Earlier today, Thursday, December 17, 2020, the NJ Legislature passed an historic bill legalizing and taxing recreational marijuana for adults use.
The 240-page Assembly Bill 21 passed by a 49-24 vote with 6 abstentions in the Assembly and a 23-17 vote in the state Senate.
The final bill creates a 5-member Cannabis Regulatory Commission to oversee the new market, as well as the existing medical marijuana market.
Licenses for cultivators are capped at 37 for the first 24 months following the bill’s enactment.
Cannabis sales will be taxed at 7% – which includes the 6.625% sales tax on retail sales, and a tax on cultivators, which adds up to a 7% rate in total.
70% of sales tax revenue and all the money from a tax on cultivators are dedicated toward legal aid, health care education and other social services for lower-income, minority communities.
The remaining 30% in sales tax revenue will go to fund the Cannabis Regulatory Committee and to help fund local police departments for the training of “Drug Recognition Experts”.
Per NJBIZ, employers must have a “reasonable suspicion” that their workers are high on the job in order to conduct a drug test. And the test must be accompanied by an assessment from a Drug Recognition Expert to ensure the person’s behaviors match someone who’s high.
That would allow workers to use marijuana while off the clock, just as with alcohol.
Separately, another measure, Senate Bill 2535, was passed which ends arrests for possession of up to 6 ounces of cannabis, while Senate Bill 3256 will also lower penalties for possession of psilocybin (i.e., mushrooms).
Duane Morris attorneys in offices throughout the U.S. have extensive experience with the wide array of issues attendant to legal cannabis business activities, including real estate development and leasing; licensing for cultivation, processing and dispensing; litigation; banking and finance; raising and deploying capital; protecting intellectual property; public company representation and SEC filings; land use and zoning; healthcare and research; and taxation.
For more information on this blog post, do not hesitate to contact Brad A. Molotsky or Paul Josephson or any of the other Duane Morris attorneys you regularly engage with.
According to lawmakers, a deal has been reached to compromise on legislation to enable adult use cannabis in NJ.
The compromise bill allows for 37 licenses for marijuana growers during the first 2 years of legal sales. The license limit does not apply to micro-licenses, which can be granted to businesses with 10 or fewer employees.
Minority Communities – 70% of the sales tax revenue as well as all of the funds raised by a tax on cultivators will be used to support restorative programs for legal aid, health care, mentoring in minority communities.
NJ voters approved a ballot question seeking to amend the state constitution and legalize marijuana on Nov. 3.
Per NJ Biz, legislators reached another deal on that issue earlier last week to pass a bill that will allow people to possess up to 6 oz. of marijuana.
Lawmakers are also expected to move forward with the bill to decriminalize marijuana later in December.
Senators also introduced a new constitutional amendment that could go before voters in 2021. It seeks to solidify the tax structure outlined in Senate Bill 21, ensuring that the money only go to social and racial justice causes, and not the state’s general fund.
Given the current legislative calendar, it is likely that the legalization bill will go before the Senate Judiciary Committee on Dec. 14 and for a full vote on Dec. 17, 2020.
Duane Morris attorneys in offices throughout the U.S. have extensive experience with the wide array of issues attendant to legal cannabis business activities, including licensing for cultivation, processing and dispensing; litigation; banking and finance; raising and deploying capital; protecting intellectual property; real estate development; public company representation and SEC filings; land use and zoning; healthcare and research; and taxation.
For more information on this blog post, do not hesitate to contact Brad A. Molotsky or Paul Josephson or any of the other Duane Morris attorneys you regularly engage with.
Paul Josephson remembers his time at the University of Michigan, a decade after the city of Ann Arbor had decriminalized marijuana.
“It was an issue everybody was aware of,” Josephson said. “You could walk past a cop with a joint hanging out of your mouth. You’d get a $15 summons you would have to pay.”
Not true for the Black students he encountered for the first time at a large university. He said he learned that their experiences with police officers was very different than his.
“If you were Black or poor, it could especially derail your career,” he said.
Combine that with Josephson’s history in politics, beginning with him being elected president of UM’s student government and then choosing to go to law school in the nation’s capital, and you can explain why he got involved in efforts to legalize marijuana in New Jersey.
To read Mr. Josephson’s full profile, please visit nj.com.
Earlier this week, the New Jersey Department of Health (DOH) issued permits allowing Zen Leaf Elizabeth (Verano NJ) in Elizabeth and Columbia Care in Vineland to begin dispensing medical marijuana.
These 2 new operations bring the total number of operating dispensaries in the state to 11. Zen Leaf Elizabeth is scheduled to open Friday, May 29 and Columbia Care will likely open in early June.
The 9 other ATCs currently dispensing medical marijuana include Greenleaf Compassion Center of Montclair, The Botanist (Compassionate Care Foundation) of Egg Harbor and Atlantic City, Garden State Dispensary of Woodbridge and Union Township, Breakwater Alternative Treatment Center of Cranbury, Curaleaf NJ, Inc. in Bellmawr, Harmony Dispensary in Secaucus and Rise in Paterson.
In March, the DOH issued several waivers to improve ATC operations during the COVID-19 pandemic. These included waivers that allowed for curbside pick-up, telephonic consultations (instead of in-person), volume-based discounts and reduced caregiver fees.
Participation in the medical program continues to grow. According to the DOH, there are currently over 77,000 patients, 3,000 caregivers and 1,100 physicians enrolled. Patients and caregivers can visit the Division of Medicinal Marijuana’s website if they choose to change their preferred ATC. http://www.nj.gov/health/medicalmarijuana/
The change can also be made by calling the Customer Service Unit of the Division at 844-419-9712 and does not require changing ID cards.
Duane Morris has a robust Cannabis Practice Group to assist clients in all facets of the cannabis arena including formation, licensing, fund raising, regulatory, real estate, and intellectual property. Contact your Duane Morris attorney for more information. Prior Alerts on the topic are available on the team’s webpage.
For Further Information:
If you have any questions about this post, please contact Brad A. Molotsky, Paul Josephson or the attorney in the firm with whom you are regularly in contact.
Duane Morris is sponsoring an Advance 360 Cannabis Insider Live Online webinar, “Cannabis and COVID-19: Where Does America Go From Here?” to be held on Wednesday, May 13, 2020, at 1:00 p.m. Eastern time and 10:00 a.m. Pacific time.
Advance 360 Cannabis Insider Live Online presented by Duane Morris LLP and hosted by NJ Cannabis Insider editor Justin Zaremba, is a highly focused, information-driven talk designed to engage audiences about the most pressing concerns and challenges communities face as the state and federal government navigate the Covid-19 crisis.
News remains fluid day by day in these uncertain times. That said, there has been some progress in the cannabis space out of sheer necessity: curbside pickup and home delivery in some markets to aid medical marijuana patients. A renewed call to allow patients to grow their own weed and telemedicine are also at the forefront of possible changes, especially as the country remains in lockdown. Research for medical cannabis applications, lab testing for reliable and quality medicine and CBD and a resurgent hemp industry are also making strides, despite a stalled economy.
Can a federally legal cannabis industry help rescue the economy as we enter into what might be one of the worst recessions since the Great Depression? Some analysts believe it will be similar to the way the end of alcohol prohibition boosted the country’s economy at the end of the Great Depression.
Earl Blumenauer, United States Congressman
Karen O’Keefe, Director of State Policies for Marijuana Policy Project
Chris Melillo, Senior Vice President of Retail Operations for Curaleaf
Katie Neer, Director of Government Affairs for Acreage Holdings and an Associate at Greenberg Traurig
Duane Morris partner Paul Josephson was named to the 2019 “Insider 100: Policymakers” list by Insider NJ, which described him as “an expert on transportation and casino issues – and cannabis.” Mr. Josephson was also named to the 2017 and 2018 lists.
“The list assembles names listed … because of the rigorous quality of their public policy minds,” according to the publication.
To read the 2019 “Insider 100: Policymakers” publication, please visit the Insider NJ website.
It’s official: if you’re seeking a medical cannabis license in New Jersey, cancel your summer vacation plans. July and August promise to be very busy months. Today, the NJ Department of Health materially revised its current Request for Applications. Details below.
Although the number of permits to be issued this round has shrunken considerably, tomorrow, July 2, Governor Phil Murphy will be signing a major medical cannabis bill that substantially increases patient access, establishes a new regulatory overseer for the cannabis sector, and promises a much larger round of licensing (integrated and stand alone) this fall.
Key takeaways for the pending RFA round revised today:
Book It: Application forms will be released on July 15, 2019, and are due on August 21, 2019 at 3pm for dispensaries and August 22, 2019 at 3 pm for cultivation and integrated applications.
How Many? In total, the Department will seek up to 4 vertically integrated permits, up to 5 cultivation endorsements, and up to 15 dispensary endorsements.
In each of the three regions (North, Central, South) the Department will seek to issue up to 2 cultivation endorsements, 5 dispensary endorsements and 1 vertically integrated (cultivation, processing and dispensing) permits.
A fourth vertically integrated permit will be issued, with the region to be determined based on quality of application and patient need. “Because the patient population is expanding so quickly and is expected to accelerate, the Department anticipates that this flexible approach for up to 1 vertically integrated permit will allow for 1) the most qualified applicant to be chosen and 2) that the award can most adequately respond to real time changes in enrollment.”
No processing permits will be issued this round.
Initial Cultivation Canopy Limits: To provide opportunities for different sized businesses to participate in the RFA, the Department will seek to issue cultivation endorsements in the following tiers of canopy size:
– Up to 5,000 Square Feet: up to 1 cultivation endorsement.
– 5,001 square feet to 20,000 Square Feet: up to 2 cultivation endorsements.
– 20,001 square feet to 30,000 Square Feet: up to 2 cultivation endorsements.
According to NJDOH, these cultivation tiers “represent the ranges of starting cultivation canopy at the ATCs awarded as part of this RFA. The maximum initial canopy for any of the awardees is 30,000 square feet. Vertically integrated applicants may choose any of the canopy tiers.”
Limits on Number and Combination of Applications:
Entities and individuals may seek up to three total permit endorsements as part of this RFA. Applicants may only apply for one cultivation endorsement and may only submit one application per region. A separate application is required for each endorsement. An applicant for a vertically integrated permit may submit one application because all endorsements will be located within the same region. Therefore, the only applicants eligible to submit an application for more than one endorsement per region in this RFA are applicants for vertically integrated permits.
Applicants cannot submit for both vertically integrated permits and individual endorsements.
Applicants submitting for individual endorsements can submit applications for up to three endorsements, but they can’t be in the same region(s).
No applicant shall be awarded more than one permit pursuant to this RFA, and no applicant shall hold more than 1 cultivation endorsement, 1 manufacturing endorsement, and 1 dispensary endorsements as a result of the awards made pursuant to this RFA.
Except for the vertically integrated permits, no other entity shall be awarded both a cultivation endorsement and a dispensary endorsement pursuant to this RFA.
Current ATC permit holders (including awardees from December 2018) are not eligible to participate in this RFA.
Get Your Legal Documents Ready: NJDOH has substantially increased the disclosure requirements (of interested parties and documentation of virtually all business deals underlying an application) this round to ensure all parties interested in an application are known to the NJDOH at the time of application.
Questions, Comments and Further Information: NJDOH will accept questions on the RFA until July 26, and will conduct a preapplication webinar on August 2. Potential applicants are strongly encouraged to present any concerns, objections or suggestions relating to the substance of the RFA by July 26, if not sooner.
No Deadline for Award: NJDOH has not announced a deadline for making awards.
No License Squatting: Applicants awarded the right to complete the ATC permitting process must complete facility build out and be ready to commence operations within 18 months (cultivation endorsements and vertically integrated permits) or 12 months (dispensary endorsements). If an awardee is not permitted at the end of the above timeline, or the materials submitted with the application are found to be not accurate or truthful, as applicable, the award may be rescinded.
Criteria, Weighting and Page Limits:
Applicants must observe a strict 100 page limit per endorsement sought. Criteria weighting is as follows:
Criterion 1. Ability to meet the overall health needs of qualified patients and safety of the public. 30 pts
• Measure 1, Security plan: 10 pts
• Measure 2. Environmental impact plan: 10 pts
• Measure 3, Quality control and quality assurance plan: 10 pts
Criterion 2. History of compliance with regulations and policies governing government-regulated marijuana programs. 20 pts
• Measure 1, Experience of principals, officers, and owners, in operating a regulated cannabis business, or operating a business in another highly regulated industry, such as healthcare, insurance, financial services, pharmaceuticals, or energy. 20 pts
Criterion 3. Ability and experience of applicant in ensuring an adequate supply of marijuana. 20 pts.
• Measure 1, Financing plan: 20 pts.
Criterion 4. Community Support and Participation. 20 pts.
• Measure 1, Ties to the local community: Applicants shall provide a list of all owners, officers, board members, and principals that have resided in NJ for at least 2 years, and supply proof of their residency. 20 pts.
Criterion 5. Ability to provide appropriate research data. 10 pts
• Measure 1, Research contributions: Evidence of past contributions – in the form of cited original and published work – to expanding clinical and scientific research related to medical cannabis or the debilitating medical conditions that can be treated with medical cannabis. 10 pts
Criterion 6. Experience in cultivating, manufacturing, or dispensing marijuana in compliance with government-regulated marijuana programs. 100 pts.
• Measure 1, Cultivation plan.
• Measure 2, Manufacturing plan.
• Measure 3, Dispensary plan.
Criterion 7. Workforce and job creation plan, including plans to involve women, minorities and military veterans in ATC ownership, management and experience with collective bargaining in cannabis industries. 100 pts
• Measure 1, Labor Peace Agreement: Applicants shall provide a signed labor peace agreement that includes provisions to ensure the cultivation, manufacturing and dispensing of medical cannabis will not be disrupted by labor-related disputes. Failure to provide a signed agreement will result in a score of 0 for this measure. 30 pts.
• Measure 2, Labor compliance plan: Applicants shall provide a plan to comply with labor laws and an overview of their experience related to collective bargaining and/or accommodating the rights of workers. 20 pts
• Measure 3, Minority-owned, women-owned or veteran owned business certification: Applicants shall provide a copy of certification(s) issued by the Department of the Treasury, Division of Revenue which verifies MBE/WBE certification or VOB certification, or evidence that the applicant would otherwise meet the MBE/WBE certification or VOB certification requirements once generating revenue. Applicants with a certification will receive the full 30 pts. Applicants that provide evidence of meeting the criteria in the future shall receive partial credit, based on the strength of the evidence. The selection committee shall take into account related entities for this measure. 30 pts.
• Measure 4, Workforce and job-creation plan: Applicants will be scored on the extent to which they will involve individuals from socio-economically disadvantaged communities, individuals disproportionately impacted by enforcement of drug laws, and people with disabilities in the ownership, management and staffing of the proposed ATC. 20 pts
Scoring criteria reflect strong union (50 out of 300 total points), MBE/WBE (30 of 300 points) and social justice (20 of 300 points) preferences.
This post summarizes key terms of interest. Potential applicants should review the complete terms of the RFA at https://www.nj.gov/health/medicalmarijuana/alt-treatment-centers/applications.shtml, and regularly consult the NJDOH website for ongoing updates.
Just days after the NJ Senate and Assembly close in on expansion of medical use Cannabis, the New Jersey Department of Health (“Department”) published notice of a Request of Applications (“RFA”) for an additional 108 alternative treatment center (“ATC”) permits which authorize holders to cultivate, manufacture, and/or dispense medicinal marijuana. The Public Notice is available here, while the RFA is summarized below and available in full here.