NJ Pot Advocates Say License Caps Could Shape Industry – By Diana Novak Jones

Posted on December 28th, 2020

Law360 (December 23, 2020, 4:39 PM EST) — As legislation framing the new adult-use marijuana market in New Jersey awaits the governor’s signature, advocates say one of the most consequential decisions for what could be the industry’s most lucrative state has yet to be made.

New Jersey’s proximity to New York and Pennsylvania — two populous states without legal recreational marijuana — will mean its adult-use marijuana businesses could have near-exclusive access to one of the most densely populated parts of the country.

Legislators have drafted the first rules for the industry, and they already include a restriction on the number of cultivators. If Gov. Phil Murphy signs off, the process will move into regulators’ hands. It’s there that the competition could ramp up, depending on whether the Cannabis Regulatory Commission decides to limit the number of dispensaries and other marijuana businesses.

If they do, the fight could be just getting started, advocates say.

Joshua Bauchner, head of the cannabis practice group at New Jersey law firm Ansell Grimm & Aaron PC, pointed to the “green trail,” a reference to Interstate 91, as evidence people will travel for marijuana.

New Yorkers drive between two and three hours on the interstate to reach Massachusetts, where they can access recreational marijuana dispensaries, Bauchner told Law360. Soon, they’ll instead be able to ride a New Jersey transit train for 15 minutes, he said.

And if regulators decide to put caps on dispensary licenses, “the few operators that are lucky enough to get a license will basically have monopolistic power,” he said.

A Sticking Point

A key feature of many states’ forays into recreational marijuana has been to cap the number of licenses issued, and New Jersey has been no exception so far.

Caps on cultivation were among the hotly debated elements of New Jersey’s recreational pot legislation, spurred by concerns about controlling the amount of product available, according to Harris Laufer, the legislative director for New Jersey State Sen. Nick Scutari, D-Union County, who led the push for the bills. The legislation that passed New Jersey’s Legislature on Dec. 17 came with a cap of 37 cultivation licenses.

Scutari has been working toward legalizing recreational pot since he joined the Legislature in 2004, in a process that has been repeatedly stymied by reluctant lawmakers. He said it would not have happened this year without voters’ clear support on the measure.

“If that didn’t happen, I can think of a few legislators that would not have voted for it,” Scutari said.

Scutari prefers a free-market approach, but the cap on cultivators was a critical part of the negotiations to get the deal on the legislation done, Laufer said. And the cap, which expires after two years, covers both medical and recreational cultivators, so many of the licenses are already claimed.

Scutari said he worked with the governor’s office to craft this legislation, so he is confident it will get Murphy’s signature.

But with the restriction on cultivators in place, many in the industry are wondering whether more limits are on the way.

Once Murphy approves the legislation, the rest of the state’s pot regulations will be drafted by the Cannabis Regulatory Commission. Murphy has been selecting the commission’s members since earlier in fall.

The licensing process needs to be put together, then the licenses need to be awarded, Scutari said.

“There’s a lot to that,” he said, predicting it will be at least six months before the licenses go out.

Cap Concerns

The Garden State’s potential as a new marijuana market has many in the industry worried about caps on businesses like dispensaries and producers, and what that could mean for businesses hoping to get a foothold.

Nothing is finalized yet, but advocates for different groups say limits on licenses could leave a lot of people out of the burgeoning industry. And once the legislation is signed, it will be up to the Cannabis Regulatory Commission to decide whether to include them.

Representatives for Murphy declined to comment or make the newly chosen head of the commission, Dianna Houenou, available to speak about the coming regulations.

One group concerned about the use of caps are those behind the ballot measure that legalized marijuana.

Amol Sinha, executive director of the American Civil Liberties Union’s New Jersey chapter and chairman of the ballot measure initiative, NJ CAN 2020, said caps are a problem when it comes to the group’s goal of improving access to the industry for people impacted by the war on drugs.

“They eliminate competition, they artificially keep the price of cannabis high,” Sinha told Law360.

Caps “make it hard for everyday people to obtain a license. Only the people who are already set up are going to get those, and usually those are big operators,” Sinha said.

Sinha applauded a part of the legislation that sets aside 70% of the sales tax and additional fees from legal marijuana for impact zones, which he said were largely minority communities across New Jersey. The ACLU put its weight behind that measure after initial proposals had the bulk of the money going to law enforcement, he said.

But the legislation doesn’t have a plan to set aside licenses for equity applicants, or people disproportionately hurt by marijuana prohibition, he said. That will also be up to the regulators, Sinha said.

Another person watching to see what happens with the regulations is Bauchner, who is representing several would-be medical marijuana operators in two separate and ongoing lawsuits over New Jersey’s medical marijuana licensing process.

The lawsuits target the New Jersey Department of Health, which oversees medical marijuana, deciding how many dispensaries the state will have and who gets them. Bauchner says the regulators for recreational marijuana should expect competition for the licenses to be fierce.

“If past is prologue, everyone is going to be interested in the adult-use market,” he said.

If caps are put in place, there will likely be more litigation, Bauchner added. And he thinks caps are likely, given their political support.

“We’re likely to see, as we have in the past, hundreds of applications,” he said. “The problem then becomes qualified applicants are being denied the right to pursue that option because of an arbitrary cap.”

Limits will likely also have the backing of major marijuana companies, which are already present in the state’s medical industry, Bauchner said.

If regulators rely on caps, “they’ve created a system where the stakes are so high, it engenders litigation and it permits monopolistic conduct,” he said. “It’s going to yield problems.”

–Additional reporting by Bill Wichert. Editing by Nicole Bleier.

Ansell Grimm & Aaron’s Litigation Department: Year in Review

Posted on December 23rd, 2020

As the world struggled to face the coronavirus pandemic, and millions of small businesses were 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 Anthony D’Artiglio, Rahool Patel, Seth Rosenstein and, our newest member, Ashley Whitney, the Department is pleased to share its numerous successes.

COVID-19 Litigation
Ansell Grimm & Aaron represented 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 our clients.

Class Action Litigation
Ansell Grimm & Aaron successfully obtained a transfer of venue in a nationwide class action originally venued in the Northern District of California.  Plaintiff brought claims related to the sale of beauty products against the seller, shipper, and a host of individuals and entities.  We successfully asserted that the shipping entity and a related individual should be severed and dismissed from the action, paving the way for a transfer of venue to the District of New Jersey for the remaining Defendants.  We subsequently filed a Motion to Dismiss in the District of New Jersey asserting that the Court lacks subject matter jurisdiction as a result of a pre-litigation refund offer and that the Amended Complaint is an impermissible “shotgun” pleading which is overlong, unintelligible, and impermissibly asserts collective rather than individual allegations of wrongdoing against all Defendants.  The Motion to Dismiss remains pending.

Cannabis Litigation
In Washington v. Barr, the Firm filed a pro-bono amicus brief in the United States Supreme Court on behalf of several non-profit organizations representing former national and international professional athletes in support of a constitutional challenge to the federal government’s continued refusal to remove marijuana from Schedule I of the Controlled Substances Act, even though millions of Americans use marijuana on a regular basis to manage debilitating health conditions in accordance with State, territorial, and local laws. Unfortunately, with the passing of Justice Ginsberg, petitioners were unable to secure the four votes necessary to secure review.

In an appeal challenging the New Jersey Department of Health’s administrative process with respect to its 2018 Request for Applications to operate medicinal marijuana alternative treatment centers, the Appellate Division issued a momentous 75-page decision vacating the Department’s disqualification decisions and remanding for further proceedings because the Department failed to provide any cogent explanation for the vast scoring discrepancies observed.

In several appeals challenging the technological failure of the New Jersey Department of Health’s online submission portal for its 2019 Request for Applications to operate medicinal marijuana alternative treatment centers, the Appellate Division issued a stay enjoining the Department from any further administrative action, including scoring and ranking applications, and issuing licenses.  The Court later denied a motion by the Department to vacate the stay.  At the present time, the appeals are fully briefed and scheduled for oral argument on February 2, 2020.

Judgement Enforcement & Defense
A matter of interest in 2020 concerned litigation initiated by the State of New Jersey’s Uninsured Employer’s Fund against the former owner of a New Jersey business.  For years, the State’s outside counsel “litigated by default” an action against an entirely different individual (albeit, with the same last name), with a different address and different social security number having failed to afford our client any notice of the action whatsoever permitting him to defend.  The State subsequently sought to enforce a Judgment against our client, going as far as levying escrow funds from the sale of the client’s home.

Upon retention, the Firm worked vigorously to oppose the turnover of funds from escrow and mark the judgment as satisfied, and cross-moved to vacate the default judgment.  Our efforts resulted in justice for the client, by way of vacating default judgment, the issuance of an Order directing the State to promptly return the seized funds to escrow, and ultimately the return of the subject funds to our client.

Police Benevolent Association Legal Protection
The Firm is appealing the termination of a police officer with no prior discipline record who consistently held the department record for summonses, DUIs, and arrests, for alleged Criminal Justice Information Services violations by way of excessive full-disclosure search on his patrol car’s Mobile Data Terminal, despite its failure to identify a single full-disclosure search conducted without justification.  The matter is slated for oral argument this month.

Ms. Whitney also utilized her years of representation of police officers to join the Firm’s criminal defense attorneys, Mitchell Ansell and Kevin Clark, on the PBA Legal Protection Plan’s list of approved attorneys in order to offer additional representation through the Firm’s Woodland Park office.

Posted in News

AGA Partner Andrea White to Speak at Family Law Symposium

Posted on December 17th, 2020

Ansell Grimm & Aaron partner Andrea B. White Esq. will be among the featured speakers in the New Jersey Institute for Continuing Legal Education  2021 Family Law Symposium.

The symposium is a comprehensive 2-day program slated for Jan. 26 & 27 offering 14.8 NJCLE credits including 1.0 diversity and inclusion credits  (please visit the NJSBA website for information on CLE credits for NY and PA attorneys).

The program will run from 9 am to 4:30 pm on Jan. 26 and 9 am to 3 pm on Jan 27. Registrants for the program will automatically get the on-demand and live program for both days and will be able to access the on-demand program for 120 following its release, available 7 days after the live event.)

The symposium is presented in cooperation with the NJSBA Family Law Section.

Ms. White is slated to take part in two panels:

  • What I Wish I Knew Then-Hot Practice Tips from Past Family Law Chairs
  • Home is Where the Heart(ache) is: Occupancy Under NJSA 3B:35-3(a),
    Pendente Lite Occupancy, and Need for Each Party to Have a Residence

Registration and more information about the symposium is available at:

NJICLE

A print-ready pdf application form is available here:

2021 Family Law Symposium

A group registration form is available here:

Group Registration

NJ Appeals Court Vacates and Remands 2018 MMJ Disqualification Decisions: Victory for Appellants, Government Transparency, and NJ MMJ Patients

Posted on November 25th, 2020

The New Jersey Appellate Division this morning issued its Decision vacating the Department of Health’s final agency decision in the 2018 Medical Marijuana Request for Applications process and remanding for further proceedings to address the endemic scoring defects and related problems.  The Decision is available here.

In its 75-page Decision, the Court extensively reviewed the scoring irregularities which rendered the DOH’s disqualification of Appellants arbitrary, capricious and unreasonable:

In short, all roads lead to the same point: numerous, indisputable anomalies in the scoring of the appellants’ applications prevent us from having sufficient confidence in the process adopted by the Department or its results for the approval of ATCs in this important industry that provides ‘beneficial use[s] for . . . treating or alleviating the pain or other symptoms associated with’ certain medical conditions. N.J.S.A. 24:6I-2(a). It is for this chief reason that we remand to the Department to undertake further steps to ameliorate these concerns.

The Court concluded that “the Department tolerated too great a degree of ‘relative error’ in its scoring, its decisions were arbitrary, capricious and unreasonable. This argument, with which we agree, is demonstrated by numerous examples that simply cannot be rationally explained on the record before us.”

The Court further unequivocally rejected the Department’s excuses for the scoring anomalies:

The Department has done little to justify these anomalies or explain why they should be disregarded. We would characterize the Department’s contentions as falling into two general assertions: (1) the divergent scores in some instances are the product of “each member appl[ying] his or her unique expertise to the scoring process,” and (2) all applicants were subject to the same process and, therefore, all buoyed or dragged down by the varying scores. The former is unconvincing because it runs counter to the fact that the Department provided each review committee member the same set of instructions that it presumably sought to have applied in the same way, as well as the rather obvious likelihood that the Department did not intend – nor should it have intended – to allow reviewers’ personal views to enter into the calculus. We are also unpersuaded by the Department’s false-equivalency argument. It is certainly true that the winning and losing applicants were subjected to the same review committee, and there may be evidence of similar inconsistent scoring of the winning applications, but that doesn’t mean that they were entirely treated the same way.

In dismissing these arguments, the Court succinctly explained:  “There is no escaping the fact that some of these scores simply ‘don’t compute’ and that, no matter how the Department and the other respondents may attempt to slice it, the results are still unsettling.”  The Court then ordered that:  “The Department must address the numerous questions posed about its scoring procedures and explain the basis for its resolution of the remand proceedings before we can ever adequately review whatever final agency decisions come from those proceedings.”

In reaching its Decision, the Court also telegraphed its concerns regarding the pending 2019 Medical Marijuana Request for Applications:

We intervene in the administrative proceedings that have taken place so far to ensure the public’s confidence in both the results achieved at the agency level so far and to ensure that future similar proceedings will be likewise subjected to a measure of scrutiny at the agency level that will guarantee the process does not produce determinations that are arbitrary, capricious or unreasonable.

As to a remedy, the Court explained that it “will not dictate to the Department what it is that it should do following today’s remand, other than to hold that it must engage in some sort of additional process for receiving and considering the appellants’ contentions and must explain its determinations on those contentions.”  As an administrative hearing likely only will reveal additional problems, and the Court repeatedly noted the option to award more licenses, there is hope on the horizon for expanding patient access in New Jersey to much-needed medicine in the near term.

Ansell Grimm Adds Application Writer-Attorney To Cannabis Law Practice

Posted on November 10th, 2020

Ansell Grimm & Aaron, PC announces that Ariana Van Alstine will be coordinating with the firm to assist in the preparation of applications for cannabis licenses in the State of New Jersey.  The addition of Ms. Van Alstine expands the firm’s already robust Cannabis Law Practice Group, enabling it to further support its clients in licensing, corporate formation and governance, commercial leasing, contract negotiation and drafting, employee issues, capital raising and financing, and regulatory and municipal compliance.

Ms. Van Alstine is an attorney and consultant to the cannabis industry who is widely recognized for her ability to support clients to accomplish business goals within the context of complex regulatory frameworks.  Ms. Van Alstine has successfully worked with clients to win numerous local competitive license processes, guided the state license process for nearly every license type, guided clients through multi-state expansion processes, and navigated the cannabis regulatory hurdles in dozens of commercial, real estate, and acquisition agreements. In addition to working with cannabis businesses, she works with platforms and financial service providers to navigate cannabis regulatory hurdles.

Prior to founding AAVA Consulting, Ms. Van Alstine was Vice President of Legal and Regulatory Affairs at Connected California, a vertically integrated multi-state cannabis business. At Connected, she oversaw the company’s legal, compliance, and regulatory affairs departments.

Ms. Van Alstine is regularly invited to share her unique knowledge of cannabis law. She taught an executive training on cannabis licensing for University of the Pacific, McGeorge School of Law, and has provided continuing legal education to the Sacramento County Bar Association. Past speaking engagements include California Cannabis Industry Association’s Risk Management Conference, The State of Cannabis, Urban Exchange Speaker Series, California Cannabis Courier’s Association: Ask the Lawyers, McGeorge School of Law: Cannabis Law Symposium; McGeorge School of Law Cannabis Licensing Seminar; Sacramento County Bar Association: Cannabis Law Section on Licensing, Sacramento County Bar Association: Cannabis Law Section on Record Keeping, and Payroll Systems: MRB Compliance Seminar.

Ms. Van Alstine is a California Super Lawyer, Rising Star. She sits on the Board of Women Lawyers of Sacramento, and on the Advisory Board for Khemia Manufacturing and Tracy Cannabis Collective. She has also sat on the California Cannabis Industry Association’s Legislative and Insurance Subcommittees. Ms. Van Alstine is a member International Cannabis Bar Association, the Women in Cannabis Chamber of Commerce, the Sacramento County Bar Association, and Barristers’ Club of Sacramento. In her spare time, she volunteers as an Alumni Coach for the McGeorge School of Law Honors Board Asylum competition.

Ansell Grimm is pleased that Ms. Van Alstine is bringing her extraordinary experience to service its cannabis clients.  Our dedicated Cannabis Law Practice Group stands ready to assist applicants with ensuring they are prepared when the Request for Applications is issued for adult use cannabis, as well as for additional medical licenses.  Please contact Joshua S. Bauchner, head of the Cannabis Law Practice Group, at jb@ansellgrimm.com or (973) 247-9000 to get started today.

Recreational Marijuana Legalized by New Jersey Voters

Posted on November 5th, 2020

As the New York Times reported, after years of legislative failures, New Jersey voters on Tuesday authorized the legal use of recreational marijuana in a year when supporters rallied around the disproportionate number of arrests for the drug in minority communities.

The ballot question passed as expected, by a wide margin, according to preliminary results from The Associated Press.  The vote allows New Jersey officials to begin the thorny, potentially lengthy process of establishing rules related to regulating and testing cannabis and issuing licenses, including how many permits to grant — and to whom.

The question New Jersey voters approved called for a 6.625 percent state tax on marijuana sales to customers 21 or older, and permitted municipalities to charge an extra 2 percent tax. But most other implementation details must now be worked out by the Legislature and a Cannabis Regulatory Commission with five members — only one of whom has been appointed.

The potential for extra tax revenue and new jobs may serve as a powerful motivator to move quickly in New Jersey, which is struggling to plug budget gaps left by a pandemic now stretching into its ninth month. The measure is expected to generate about $126 million a year once the market is established.

Ansell Grimm & Aaron, PC’s dedicated Cannabis Law Practice Group stands ready to assist applicants with ensuring they are prepared when the Request for Applications is issued, including, among other things:  corporate formation and governance, leasing, property acquisition, capital raising and financing, distribution agreements, licensing, and regulatory and municipal compliance.

Please contact Joshua S. Bauchner, head of the Cannabis Law Practice Group, at jb@ansellgrimm.com or (973) 247-9000 to get started today.

The State of Cannabis: NJ’s Upcoming Ballot Referendum on Adult-Use

Posted on September 22nd, 2020

October 28th, 2020 6:00pm-8:00pm

Via Zoom

Join us on October 28th for a timely and important discussion where our distinguished group of panelists will address cannabis at the federal level, and then hone in on what’s happening in NJ with the current medical operators, the prospect for adult-use if the referendum passes, and the viability of applying for and securing a license to operate.

Our moderator is Joshua S. Bauchner, head of the Cannabis Practice Group at the law firm Ansell Grimm & Aaron PC, who will be joined by panelists Art Hance, President, Hance Construction, Todd Johnson, Executive Vice President and Head of New Jersey Operations for Justice Grown and President of Community Greenhouse, and Jeff Monat, Senior Partner at Merida Capital.

To register for the event, click here.

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

Posted on September 14th, 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 (www.ansellgrimm.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.