Ansell Grimm
November 15, 2023
By Anthony Sango
On December 5, 1933, the United States rejected years of moral panic and repealed alcohol prohibition by passing the 21st Amendment. Just under 88 years later, on November 3, 2020, the people of New Jersey rejected decades of a similar moral panic by voting “Yes” on Public Question 1, legalizing recreational cannabis. Five months later, on March 30, 2021, New Jersey’s neighbor, New York, approved legislation to legalize recreational cannabis. These two states were part of a wave of legalization in late 2020 and early 2021, with six other states and various tribal nations reflecting what so many Americans already knew: cannabis is safe, commonplace, and ordinary to consume.
Though New Jersey and New York both legalized cannabis around the same time, the two states took different approaches on the path toward legalization and destigmatization. By regulating cannabis similarly to alcohol, New York seems to acknowledge the reality that cannabis is the second most commonly used recreational drug after alcohol. New Jersey, on the other hand, has chosen to treat cannabis differently than it treats alcohol, though there are threads of alcoholic beverage control in its cannabis regulations. These divergent regulatory approaches are reflected in how each state addresses the zoning and regulation of cannabis businesses.
New York: Following the Cannabis Golden Rule
New York abides by cannabis advocates’ Golden Rule: treat cannabis as you would want the state to treat alcohol. The Marihuana Regulation and Taxation Act (MRTA) repeatedly mentions maintaining equal or comparable regulations for the two substances. In fact, cannabis and alcohol are so intertwined that the state’s Office of Cannabis Management was established within the Division of Alcoholic Beverage Control.
Local Zoning and Fees
The MRTA and its regulations govern how a city or town can zone for and tax cannabis businesses. For example, a town or city can only impose fees on a dispensary or consumption lounge in a similar amount and manner as it would on a liquor store, bar, or club. The MRTA also prohibits special fees and taxes for cultivation, processing, manufacturing, and distribution businesses unless those special fees and taxes are also applied to similarly situated businesses. The best point of comparison is cultivation: a town or city can only impose a special fee or tax on a cannabis grower if that town or city imposes the same special fee or tax on a farm, plant nursery, or similar agricultural business.
Similarly, as with bars and liquor stores, dispensaries and consumption lounges are restricted from operating too close to houses of worship, schools, and public facilities used by youths. The distances range from 200 feet to 500 feet, measured from the center of the door of the cannabis business to the nearest entrance or structure of the restricted facility. What constitutes an “entrance” depends on the building’s specific use and design.
Consumption Lounges
No, your neighbor didn’t run over a skunk – that might be the new consumption lounge in town. Unlike their smoke-free, alcohol counterparts, consumption lounges emit the characteristic, potent, and familiar smell of cannabis, presenting a unique challenge for regulators.
To address this issue, New York borrowed from laws governing another commonly used recreational substance: tobacco. In New York, a town or city can impose ventilation and odor control laws on indoor consumption lounges only insofar as those laws apply to cigar lounges or any other business that permits smoking or vaping tobacco. In fact, the MRTA specifically invokes the Clean Indoor Air Act. Outdoor consumption lounges get more leeway – they only need to maintain a setback of 20 feet from a public walkway or road.
However, regulators borrowed the permitted hours of operation from bars and clubs in regulating consumption lounges. A consumption lounge – whether indoor or outdoor and regardless of the size of the city or town – must be closed between 4:00 a.m. and 8:00 a.m. This mirrors the restriction on bars and clubs, requiring them to have last call at 4:00 a.m. (or earlier if desired by the local government).
Overall, New York’s approach to regulating cannabis seems to acknowledge its legal status, widespread use, and acceptability in American life and society, just like alcohol, while maintaining comparable restrictions for the public’s health.
Lack of Guidance and Clarity in New Jersey Cannabis Zoning Regulation
New Jersey takes a different approach to cannabis zoning and regulation than the Empire State. With no explicit language instructing towns and cities to treat cannabis like alcohol (or at least not placing any unusual and onerous fees, taxes, and regulations on cannabis), New Jersey’s Cannabis Regulatory Enforcement Assistance and Marketplace Modernization Act (CREAMM Act) provides towns and cities – as well as courts – with a lot of leeway as to the interpretation of the law and regulation of cannabis.
The theme throughout the CREAMM Act is deference to the local government. For example, as in New York, the CREAMM Act allows towns and cities to require cannabis businesses to be set back from certain sensitive areas. Unlike the MRTA, however, the CREAMM Act provides no guidance regarding how to measure those setbacks. Effectively, towns and cities are left to decide for themselves how to do so. The CREAMM Act similarly provides almost no guidance on consumption lounges and instead leaves it up to local zoning boards to regulate these businesses.
Unfortunately, because part-time members run most local zoning boards, measurement guidelines and other minor but essential guidance are often treated as afterthoughts or left unaddressed. If zoning boards do not provide a clear method for measurement, some courts have turned to a “reasonable pedestrian” standard that measures the distance borrowed from cases involving the Alcoholic Beverage Control Board. But as anyone who has ever driven in our crowded cities and towns knows, otherwise reasonable people can become unreasonable pedestrians, jaywalking, cutting through parking lots, or even hopping over fences. Courts will strain to find some definition or guidance in the ordinance itself.
The CREAMM Act also fails to define what an entrance is – further complicating any setback measurements. Similarly, local ordinances often forget to define “entrance,” leading some courts to assume that any exterior door constitutes an entrance. Many cannabis businesses have faced challenges to their Resolutions of Support because their entrances were deemed too close to sensitive areas or because the board tried to reassign or redefine what an entrance is.
For example, challengers have claimed that a building’s “emergency exit” is, in fact, a regular entrance and that the “emergency” designation was just a way to circumvent a setback requirement. In other instances, cannabis businesses seeking to comply with a setback requirement have reassigned an emergency exit as the entrance with mixed results.
The situation for consumption lounges is no better. The only zoning requirement in the CREAMM Act for a consumption lounge is that a town or city issue an endorsement for a consumption area in or adjacent to a dispensary. Curiously, the CREAMM Act allows a dispensary-turned-consumption lounge to sell a customer as much cannabis as the customer is otherwise permitted to buy at a dispensary. This stands in contrast to bars, where a bartender would likely refuse to serve a patron several beers at once unless that patron had several friends with him. But just as bar patrons can’t walk out of the bar with a half-finished beer, the CREAMM Act prohibits consumption lounge patrons from leaving with leftover cannabis.
New Jersey cannabis businesses are left with generic ordinances that may mirror alcohol ordinances but lack the explicit instruction to treat cannabis like alcohol or to measure setbacks in specific ways. The patchwork of local cannabis regulations creates a maze of red tape for even the savviest cannabis business entrepreneur. As a result, New Jersey courts have been flooded with lawsuits challenging so-called Resolutions of Support for cannabis businesses that allegedly violate one local ordinance or another.
While New York has been more orderly in defining zoning considerations for the legal cannabis industry, New Jersey has been more hands-off, leaving it to the towns and cities – and the courts – to determine what it means to comply with the CREAMM Act.
If you have questions or concerns regarding zoning or other regulatory issues involving cannabis in New York or New Jersey, please contact Anthony Sango. Join Anthony and Kelsey Barber on December 18, 2023, as they present at the National Business Institute’s Marijuana Business Operations in New York program. Learn more about the full day continuing legal education seminar and register to attend.
