Category Archives: General

NJ Governor Murphy Projects Adult Use Cannabis Legalization by January 2019

In his first budget address, New Jersey Governor Phil Murphy today reaffirmed his commitment to promptly expand the state’s currently moribund medical marijuana program, and the full legalization of adult use marijuana by January 1, 2019.

In his address, Governor Murphy explained:

We must also make sure we are investing not just in individuals, but also in entire communities – particularly our long-overlooked urban neighborhoods. We must recommit to opening the doors to economic opportunity for the thousands of young men and women – especially young men and women of color – jailed for non-violent drug-related offenses. Our current system has failed them, and put a mark on them that they will carry for their entire lives, preventing them from furthering their educations or getting jobs.

It’s the principal reason I advocate for legalizing adult-use marijuana. According to research, New Jersey spends upwards of $140 million per year adjudicating low-level marijuana possession offenses. And, marijuana-related arrest rates are tilted three-to-one against African-Americans, even though rates of marijuana use are similar among races.

These resources must have a better use, whether to tackle the trafficking of illegal guns, provide stronger community policing, or to crack the back of our opioid epidemic, which was devastating our urban centers long before it made headlines.

I greatly respect those in this chamber who have proposed decriminalizing possession of small amounts of marijuana, and I thank them for recognizing the importance of doing what’s right and just for those who carry criminal records for past possession arrests. But decriminalization alone will not put the corner dealer out of business, it will not help us protect our kids, and it will not end the racial disparities we see.

If these are our goals – as they must be – then the only sensible option is the careful legalization, regulation, and taxation of marijuana sales to adults.

Legalization will allow us to reinvest directly in our communities – especially the urban neighborhoods hardest hit by the misguided War on Drugs – in their economic development, in health care and housing, child care and after-school programs, and other critical areas. These investments will pay dividends far greater than the cost of mass incarceration.

I did not come to this overnight, myself. After all, we are the parents of four children under the age of 21. But from the standpoint of social justice, and from the standpoint of protecting our kids and lifting up our communities, I could not arrive at any other conclusion.

In the Budget in Brief submitted to the Legislature today, the Administration stated that it “plans to legalize adult-use marijuana by January 1, 2019. The State will also move forward with expanding access to medical marijuana to alleviate patient suffering.”

The Budget projects $80 million in new revenue from legalizing marijuana, without specifying tax rates or the number of dispensaries the Governor anticipates.  This is part of $2 billion in new revenues to meet the $37.5 billion budget that also includes a millionaires tax ($765 million), restoring the sales tax rate to 7% ($581 million) and business tax modernization ($110 million).

Next on the Governor’s agenda: the anticipated release of substantially revised regulations governing New Jersey’s medical marijuana program that currently consists of only 6 vertically-integrated, nonprofit dispensaries serving less than 15,000 patients.  The Governor has promised rules by March 24 designed to increase the qualifying conditions for which marijuana may be prescribed and to increase patient access to medical marijuana.

Medical marijuana expansion can be largely accomplished by the Governor without legislation, though it is anticipated the  Legislature is expected to consider changes beyond the Governor’s regulatory authority, including clear authorization to dispense edible products to medical marijuana patients.




Duane Morris Hosts Women Grow Networking Event with San Francisco Office of Cannabis Director Nicole Elliott

On Thursday, March 8, 2018, Duane Morris hosted the Bay Area Women Grow Signature Networking Event in our San Francisco office.  Our panel speakers included Duane Morris partner Jennifer Briggs Fisher, who specializes in providing regulatory and compliance advice to cannabis companies, and Nicole Elliott, the Director of the San Francisco Office of Cannabis.  The panel was moderated by Women Grow Co-Founder Jazmin Hupp.

Our panel speakers addressed the cannabis business permitting process in San Francisco, the equity applicant program, requirements for licenses from the State of California, and legal and compliance considerations for cannabis businesses.  It was a fantastic way to celebrate International Women’s Day!

Patricia Heer

Will the Scope of US Trustee’s Policy on Cannabis-Related Bankruptcy Filings be Limited?

The Court of Appeals for the Ninth Circuit revived a chapter 13 debtor’s bankruptcy case holding that the bankruptcy court below made no specific finding that the debtor violated the Controlled Substance Act (“CSA”) to support dismissal of the case.

In In re Olson, 2018 WL 989263 (B.A.P. 9th Cir. Feb. 5, 2018), the debtor, a 92 year old landlord, rented a storefront to a cannabis dispensary. The landlord filed bankruptcy to stay a lawsuit that the tenant dispensary commenced against her. The bankruptcy court dismissed the bankruptcy case based on the ground that the landlord’s rental income constituted illegal proceeds and, thus, the landlord violated the CSA. On appeal, the Bankruptcy Appellate Panel overturned the dismissal holding that the bankruptcy court had not detailed sufficiently its findings with respect to the offending lease to support a conclusion that the landlord violated the CSA. The Panel held that the bankruptcy court could not rely just on the CSA itself to dismiss the case. Continue reading Will the Scope of US Trustee’s Policy on Cannabis-Related Bankruptcy Filings be Limited?

Sessions Draws Lines for US Attorneys in Terms of Marijuana Prosecution

Seth Goldberg
Seth A. Goldberg

In speaking at the Georgetown Law Center on March 10, 2018, AG Sessions said the following:  “We’re not going to be able, even if we desire, to take over state enforcement of routine cases that might occur.  Federal agents are highly paid, highly trained.  They work on cases involving cartels, international organizations, major distribution networks, large amounts of cash. They deal with criminal organizations, RICO type cases, and we’re not out there prosecuting those types of cases everyday.”

Although, in making the above comments, Sessions was clear that marijuana was still illegal in the U.S., he appears to have drawn a box around those types of marijuana-related criminal activities on which federal prosecutors are focused.  The above comments are not inconsistent with the Sessions memo of January 4, 2018, and may help clarify what prosecutorial discretion looks like under that memo.  Based on the above comments, it would seem that activities conducted pursuant to state marijuana programs are not the types of activities on which federal prosecutors are focused.

CCC signs off on Massachusetts Adult-Use Cannabis Regulations

On Tuesday, March 6, 2018, the Cannabis Control Commission (the “Commission”) unanimously agreed to final regulations for adult-use cannabis in the State of Massachusetts.  These regulations have not yet been published, but the Commission indicates that they will “incorporate language approved at [today’s] meeting into the final regulations before filing them with the Secretary of State.” There are nine licensing categories, which are intended to meet the varying needs of the cannabis industry.  The material departures from the draft regulations adopted in December 2017 include:

  1. On-site consumption and delivery of cannabis are not yet permitted, but regulations for these activities are expected to be released within one year.
  2. Dispensaries will have to reserve at least 35% of their inventory for medical cannabis patients if they are co-located with a registered marijuana dispensary.
  3. Licensees growing cannabis will be limited to 100,000 square feet of canopy
  4. Any person with drug trafficking convictions will be banned from the industry, except if such convictions are related to cannabis.

 The Commission is still committed to authorizing legal sales of adult-use cannabis by July 1, 2018, but there could be delays from individual municipalities in the adoption of their own regulations and permits.  In order to meet this goal, the Commission anticipates accepting adult-use license applications starting on April 1, 2018, and the first adult-use licenses being issued to cannabis establishments on June 1, 2018.  Priority status will be given to Economic Empowerment Applicants (applicants from communities disproportionately impacted by marijuana-related crimes) and to licensees of Registered Marijuana Dispensaries (licensees of medical dispensaries), which is consistent with the draft regulations.

David Feldman

Study: Cannabis Improves Cancer Patients’ Condition

An Israeli peer-reviewed study, just published in the European Journal of Internal Medicine, reports that pain and nausea of cancer patients can be lessened through the use of medical cannabis. The study included thousands of cancer patients using medical cannabis between 2015 and 2017. Over 95% of the patients reported an improvement in their condition after using cannabis. The conclusion of the study: “Cannabis as a palliative treatment for cancer patients seems to be well tolerated, effective and safe option to help patients cope with the malignancy related symptoms.”

As we know, the US Government continues to defend the status of cannabis as a Schedule I drug, deemed as dangerous as heroin and LSD. Their previous claims suggested that no research shows that cannabis is safe or has medical benefit. At the same time, the Government severely limits the amount of research on cannabis that can be conducted in the US. According to the DEA website, Schedule I drugs are “drugs with no currently accepted medical use and a high potential for abuse.” This study, with others also underway, appear to now counter the belief that cannabis has no accepted medical use.

With the recent dismissal of a constitutional challenge to the Controlled Substances Act as it relates to cannabis (which may be appealed), more eyes are turning to Congress and the various bills pending to deschedule cannabis at the federal level.

Cannabis Trading on Major U.S. Stock Exchange

Seth Goldberg
Seth A. Goldberg

Another breakthrough for the cannabis space occurred on Tuesday, February 27, 2018, when Toronto-based Cronos Group Inc. began trading on the Nasdaq Stock Market. (MJN:CN). This marks the first listing of a company focused purely on cannabis on a major U.S. stock exchange.  The listing of Cronos comes within two months of the memorandum issued by Attorney General Sessions that rescinded the federal government’s previous guidance regarding enforcement of state-lawful cannabis activities under the Cole Memorandum.  That earlier guidance is credited with providing the cannabis space with a window of opportunity for the warp-speed growth the space has seen in recent years.  The Sessions memo was intended to slow the growth of the cannabis space, especially with respect to the capital markets.  The Nasdaq listing of Cronos suggests that 2018 could be another strong year for cannabis-related investments; 2017 was believed to have resulted in approximately $2 billion in cannabis-related investments in the U.S.

David Feldman

Court Dismisses Suit Challenging Controlled Substances Act

A potentially groundbreaking federal lawsuit brought last summer was dismissed by New York judge Alvin Hellerstein today. The case, brought by five plaintiffs including two children, two veterans and former NFL player Marvin Washington, all of whom use state legal medical cannabis, claimed that the Controlled Substances Act is unconstitutional as it relates to the plant.

The judge ruled that the plaintiffs should have first complied with administrative processes by filing a petition with the Drug Enforcement Administration, and that the case was not appropriate to bring to court. He was sympathetic to the plaintiffs, however, noting that “this decision should not be understood as a factual finding that marijuana lacks any medical use in the United States, for the authority to make that determination is vested in the administrative process.”

He did, however, rule that it was “not irrational” that the Government deemed cannabis dangerous enough to be listed as a Schedule I drug, as it did for heroin and LSD. Statements by former Nixon Administration officials in the 1990s that they knew they were lying about the drugs at the time of the CSA were not considered dispositive, since Congress passed the law.

News reports indicate that the plaintiffs’ attorneys, Mike Hiller, Joe Bondy and Lauren Rudick, may appeal the decision or ask the judge to reconsider. They claim that the petition process would be futile and that there is substantial evidence that the US government has taken actions supporting the notion that there is medical benefit to cannabis.

Getting Into the Weeds of Legal Marijuana/Cannabis

Duane Morris Partner Paul P. Josephson will be moderating and leading a panel for New Jersey Institute for Continuing Legal Education, “Getting Into the Weeds of Legal Marijuana/Cannabis” which Partner David N. Feldman and Special Counsel Patricia H. Heer will also be speaking at. It is to be held Monday, March 26, 2018 at 9:00 a.m.

For more information and to register, please visit the event page.