Bill to Expand NJ Medicinal Marijuana Program Heads to Gov. Murphy

Legislature Has Approved a Bill That Will Significantly Expand the New Jersey Medicinal Marijuana Program

The New Jersey Legislature has approved a bill that will significantly expand the state’s Medicinal Marijuana Program. The legislation, Assembly Bill 20/Senate Bill 20, reflects a compromise reached between the Legislature and the Murphy Administration, and Gov. Murphy is expected to sign it.

Expansion of NJ Medical Marijuana Law

Expanding access to medical cannabis has been a top priority for Gov. Murphy since he took office. After efforts to pass comprehensive legislation legalizing recreational cannabis and expanding the medical marijuana program failed, Gov. Murphy announced his own plans to expand the state’s Medicinal Marijuana Program earlier this month. As part of the expansion, the Department of Health (Department) issued a Request for Applications (RFA) seeking new applicants to operate up to 108 additional Alternative Treatment Centers (ATCs), including up to 24 cultivation endorsements, up to 30 manufacturing endorsements, and up to 54 dispensary endorsements.

The Murphy Administration’s announced its expansion plan after the New Jersey Senate and Assembly had already approved the Jake Honig Compassionate Use Medical Marijuana Act (S-10), which would also expand the state’s medical cannabis program. Key differences in the Legislature’s plan included transferring medical marijuana oversight from the Department of Health’s jurisdiction to a new five-member Cannabis Regulatory Commission. The number and types of licenses to be issued pursuant to the RFA is significantly higher than the proposed licensing of another 11 cultivators pursuant to S-10. 

To address these issues, lawmakers quickly introduced and passed Assembly Bill 20/Senate Bill 20, which reflects a compromise between Gov. Murphy and the Legislature. Many of the provisions of the original bill (S-10) remain, including numerous provisions to expand patient access.

Below is a brief summary of the compromise provisions:

• Oversight: The bill will transfer oversight of the state’s medical cannabis program to the new Cannabis Regulatory Commission (CRC). The CRC will consist of five, full-time members. The initially designated chair and two other initial members will be appointed by the Governor, another initial member will be appointed by the Governor upon the recommendation of the Senate President, and the final initial member will be appointed by the Governor upon the recommendation of the Speaker of the General Assembly. Thereafter, the Governor will appoint, with the advice and consent of the Senate, the chair and the two other members not requiring any legislative leadership recommendation. The appointments based upon the Senate President’s and Speaker’s recommendation would continue to be direct gubernatorial appointments that are not subject to the advice and consent of the Senate.
• Taxation: The bill will phase out the sales tax over three years, with the tax dropping to four percent on July 1, 2020, to two percent on July 1, 2021, and being completely exempt from all state sales tax as of July 1, 2022. The bill also authorizes municipalities in which a medical cannabis dispensary or clinical registrant is located to assess a transfer tax of up to two percent on the purchase price of all medical cannabis dispensed by the dispensary or clinical registrant.
• Permitting: The bill still establishes three distinct permit types in connection with the production and dispensing of medical cannabis: medical cannabis cultivators, medical cannabis manufacturers, and medical cannabis dispensaries. The bill restricts the total number of entities authorized to cultivate medical cannabis to 28 for the first 18 months after the effective date of the bill, which will include any ATCs issued a permit prior to the effective date of the bill and the new permits required to be issued under the bill, but will not include microbusinesses issued a cultivator permit. The CRC will be required to specify by regulation the number of new permits of each type that it will authorize in the first year following the effective date of the bill, and thereafter periodically evaluate whether the current number of permits is sufficient to meet the needs of qualifying patients and issue requests for new applications as needed. 
• Consumption Lounges: The bill authorizes medical cannabis dispensaries and clinical registrants to establish medical cannabis consumption areas, subject to approval by the CRC and the municipality in which the dispensary or clinical registrant is located.  A consumption area is required to be on the premises of the dispensary or clinical registrant, accessible only to patients and their designated caregivers, and screened by sufficient walls or other barriers to prevent any view of patients consuming medical cannabis.

What’s Next?

On June 20, 2019, the Legislature passed the medical marijuana bill by a vote of  31 to 5 in the Senate and 22 to 12 in the Assembly. It now heads to Gov. Murphy for his signature.

Given the passage of A20/S20, the timetable set forth in the Department of Health’s recent RFA may be extended, or the RFA may be withdrawn altogether and a new one issued.  Any revision of the regulations necessitated by A20/S20 would be the subject of future rulemaking by the Department of Health.

In any case, the New Jersey medical cannabis program is poised to significantly expand in the very near future.  If you are interested in participating in the market, you need to begin the planning process ASAP.

If you have any questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Dan McKillop, at 201-806-3364.

This article is a part of a series pertaining to cannabis legalization in New Jersey and the United States at large. Prior articles in this series are below:

• New Jersey Assembly Approves Medical Marijuana Bill
• Big Changes Coming to the New Jersey Medicinal Marijuana Program
• Will Calls for Cannabis Banking Clarity Lead to Results?

Disclaimer: Possession, use, distribution, and/or sale of cannabis is a Federal crime and is subject to related Federal policy. Legal advice provided by Scarinci Hollenbeck, LLC is designed to counsel clients regarding the validity, scope, meaning, and application of existing and/or proposed cannabis law. Scarinci Hollenbeck, LLC will not provide assistance in circumventing Federal or state cannabis law or policy, and advice provided by our office should not be construed as such.