NJ Voters Approve Adult-Use Cannabis: The Path Forward

NJ Voters Approve Adult-Use Cannabis: The Path Forward

As of January 1, 2021, the cultivation, processing, and sale of retail marijuana and the personal possession and use of marijuana by persons age 21 and older will be legal, provided such actions are conducted in compliance with coming legislation and regulations. 

Constitutional Amendment

After failing to reach a consensus on how to legislatively legalize adult-use marijuana, the New Jersey Legislature passed a resolution last year that introduced a constitutional amendment to legalize and thereby set the stage for a vote by the citizens of New Jersey.  On November 3, 2020, New Jerseyans overwhelmingly voted in favor of legalization, with 67% voting in favor of the referendum and 32% against.

Though brief, the referendum does provide that the Cannabis Regulatory Commission, which is yet to be formed, will oversee both the State’s medical cannabis program and the coming adult-use market. The Cannabis Regulatory Commission will likely be tasked with drafting regulations governing additional areas, including: 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; record keeping requirements; and civil penalties for the failure to comply with the regulations.

The referendum also provides that all retail sales of adult-use marijuana products in the new market will be subject to the State’s sales tax, which is currently 6.625%. If authorized by the Legislature, a municipality may pass a local ordinance to charge a local 2% tax on such products.

Regulation of Recreational Cannabis Market

The New Jersey Legislature must now enact enabling legislature, which is a significant task given its prior inability to agree on key issues about how adult-use marijuana would be regulated, marketed and sold. Below are several of the many issues that lawmakers must address:

• Licensing, including classes of licenses, application requirements/process, number of licenses available, and how they will be distributed
• Oversight of adult-use marijuana handlers and others who perform services for licensees
• Local government oversight
• Authorization of delivery and retail consumption areas

Adult-use marijuana legislation has faltered in the past.  However, the financial impact of the ongoing COVID-19 pandemic on the State and the predicted $126 million in adult-use marijuana tax revenue may help speed up the legislative process. The expansion of the state’s legal marijuana industry will also create jobs and business opportunities.

Sen. Nick Scutari, the chief architect of prior recreational marijuana bills, is already working on legislation.  According to Sen. Scutari, many of the provisions in previous versions of his legislation will likely be included in his latest proposal. “Now the people have spoken,” he said in an interview with NJBIZ. “We will be under intense pressure [to develop] a regulated market.” He added: “We need to ramp up production, we need to get more licenses … cultivators and dispensaries online as soon as possible. But that all is going to take time.” Senate President Stephen Sweeney, also a vocal proponent of legalization, has said that he is hopeful that licenses can be issued by the middle of next year.

Next Steps for Businesses

The Scarinci Hollenbeck Cannabis Law Practice group will be continuously tracking the status of the recreational marijuana legislation. We encourage current and prospective members of the New Jersey cannabis industry to check back regularly for updates.  We also encourage existing businesses in the State of New Jersey to contact us with any questions regarding the potential impacts of these developments on existing workplace operational and human resource protocols.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Dan McKillop, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.

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:

• Medical Marijuana May Now Be Prescribed Via Telemedicine in New Jersey
• NJ Medical Marijuana Dispensaries To Start Home Delivery Soon
• Understanding How the USPTO’s Examination Guide for Cannabis Marks Impacts CBD Products

<small><p>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.</p></small>