The Path Forward for Legal Cannabis in New Jersey

The Path Forward for Legal Cannabis in New Jersey

Proponents of legalizing adult-use marijuana in New Jersey are hopeful that two recently introduced cannabis bills will help reignite momentum. Senate Bill 2702, proposed by Senator Nicholas Scutari and Senate President Stephen Sweeney, combines the expansion of the state’s medical marijuana program with the legalization and establishment of an adult-use market.  Meanwhile, Senate Bill 2703 would legalize the possession and personal use of up to an ounce of marijuana for individuals 21 and over.

SB2703 – Adult-Use Legalization Bill

SB2703 legalizes possession and personal use of marijuana for persons age 21 and over. Specifically, a person may possess, use, purchase, or transport: marijuana paraphernalia; one ounce or less of marijuana; 16 ounces or less of marijuana-infused product in solid form; 72 ounces or less in liquid form; 7 grams or less of marijuana concentrate; and up to 6 immature marijuana plants.

The proposed legislation also establishes a new Division of Marijuana Enforcement (Division) to oversee the legal industry. Notably, the Division would be located in the Department of Treasury rather than the Department of the Attorney General. The new Division would be tasked with drafting cannabis regulations, which would include the following: procedures for the application, issuance, denial, renewal, suspension, and revocation of a license to operate a marijuana establishment; license application fees; licensing goals; security requirements for marijuana establishments; requirements to prevent the sale or diversion of marijuana and marijuana products to underage persons; labeling and packaging requirements; health and safety regulations and standards for the manufacture and sale of marijuana products; advertisement restrictions; recordkeeping requirements; and civil penalties for the failure to comply with the regulations.

Below are several other key provisions of the bill:

• Licensing: The bill establishes four classes of licenses: a Class 1 Marijuana Grower license for the premises at which the marijuana is grown or cultivated; a Class 2 Marijuana Processor license for the premises at which the marijuana is processed; a Class 3 Marijuana Wholesaler license for the premises at which the marijuana is warehoused; and a Class 4 Marijuana Retailer license for the premises at which the marijuana is retailed. A separate license would be required for each location at which a marijuana establishment seeks to operate. All prospective licensees must complete application requirements, meet residency requirements, and undergo a criminal history record background check. The Division would begin accepting applications 30 days after implementing regulations are adopted. Existing medical marijuana facilities would be authorized to immediately apply for a license to distribute marijuana to a person who is not a medical marijuana patient.
• Taxes: Under the proposed cannabis legislation, a tax would be levied upon marijuana sold or otherwise transferred by a marijuana cultivation facility to a marijuana product manufacturing facility or to a retail marijuana store. To encourage early participation in and development of marijuana establishments and to undermine the illegal market, the bill establishes an escalating tax rate: in year one following enactment of the bill, the excise tax would be 10 percent; 15 percent in year two; 20% in year three; and 25% in year four and beyond. No tax would be levied upon marijuana intended for sale at medical marijuana centers.
• Local Government Oversight: The bill provides that each local governmental entity may enact an ordinance or regulation governing the time, place or manner and number of marijuana establishment operations and provides for civil penalties violating those ordinances. Local governmental entities would also be able to prohibit the operation of marijuana cultivation facilities, marijuana product manufacturing facilities, marijuana testing facilities, or retail marijuana stores through the enactment of an ordinance.  Under the bill, the failure of a local governmental entity to enact an ordinance prohibiting the operation of a marijuana establishment within 180 days following the effective date of the bill would permit such operations within the local governmental entity for a period of five years. At the end of this five year period, and every five year period thereafter, the local governmental entity would again be permitted to prohibit the operation of a marijuana establishment.
• Expungement: The bill permits a person convicted of marijuana possession as defined in paragraph (4) of subsection a. of N.J.S.2C:35-10 (possession of 50 grams or less of marijuana, or five grams or less of hashish)to present an application for expungement to the Superior Court.
• Conflict with Federal Law: With regard to contract enforceability, the bill provides that no contract would be unenforceable on the basis that manufacturing, distributing, dispensing, possessing, or using marijuana is prohibited by federal law. In addition, no contract entered into by a licensee, its employees, or its agents as permitted pursuant to a valid license issued by the Division, or by those who allow property to be used by a licensee, its employees, or its agents as permitted pursuant to a valid license issued by the Division, could be deemed unenforceable on the basis that the actions or conduct permitted pursuant to the license are prohibited by federal law.

SB2702 – Combined Medical and Adult-Use Bill

Senate Bill 2702 contains all of the provisions of Senate Bill 2703 and also includes measures to expand the State’s existing medical marijuana program. Below are several proposed changes:

• Qualifying Conditions: The bill changes the term “debilitating medical condition” to “qualifying medical condition” and updates and revises the list of conditions in certain ways, including adding additional conditions and providing that medical marijuana may be used as a treatment of first resort for any condition included in the list, which are: seizure disorder, including epilepsy; intractable skeletal muscular spasticity; post-traumatic stress disorder; glaucoma; positive status for human immunodeficiency virus; acquired immune deficiency syndrome; cancer; amyotrophic lateral sclerosis; multiple sclerosis; muscular dystrophy; inflammatory bowel disease, including Crohn’s disease; terminal illness, if the patient has a prognosis of less than 12 months of life; anxiety; migraine; Tourette’s syndrome; chronic pain; or any other medical condition or its treatment that is approved by the Department of Health (DOH).
• Authorizing Patients For Medical Marijuana Use: The proposed legislation expands the list of professionals who can authorize patients to use medical marijuana to include any health care practitioner who is authorized under State and federal law to prescribe controlled dangerous substances, including physicians, physician assistants, and advanced practice nurses. It further provides that health care practitioners will not be required to register with the DOH, or be publicly listed in any DOH registry, as a condition of authorizing patients. 
• Minors: The bill provides that, in order to authorize a qualifying patient who is a minor for medical marijuana, the health care practitioner will be required to either: (1) be trained in the care of pediatric patients; or (2) obtain written confirmation from a health care practitioner trained in the care of pediatric patients. SB2702 also removes a provision that limited distribution of edible forms of medical marijuana to qualifying patients who are minors.
• Alternative Treatment Center Applications: The bill establishes three different types of ATC permit: medical marijuana cultivator, medical marijuana processor, and medical marijuana dispensary. Cultivators are facilities that will be authorized to cultivate marijuana and supply it to other cultivators and to dispensaries.  Processors will be authorized to process marijuana into marijuana-infused and marijuana-derived products, which it may supply to other processors and to dispensaries. Dispensaries will be authorized to furnish medical marijuana, marijuana-infused products, marijuana-derived products, paraphernalia, and related supplies to other me dispensaries and to qualifying patients. The original six ATCs in the State will be deemed to hold a cultivator permit, a processor permit, and up to three dispensary permits. Applicants must submit a separate application for each proposed cultivator, processor, or dispensary location.

The bill establishes specific requirements for DOH to review and score initial permit applications for new medical marijuana cultivators, medical marijuana processors, and medical marijuana dispensaries based on a 100-point scale, which includes evaluations of the applicant’s operational plan, environmental impact plan, safety and security plan, business experience, proposed location, record of social responsibility, philanthropy, involvement in research concerning the medical efficacy and adverse effects of medical marijuana, workforce development and job creation plan, and business and financial plan. The maximum fee for initial issuance or renewal of an ATC permit will be $50,000 for a medical marijuana cultivator, $25,000 for a medical marijuana processor, and $10,000 for a medical marijuana dispensary. Additionally, the maximum fee for relocation of an ATC will be $20,000 and the maximum fee to sell or transfer an ATC permit will be $150,000. 

• Establishing New ATCs:  The bill authorizes DOH to issue up to a total of 15 cultivator permits, up to a total of 15 processor permits, and up to a total of 98 dispensary permits. The total number of permits will include the six current ATC permits issued prior to the effective date of the bill.  Additional permits will be issued as the program grows to meet patient demand.
• Legal Protections for Patients: The bill provides that qualifying patients and designated caregivers may not be discriminated against when enrolling in schools and institutions of higher education, or when renting or leasing real property, solely on the basis of the medical use of marijuana or their status as a registry cardholder. However, the bill provides that nothing is to require a school, institution of higher education, or landlord to take any action that would jeopardize a monetary grant or privilege of licensure based on federal law. SB2702 also establishes protections from adverse employment actions for qualifying patients. Specifically, employers will be prohibited from taking any adverse employment action against an employee based on the employee’s status as a registry identification cardholder or based on a positive test for marijuana, unless the employer establishes, by a preponderance of the evidence, that the lawful use of medical marijuana impaired the employee’s ability to perform the employee’s job responsibilities. 

If an employer has a drug testing policy and an employee or job applicant tests positive for marijuana, the employee or job applicant is to be offered an opportunity to present a legitimate medical explanation for the positive test result, such as a practitioner’s recommendation for medical marijuana, a registry identification card, or both, or request a retest of the original sample at the employee’s or job applicant’s own expense. Nothing in the bill will restrict an employer’s ability to prohibit or take adverse employment action for the possession or use of intoxicating substances during work hours, require an employer to commit any act that would cause the employer to be in violation of federal law, or require the employer to take any action that would result in the loss of a federal contract or federal funding. 

If you have any questions, please contact us

Given that the proposed bills are extremely complex, this article provides only a brief overview of several key provisions. We encourage cannabis businesses and those that are seeking to enter the emerging cannabis industry to contact an experienced attorney to discuss how the proposed measures may impact you. 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:

• President Trump Pledges to Protect State Marijuana Rights, Is Federal Bill Next?
• NJ Legislature Advancing Bill to Expand Medical Marijuana Program
• What is the Process to Obtain Marijuana Dispensary Licenses in New Jersey?