Cannabis Law Update

Posted on May 10th, 2021

Adult-Use Licensing

Attention again turns toward applications and licensing as a result of the passage of adult-use legislation in February, the Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (“CREAMMA”). The firm is working with a number of clients interested in pursuing one of six license types:  cultivation, processing, wholesaling, distribution, delivery and dispensary.

In addition to standard licenses, the newly formed Cannabis Regulatory Commission (“CRC”) is also offering micro-licenses targeting New Jersey entrepreneurs. Microbusiness licenses will be restricted to residents who have lived in the State for at least two years and will limit the size and number of employees of the Microbusiness. However, there will be no limit on the number of Microbusiness licenses that can be issued. CREAMMA requires that a minimum of 10% of the licenses issued for each license type be issued to Microbusinesses, and that 25% of the total licenses issued be awarded to Microbusinesses. The Microbusiness classification is expected to expand the opportunity for New Jersey residents to participate in the industry by removing the need for such applicants to compete for a finite number of licenses.

Medical Marijuana Licensing

The pending applications for the 2018 and 2019 medical marijuana licenses were formally transferred from the Department of Health (“DOH”) to the CRC.  As a result of a decision from the Appellate Division reversing and remanding the DOH’s 2018 scoring decisions, a number of appellants were permitted to resubmit their applications for additional review.  That process remains underway and likely will take another 90-120 days, at least.  Similarly, after the Appellate Division ruled on the 2019 appeal, the CRC is now scoring those applications and decisions are expected shortly.  As demand continues to vastly exceed supply, and it can take a year or longer to start operations, we are hopeful that the CRC will act quickly in awarding the six vertically integrated licenses available under the 2018 RFA and the 34 licenses of various types available under the 2019 RFA.

Cannabis Regulatory Commission

The CRC got off to a quick start hosting a number of virtual meetings to introduce the six commissioners –Dianna Houenou – Chair of the CRC, and Commissioners Krista Nash, Maria Del Cid-Kosso, Sam Delgado, and Charles Barker — and to establish an agenda for the significant amount of work which lies ahead.  Jeff Brown, who led the medical marijuana program under the DOH, came over as Executive Director of the CRC.

In support of that effort, Zachary Windham, who previously worked as the Legal & Financial Director for a Marijuana Business Operator with retail locations across the state of Colorado and recently joined the firm, submitted comments to the CRC concerning social equity issues, Minority and Women Business Enterprise (“MWBE”) point allocations, and the need to increase cultivation capacity in accord with the findings of the New Jersey Department of Health’s Biennial Report on the Medical Marijuana Industry, among other topics.

Zachary explained that there was a need to educate social equity applicants concerning the licensing process as the current  30 day window between issuance of the final rules and the application deadline was insufficient time to prepare a comprehensive application. He also recommended utilizing the State’s current MWBE designation as mechanism to allot additional points to social equity applicants, in the event there is insufficient opportunity for the CRC to create its own social equity designation.  Finally, Zachary explained that the Biennial Report noted the need to increase cultivation capacity, and that 10% of the 37 cultivation licenses (i.e., four licenses) would be awarded to micro-businesses.  However, as the micro-licenses are capped at 2,500 square foot canopy, it would only add 10,000 square feet of cultivation capacity.  While a robust microbusiness sector is critical to ensuring social equity at the consumer level, we also need to increase supple to meet the demand of more than 106,000 registered patients in addition to the adult-use market.

NJSBA Annual Meeting and Chair Appointment

Joshua Bauchner will be presenting at the NJ State Bar Association’s Annual Meeting on Thursday, May 20, 2021.  The virtual panel will provide an overview of CREAMMA addressing topics such as licensing, employment law, expungement and social justice issues, banking and business issues and more.  Registration remains open here.

Josh also was appointed Chair of the NJSBA Cannabis Law Committee for the 2021-2022 term, along with his friend  and colleague, Lisa Gora, Esq. of Wilentz Goldman & Spitzer, PA.