinking after he found cannabis.

“Without cannabis, I would be dead, period,” said McCarty. “I suffered for so many years, and I know there are millions of people like me who are suffering in silence right now. We can end that suffering by educating ourselves and changing our laws to treat cannabis as what it rightfully is: essential medication that saves lives.”

Although 38 U.S. states and territories have legalized the use of cannabis for medical reasons, the federal government persists in classifying cannabis as a Schedule 1 drug with “no accepted medical use.” This means that people whose lives depend upon treatment with cannabis cannot legally enter onto federal land and cannot travel by air or other federally regulated modes of transportation. Worse, they live in constant fear that their lifesaving medication may be taken from them and that they will be arrested.

The continued failure of the DEA to take appropriate action to reschedule cannabis, and of Congress to mandate that the DEA do so by statute, has for decades deprived countless Americans of access to life-changing, and often life-saving, medical cannabis in violation of their constitutional rights.

“The decision to use cannabis for medical reasons is no less important than the decision to use common prescription drugs,” said Ansell, Grimm & Aaron’s Mellaci, a retired Superior Court Judge. “It is no less personal than the deeply intimate decision to refuse medical treatment for ethical or other reasons. My own son, Daniel, age 30, suffers from ALS and requires medical cannabis to have any quality of life. The federal government’s placement of cannabis in Schedule I would relegate him, and other patients, to a lifetime of suffering. It’s time to end that suffering.”

To read the full amicus brief, click here.

About Ansell Grimm & Aaron, PC: Founded in 1929, Ansell Grimm & Aaron, PC (62q.f7d.myftpupload.com) has a long history of delivering the advice, experience, and sophistication to clients who come to us to resolve legal matters. A general practice law firm, Ansell Grimm & Aaron’s practice areas are powered by experienced attorneys who understand that the best outcome is the one that serves the needs of each client.

Client Alert: The Enforceability of Waivers From Automatic Bankruptcy Stays

Ansell Grimm June 16, 2020

In light of the COVID-19 pandemic, the risk of commercial tenants filing for bankruptcy protection has risen substantially. A concern for many commercial landlords is whether avenues exist for protecting their ability to initiate an action against tenants when they default on their lease obligations and file for bankruptcy protection.

Below is a syllabus of the lightly-developed case law addressing whether waivers from automatic bankruptcy stays are enforceable, and the means by which landlords and their tenants can enter into such agreements. It is important to note, however, that the courts have not ruled on many cases during the pandemic and applicable case law may be in flux.

Enforceability of Bankruptcy Stay Waivers Contained in Forbearance Agreements

Pursuant to an Executive Order issued by New York Governor Cuomo, a statewide eviction moratorium on residential and commercial evictions has been extended to August 20, 2020, for tenants who qualify for unemployment benefits or who are experiencing a “financial hardship” as a result of COVID-19. Landlords may serve rent demands, but cannot commence litigation against tenants, such as eviction actions. Similarly, New Jersey Governor Murphy issued an Executive Order setting a moratorium on residential evictions and foreclosures in New Jersey — though the New Jersey Executive Order contains language clarifying that commercial tenants are not subject to the moratorium. The New Jersey moratorium will last until two months after Governor Murphy declares an end to the COVID-19 health crisis, unless the Governor issues another Executive Order to end the moratorium sooner.

In light of the present circumstances, it may be advisable for commercial landlords to work with their tenants to enter into forbearance agreements (as opposed to lease amendments) containing a waiver from the automatic bankruptcy stay. The agreements should make clear that the tenant is in default, that the agreement is being entered into as a result of the default, and that the landlord is deferring/forgiving rent, and forbearing from eviction (or whatever the consideration may be) in exchange for a waiver of the automatic stay.

While the case can be made that pre-bankruptcy agreements with tenants via a lease amendment may be enforceable, the more secure means to accomplish this is in the form of a forbearance agreement. In In re Velez, the court rejected landlord’s attempt to enforce a general waiver to escape the automatic stay, distinguishing general waiver language in a lease amendment from a forbearance agreement “whereby the debtor specifically waived future protections of the automatic stay.” In re Valez, 601 B.R. 351, 364 (Bankr. M.D. Pa. 2019).

In In re Frye, 320 B.R. 786 (Bankr. D. Vt. 2005), the court set forth certain factors to be utilized in deciding whether relief from the stay should be granted. The court also noted that it considered additional factors in making the determination that a waiver is enforceable, including: (1) the sophistication of the parties; (2) the presence of counsel; (3) consideration for the waiver; (4) the length of waiver period; (5) the risks and concessions assumed by lender/landlord; (6) the effect on other stakeholders in the Bankruptcy; (7) any defenses to the waiver, such as mistake or fraud; (8) the impact of the waiver on the feasibility of Debtors’ plan; (9) whether enforcement of the waiver would promote public policy of out of court settlements; (10) prejudice to landlord/lender for non-enforcement; (11) the time gap and change in circumstances between date of waiver and bankruptcy filing; and (12) whether the landlord/lender would otherwise be entitled to relief from the automatic stay.

Conclusion

As many courts are closed and this is new territory, we expect the case law may evolve as litigations progress on this novel issue. Arguments for the enforcement of waivers from automatic bankruptcy stays may be successful, depending on new rulings as they are issued and the specific language in the forbearance agreement executed by landlords and tenants. Landlords and tenants alike are advised to consult with an attorney experienced in this area to determine viability of such plans and to protect their interests.

Client Alert: Legislative Changes to the Family Leave Act and the WARN Act

Ansell Grimm May 4, 2020

Earlier this month, the New Jersey Legislature made further changes to the state’s labor and employment laws in light of the COVID-19 pandemic. In particular, the Legislature amended the Family Leave Act and the Millville Dallas Airmotive Plant Job Loss Notification Act (commonly known as the “NJ WARN Act”). These changes directly impact the rights of both employers and employees throughout the state. A brief summary is provided below:

Family Leave Act

On April 14, 2020, Governor Phil Murphy signed Senate Bill S2374 (“S2374”) into law. Among other things, S2374 amended the New Jersey Family Leave Act to provide job-protected leave when the Governor has declared a state of emergency. In these circumstances, an employee who needs to care for a family member because of (1) an epidemic of a communicable disease, (2) a known or suspected exposure to a communicable disease, or (3) efforts to prevent the spread of a communicable disease to other members of the community is entitled to twelve (12) weeks of job-protected leave.

The Family Leave Act defines a “family member” to mean “a child, parent, parent-in-law, sibling, grandparent, grandchild, spouse, domestic partner, or one partner in a civil union couple, or any other individual related by blood to the employee, and any other individual that the employee shows to have a close association with the employee which is the equivalent of a family relationship.”

While the Family Leave Act normally allows an employer to deny leave to the highest-paid 5% of its employees, or the seven highest paid employees (whichever is greater), subject to certain conditions being met, this exemption is suspended when the Governor declares a state of emergency and the leave requested is for one of the three reasons set forth above. In addition, an employee may take intermittent leave for epidemic-related reasons without the employer’s consent so long as the employee (1) provides prior notice to the employer as soon as practicable and (2) makes a reasonable effort to not unduly disrupt the employer’s business operations.

The amendments to the New Jersey Family Leave Act contained within S2374 went into effect immediately and are retroactive to March 25, 2020.

NJ WARN Act

In 2019, the Legislature amended the NJ Warn Act to require that covered employers pay severance to employees that are terminated in connection with a covered event (the “2019 Amendment”). The 2019 Amendment was scheduled to become effective on July 19, 2020.

In light of the pandemic, the Governor signed S2353 into law on April 14, 2020. S2353 delays the effective date of the 2019 Amendment from July 19, 2020, until ninety (90) days following the termination of Executive Order 103 of 2020, wherein the Governor declared a state of emergency and a public health emergency. At the time of publication, the Governor has indicated Executive Order 103 will not be terminated before May 15, 2020 and, therefore, the 2019 Amendment to the NJ WARN Act will not go into effect until August 15, 2020, at the earliest.

S2353 also amended the definition of a “mass layoff” to exclude layoffs “made necessary because of a fire, natural disaster, national emergency, act of war, civil disorder[,] or industrial sabotage[.]” The definitional change is retroactive to March 9, 2020.

Trade Group Calls on Ansell.Law to Address Legal Concerns Relating to COVID-19

Ansell Grimm April 27, 2020

The unprecedented events and dynamic changes necessitated as a response to COVID-19 have left many businesses grasping for a way to get a handle on the current situation. The Alliance of Automotive Service Providers of New Jersey (AASP/NJ) turned to Ansell Grimm & Aaron PC’s Joshua Bauchner and Rahool Patel to get some guidance.

The attorneys conducted a virtual discussion with the trade group addressing various issues and responding to members’ inquiries regarding the CARES Act, the Paycheck Protection Program (PPP), and insurance and landlord/tenant concerns.

The effort was well received and recently written up in the latest issue of Body Shop Business, the industry’s trade journal.

“Because of the many complicated requirements that must be met on the applications, I strongly recommend that members obtain the assistance of professionals like the people from Ansell Grimm & Aaron, PC rather than deal with it on their own,” AASP/NJ Executive Director Charles Bryant, told the publication.

The Ansell Grimm & Aaron COVID-19 Task Force will be conducting a free small business webinar on Thursday, April 30 at 11 a.m.

Topics will include:

New and pending legislation
PPP program
Lease obligations
Insurance claims
Employee concerns

To join the meeting via Zoom:

Meeting ID: 953 0659 1428

Password: 020438