Tag Archives: adult use cannabis

NJ Adult Use Bill – Two Steps Closer to a March 25th Vote – Brad A. Molotsky, Esq.

According to late night reporting from NJ Biz – Dan Munoz, who has been all over this topic, committees in both the NJ Assembly & Senate approved a measure that would legalize adult-use recreational marijuana, setting the proposals for a showdown full-floor vote in 7 days from now on March 25.

Senate Bill 2703 passed by a 6-4 vote with one abstention in the Senate Judiciary Committee Monday evening while its counterpart, Assembly Bill 4497, passed by a 6-1 vote with two abstentions at the Assembly Appropriations Committee.

Both measures would allow for anyone over 21 years of age to possess up to an ounce of marijuana.

The product would be taxed at $42 an ounce and the industry would be regulated by a five-person Cannabis Regulatory Commission, which will function similarly to how the Casino Control Commission operated following the legalization of gambling in the 1970s.

The approval of both measures followed hours of closed-door meetings as lawmakers hammered out last-minute changes to the legislation, including a dramatically increased expungement process for people with marijuana-related convictions.

Stay tuned for a detailed analysis as the final bill is published. – Brad

NJ Adult Use Cannabis Bill Fast Tracked for March 25th Vote

Gov. Phil Murphy and legislative leaders reached agreement on key provisions to legalize marijuana for adult recreational use, including how to tax and regulate it, and expunging past low-level marijuana offenses for certain users as a step toward social reform per reporting from Dan Munoz.

Per a press release issued by key Assembly Senate and the Governor’s office, we should expect to see the introduction of a cannabis bill within days.
Under the terms of the agreement:

• Adult-use marijuana would be subject to an excise tax of $42 per ounce, which will be imposed when marijuana is cultivated.

• Municipalities that are home to a cultivator or manufacturer would receive the revenue from a 2 percent tax on the product within their jurisdiction.

• Municipalities that are home to a wholesaler would receive the revenue from a 1 percent tax on the product within their jurisdiction.

• Municipalities that are home to a retailer would receive the revenue from a 3 percent tax on the product within their jurisdiction.

To start to address social equity concerns, the revised legislation will likely provide an expedited expungement process for individuals convicted of low-level marijuana offenses, and a separate expungement process that would automatically prevent certain marijuana offenses from being taken into account in particular areas such as education, housing and occupational licensing.

Additionally, there are a number of provisions that aim to ensure broad-based participation for women owned and minority owned businesses, low and middle-income individuals, and disadvantaged communities.

Under the proposed legislation, adult-use marijuana would be governed by a Cannabis Regulatory Commission, composed of 5 members—three appointed directly by the Governor to serve terms of at least 4 years, and 2 appointed by the Governor upon the recommendations of the speaker and Senate president.

The commission would be tasked with promulgating all regulations to govern the industry and overseeing applications for licensing of adult-use marijuana dispensaries.

-Brad A. Molotsky, Esq.

Is March the 4:20 for Adult Use Marijuana in NJ?

Is March the 4:20 for NJ recreational, adult use marijuana? Brad A. Molotsky

According to Senate President Stephen Sweeney, with budget hearings and discussions beginning to ramp up in Trenton, March 2019 is likely the last best time to act on a New Jersey marijuana-legalization bill.
In order for the Bill to move forward, Senator Sweeney confirmed his view that a vote needs to be held this month (i.e., March) in order to hold an election on a measure legalizing, regulating and taxing marijuana for adult-use.

Why March – According to the Senator, April would be a difficult month because of budget hearings and religious holidays. Then May is the actual budget discussion and focus on passage of the budget.

That in and of itself is problematic, according to Dan Munoz at NJBiz, given that lawmakers might view negotiations on the budget and marijuana-legalization through a tit-for-tat, transactional lens.

As for whether we could see a vote this summer or during a lame duck session of the Legislature, Senator Sweeney said he “doesn’t want to wait that long.” And whether lawmakers might put the questions before voters as a ballot referendum has essentially been a non-starter according to Munoz.

A tentative agreement between the Governor and the legislative leaders calls for a $42 an ounce tax on marijuana and for a 5-member Cannabis Regulatory Commission to oversee the new industry. Per the momentary agreement, Governor Murphy would be able to select 3 of the 5 Commission members.

Per Munoz, Governor Murphy was initially pushing for legalization within his first 100 days of office. The proposed 2020 budget, unveiled Tuesday by Governor Murphy, includes $60 million of tax revenue under the assumption that marijuana is made legal by January 2020.

The 2020 budget also anticipates spending $21 Million to create the necessary regulatory apparatus for legalized cannabis and thereafter has a placeholder for a $12 Million a year spend for cannabis operations and enforcement.

Could be an interesting March in Trenton – stay tuned!

David Feldman

New York Proposes Legalizing Adult Use Cannabis

On Tuesday, NY Gov. Andrew Cuomo released draft adult use cannabis legislation. Called the Cannabis Regulation and Taxation Act, it is just a few hundred pages long. The bill would set up a new “Office of Cannabis Management” (OCM) to oversee regulation. The office would operate under the Division of Alcoholic Beverage Control, taking control from the Department of Health, where it currently sits for the existing NY medical cannabis program.

The OCM’s Executive Director would get to decide how many licenses for growing, processing and selling cannabis it will grant. It would also decide the “standards of cultivation and processing” of cannabis and be permitted to conduct inspections and exact civil penalties on rule breakers. In a nod to those historically disadvantaged by the war on drugs, the OCM would be authorized to offer low or zero interest loans to “qualified social equity applicants.” The OCM would also take into account whether a license applicant is minority or woman-owned or owned by a service-disabled veteran or a disadvantaged farmer, and must implement a plan to “actively promote racial, ethnic, and gender diversity when issuing licenses.” Businesses would be prohibited from taking “adverse employment action” against an employee just for conduct which the bill permits unless their job performance is impaired. Three different taxes would be imposed on cultivation and sale, including a 22% combined state and county tax on a sale from a wholesaler to a retailer. The state estimates this could yield as much as $300 million in annual tax revenues. Taxes would be used for traffic safety, small business and substance abuse services.

Medical cannabis availability would be expanded to include, among other things, autism, and the OCM can add to the list in their discretion. Hospitals would be able to dispense medical cannabis. The current “registered organization” model for medical cannabis companies would continue, with the bill requiring at least 10 such ROs (there currently are 10 licensees). Non-NY licensed medical cannabis operators could receive licenses here without going through the rigorous application process if the OCM is satisfied with the regulations in the state of the original license. In fact the proposal requires giving a preference to these companies that are licensed elsewhere. This would likely favor the larger multi-state operators. Medical patients would be permitted to grow up to four plants at home.

Current ROs would be permitted to apply for adult use licenses, and the OCM would be able to conduct an auction of those licenses among the current ROs, with money used to make those low or no interest loans. Qualifying for medical cannabis would be deemed a disability under NY law. Retail pricing of medical cannabis would be approved by the OCM. CBD growers and extractors would also be able to obtain licenses, but food from hemp and hemp that is not intended for consumption generally would be subject to normal agriculture laws. Cannabis testing labs, cannabis brokers, truckers, delivery services, CBD retailers, caterers serving cannabis and warehouses also would be licensed by the OCM.

Regarding adult use, companies would not be required to be “vertically integrated” – a business can be growing, processing, distributing, selling or transporting cannabis or operating an “on-site consumption” location, which would be permitted. Cultivators would only be permitted one license each. Processors would be able to receive up to three licenses. Growers, processors and distributors (other than existing ROs) would not be permitted to own an adult use dispensary, and no one would be allowed more than three adult use dispensaries. Public smoking and outdoor growing of cannabis would not be permitted, but growing in greenhouses would be. Adult use would be permitted for those aged 21 and older.

Municipalities where adult use dispensaries would be located would have the right to express their opinion on the matter, which the OCM can take into account. Larger counties and cities would have the right to opt out of adult use cannabis. One controversial provision requires companies with more than 25 employees to sign union agreements. Advertising would be permitted but regulated. No importing or exporting of cannabis would be permitted unless federal law changes. Licenses would not be transferable. There’s an interesting provision prohibiting state law enforcement agencies from cooperating with the Federal Government in enforcing the Controlled Substances Act against people complying with the proposed law. Licensees’ principal officers and directors do not have to be NY residents, but must be US citizens or permanent residents.

Remember this is just a proposed bill. It still has to go through the NYS legislature, though both of those houses are currently controlled by Cuomo’s Democrats. The Governor has stated he would like to pass legislation by mid-April.

 

David Feldman

Cuomo Announces Plan for 2019 NY Adult Use Legalization

New York Governor Andrew Cuomo today said that he will support legalization of adult use of cannabis as a key part of the 2019 legislative agenda. In fact news reports suggest he wants to get this done within the first 100 days of his new term next year.

In his remarks on the subject he focused on reversing the stigma of cannabis use and eliminating the targeting of people of color in enforcement of anti-cannabis laws. According to ABC News, in New York City, Comptroller Scott Stringer estimated  that legalizing cannabis could yield as much as $1.3 billion in annual tax revenue for the state and about $350 million for New York City alone.

In August the Governor commissioned a work group to focus on drafting the legislation, following the advice of a task force that the benefits of legalization outweigh the risks. The work group has been conducting “listening sessions” throughout the state.

As recently as 2017 the Governor had called cannabis a gateway drug. Given the national trend to legalization and the fact that New York’s neighbor, New Jersey, is about to pass adult use legislation, however, Cuomo has felt political pressure to move ahead.

Momentum Builds With Schumer’s Bill To Legalize Marijuana

Seth Goldberg
Seth A. Goldberg

Just weeks after Senators Elizabeth Warren (D-Mass) and Cory Gardner (R-Colo) introduced bi-partisan legislation to make marijuana lawful under a state’s marijuana laws also lawful under the Controlled Substances Act (CSA), Senate Minority Leader Chuck Schumer (D-NY) introduced legislation removing marijuana from the CSA altogether on Wednesday, June 27.  Schumer’s bill also comes just one day after Oklahoman’s passed legislation legalizing medical marijuana in their traditionally red state, and one day before the U.S. Senate passed legislation legalizing hemp for all purposes, including extracts from hemp, such as cannabidiol.

By removing from the purview of the CSA, state-legal cannabis and proceeds derived therefrom, the Warren/Gardner legislation, if passed, would likely have the effect of nationwide legalization, but state operators and consumers would still need to be concerned about marijuana’s Schedule 1 status under the CSA, whereas the Schumer bill, if passed, would eliminate those concerns by removing marijuana from the CSA.

David Feldman

NY Health Dept. to Recommend Legal Adult Use of Cannabis

The New York Times reported yesterday that the New York State Health Department is ready to recommend legalizing adult use of cannabis in the Empire State.  Commissioner Howard Zucker was quoted as saying they had reviewed the pluses and minuses and concluded, in a study requested by NY Governor Andrew Cuomo, that “the pros outweighed the cons.”  The study, started in January, has not been released yet.

Governor Cuomo, as recently as last year, said that cannabis is a “gateway drug.” But he is now facing strong opposition on the issue from his primary opponent Cynthia Nixon. Even his Republican opponent wants to legalize cannabis and use the money to fix New York’s transportation system. He is also feeling pressure from New Jersey’s apparent plan to legalize adult use in the near future, not to mention Massachusetts’ full adult use rollout commencing very soon. This led to his commissioning the Zucker study.

Even with this study recommending legalization, the NY legislature would have to pass a law to make it happen. Republicans, who tend to be more anti-legalization, currently control the Senate while Democrats control the Assembly. So there is no certainty of getting a bill passed. But it appears the momentum is building towards adult use legislation in the nation’s fourth largest state.

Cannabis Banking Concerns a Focus of Proposed States’ Rights Bill

Seth Goldberg
Seth A. Goldberg

On Wednesday, an article I wrote describing the public safety concerns that result from the lack of banking in the cannabis industry due to the federal prohibition of marijuana was published in the National Law Journal.

Yesterday, Senators Elizabeth Warren (D-Mass) and Cory Gardner introduced bipartisan legislation that, if passed, would make the regulation of marijuana a state issue. Comments by Senator Gardner show public safety issues resulting from the dearth of banking providing services to the industry are a focus of the newly-proposed legislation. The Hill reports Gardner stating when introducing the legislation:

“This city of Denver, the state of Colorado, can collect taxes … they can take it to the bank,” Gardner said. “But if you’re in the business, if you work for the business, you can’t get a bank loan or set up a bank account because of the concern over the conflict between the state and federal law. We need to fix this public hypocrisy.”

It was widely reported on April 13, 2018, that President Trump promised to Senator Gardner that he would support a states’ rights approach to marijuana, which promise appears to have resulted in this proposed legislation.  A lot has to happen before this bill reaches Trump, but if it does, a veto may be unlikely.  Such states’ rights legislation could then pave the way for more banks to service the industry.

Jennifer Fisher and Justin Santarosa

Bureau of Cannabis Control’s Re-Adopted Emergency Regulations

The Bureau of Cannabis Control is the state agency designated under the Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA) as responsible for issuing licenses to and regulating distributors, retailers, delivery-only retailers, microbusinesses, and testing labs.

The BCC issued emergency regulations in November 2017, and has now proposed readopting those regulations for another 180 days. Based on feedback from the public and stakeholders in the industry, the BCC has proposed some changes to these regulations.

This blog post will highlight the changes to the BCC emergency regulations and identify key issues for distributors, retailers, delivery-only retailers, microbusinesses, and testing labs. In separate posts, we will be describing the changes made by the California Department of Food and Agriculture and the California Department of Public Health. Those posts can be found here and here.

Changes to Emergency Regulations:

  • The BCC has removed the distinction of A and M Licenses and now only requires one application and applicants will only have to pay one licensing fee. Additionally, license fees have been reduced. Previously you had to submit two applications and pay two separate licensing fees if you wanted to operate in the medicinal and adult-use market.
  • A delivery employee may now complete multiple deliveries of cannabis goods if they are prepared by the retailer prior to the delivery employee leaving the licensed premises. The total amount of cannabis goods in the delivery vehicle may be up to $10,000, the previous limit was set at $3,000.
  • The definition of owner has been amended to specify that the chief executive officer and/or the members of the board of directors of any entity that own 20% or more of a commercial cannabis business will be considered “owners.”
  • The definition of financial interests has been amended to include “an agreement to receive a portion of the profits of a commercial cannabis business.” Commercial cannabis business and service providers will have to review their agreements and applications to determine if certain amendments will need to be made to include other people or businesses as having a “financial interest” in a commercial cannabis business. Interestingly, this change was not made in the definition of “financial interest” under the CDFA and CDPH regulations.
  • Retail stores may not sell or deliver cannabis goods through a drive-through or pass-out window and sales cannot be made to people within motor vehicles.
  • License applications must now include:
    • Cannabis waste procedures; and
    • Delivery procedures, if applicable.

These changes show that the BCC and the other regulatory agencies are being responsive to their stakeholders and while not all changes are positive, we believe this is a step in the right direction for cannabis businesses in California.If you have any questions about the regulations, please contact Jennifer Briggs Fisher in our San Francisco office or Justin Santarosa in our Los Angeles office.

California Attempts to Address Public Safety with Cannabis Banking Legislation

Seth Goldberg
Seth A. Goldberg

I have previously written about the public safety concerns resulting from the lack of banking in the cannabis industry.  As I noted in that article, the elimination of the Cole Priorities in January 2018 has left federally-regulated banks wondering how they can follow FinCen’s guidance for banking cannabis issued in February 2014, which was explicitly dependent on the Cole Priorities.

While the Cole Priorities were in place, that guidance provided a clear path for banking cannabis industry participants adhering to the Cole Priorities.  FinCen’s guidance is still in place, and banking cannabis is still possible, but confusion about how to do so without the Cole Priorities as guideposts has caused greater reluctance on the part of banks.

Enter proposed legislation in California, SB-930,  which passed in the California Senate yesterday.  Not a complete solution to the banking problem by a long shot, but progress nonetheless.  If it becomes law SB-930, would result in the establishment of a California-chartered bank that would permit California cannabis industry participants to deposit the proceeds of their state-lawful cannabis activities, and would provide to them limited banking services that would allow for payment of taxes and vendors by check.

As reported in the Sacramento Business Journal, the Bill’s sponsor, Sen. Bob Hertzberg (D-Van Nuys), characterized SB-930 as an attempt alleviate the public safety concerns resulting from the federal government’s current hands off approach to banking cannabis.  As Herzog stated, “It’s not only impractical from an accounting perspective, but it also presents a tremendous public safety problem. This bill takes a limited approach to provide all parties with a safe and reliable way to move forward on this urgent issue.”