Is United Approach the Key to Adult-Use Cannabis Legalization or Not?

Is United Approach the Key to Adult-Use Cannabis Legalization or Not?

New York and New Jersey have both failed to get their adult-use cannabis legalization legislation across the finish line. Could teaming up with neighboring states be the solution?

The governors of New York, New Jersey, Pennsylvania and Connecticut recently met to explore the possibility of establishing a joint, regional approach to cannabis and vaping regulation. Earlier this year, lawmakers in New York, New Jersey, and Connecticut proposed bills to legalize recreational cannabis but failed to attract enough votes. In Pennsylvania, legislators are currently considering a cannabis legalization bill.

Regional Cannabis Regulation

As they move forward, the neighboring states are trying to avoid a patchwork of conflicting state cannabis laws. Dubbed the “Regional Cannabis Regulation and Vaping Summit,” the meeting resulted in the four states reaching an agreement on several guiding principles for the legal cannabis industry.

“In New Jersey, we are committed to conquering the public health challenge of vaping and advancing marijuana legislation. These actions will be strengthened and magnified when we know there is a similar strategic approach in New York, Connecticut, Pennsylvania, and other states,” said New Jersey Gov. Phil Murphy. “Our impact is much greater when we break out of our own silos as individual states and collaborate on the tough issues plaguing our region and nation. Together, we can ensure that these challenges are met with thoughtful, comprehensive action for those who live and work in our region.”

New York Gov. Andrew Cuomo also acknowledged the challenges of cannabis legalization. He said, “This issue is complicated, controversial and consequential. It is probably one of the most challenging things I’ve had to address in New York, and it’s a challenge for all the states. The goal of this summit is to collaborate with one another, share resources and think collectively as we all try to figure this out.”

Regional Principles for Legal Cannabis Market

The leaders of New York, New Jersey, Connecticut, and Pennsylvania agreed to a series of principles that will guide the states in regulating legal cannabis, including taxation and social justice reforms. As described by the governors of the four states in a press statement, they plan to use the following guidelines:

• Identifying best practices with regard to the basis for taxation, implementation stages and dynamic market-based controls for cannabis production and cultivation;
• Supporting the market architecture of cannabis regulation, including a keen awareness of the need to ensure a fair and competitive market, deploying strategies such as a limitation on the number of licenses or licenses types, to protect against manipulation of markets;
• Encouraging in conjunction with their legislature a stable regional market by identifying and implementing a similar overall effective tax rate for cannabis products;
• Incorporating tax mechanisms, such as weight-based, potency-based, and/or mg/thc based, to ensure price stability for licensees and that the price of cannabis does not fall to a point that increases access and use beyond current usage rates;
• Implementing social equity initiatives to ensure industry access to those who have been disproportionately impacted by the prohibition of cannabis;
• Prioritizing small and diverse businesses’ participation in the cannabis industry;
• Implementing meaningful social justice reform with regard to cannabis policy, including expediting expungements or pardons, waiving fees associated with expungements or pardons and securing legislation to support these reforms;
• Supporting and advocating for the passage of the Secure and Fair Enforcement (SAFE) Banking Act, which would provide clarity and remove disincentives for existing financial institutions to service cannabis-related businesses;
• Supporting research focusing on immediate solutions that will improve the ability of the state to manage cannabis-related cash payments, as well as long-term solutions that allow the industry to thrive; and
• Providing positive guidance to their state-chartered financial institutions with respect to cannabis-related banking services. Such guidance may make reference to education, promotion, data sharing, legislation and advocacy with federal and state regulators.

The governors also agreed to several principles regarding cannabis product safety and testing, as well as the availability and advertising of products. Both focused on restricting access to and advertising aimed at youth users and vulnerable populations. Examples include requiring child-resistant packaging for cannabis products, restricting the sale of products to adults 21 and over, and imposing strict penalties on licensees that sell to youth.

In terms of public safety, the four states agreed to work together to come up with a uniform standard for blood or saliva tests and establish methods for sharing information on suspected “bad actors” in the legal market, among other initiatives.

Key Takeaway for Cannabis Industry

The regional summit demonstrates that New York, New Jersey, Connecticut, and Pennsylvania recognize the advantages of a coordinated legalization effort. Whether any such coordination causes additional delay remains to be seen. By coordinating their approaches, the resulting cannabis regulations may be more uniform, which would make it easier for both businesses and consumers to comply. The attorneys of the Scarinci Hollenbeck Cannabis Law Group will continue to monitor the progress of legalization efforts both on the state and federal level, so please check back regularly for updates.

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:

• Cannabis Industry Celebrating House Passage of SAFE Banking Act
• What Can Cannabis Businesses Learn from Curaleaf?
• Federal Legislation Aims to Help Small Businesses in Cannabis Industry

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.