Jersey’s Just- Enacted Adult Use Marijuana Program

Racers, take your mark!

On Monday, February 22, 2020, Governor Phil Murphy signed adult-use Cannabis reform bills into law legalizing and regulating Cannabis use/possession for adults 21 years and older (“New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization” Act (“Adult Use Act”)), decriminalizing Marijuana possession (“Act 1897”), and clarifying Cannabis use and possession penalties for those under 21 (“Act S344”). 

Based on its proximity to 44 million New York, Pennsylvania, Delaware, Maryland and Jersey “adult use access lacking” consumers, ground breaking legislation (featuring statewide home delivery and consumption lounges), and forward thinking safeguards, New Jersey’s Adult Use Program will be first to market and set the standard for Mid-Atlantic Region Cannabis sales.

Adult Use and Cannabis Reform Bills Overview

Under the Adult Use Act, the Cannabis Regulatory Commission (“CRC”) will oversee cannabis business licensing applications and promulgate regulations governing medical and adult-use industries by August 22, 2021 or within 45 days of all 5 of its members being appointed. The Adult Use Act provides for Cannabis revenues reinvestment in designated “impact zones”, directs the CRC to promote diversity and inclusion in business ownership, and employment protections for those engaging in lawful behavior with respect to Cannabis.

Act 1897 reforms criminal and civil penalties for Marijuana offenses and provides remedies for people currently facing Marijuana charges. The bill prevents unlawful low-level distribution and possession offenses from being used in pretrial release, probation, and parole decisions and provides protections against discrimination in employment, housing, and places of public accommodation. Act 1897 also creates a pathway to vacate active sentences for offenses committed before the enabling legislation’s enactment.

Correcting prior laws inconsistencies regarding Cannabis penalties for those underage, Act 3454 clarifies Marijuana possession and consumption penalties for those under 21.

Adult Use Program Overview

New Jersey’s decade old Medical Marijuana Program is comprised of 100,000 patients and 12 vertically integrated grower-processor-dispensaries (“Alternative Treatment Centers”) serving its 9,241,900 population presently administered by the Department of Health. 

Under the Adult Use Act, those 21 and older can purchase an ounce of Marijuana or 5 grams of concentrated Cannabis and, after Act’s rules are issued, existing Alternative Treatment Centers could immediately begin adult-use sales but only if having sufficient quantities to meet medical Cannabis demand.

The Adult Use Act establishes 6 classes of licensed businesses: cultivator, manufacturer, wholesaler, distributor, retailer and delivery. Up to 37 Marijuana grow licenses may be issued for first 2 years of legal sales (but limit does not apply to microlicenses with 10 or fewer employees).

The Act imposes 7% state sales tax, an excise tax on cultivators and enables municipalities to impose up to 2% hosting tax. Seventy percent (70%) of sales and excise tax revenue will support legal aid, health care and mentoring programs in minority communities disproportionately affected by the drug war.

Retail stores are allowed statewide, but local jurisdictions could ban them, delivery services could operate statewide regardless of local bans, and retailers could allow on-site consumption as long as they have local approval.

 As determined by “customer demand” the CRC will grant licenses to growers, processors, wholesalers, laboratory testing facilities, distributors, delivery services and retailers. Twenty five percent (25%) of licenses would go to microbusinesses capped at 10 employees and include additional residency requirements, 15% of licenses are reserved for minority-owned businesses, and 15% of licenses are reserved for businesses owned by women or veterans. To make process more accessible to lower-income applicants, 35% of licenses in each license category would be “conditional”.

The CRC’s “application scoring priorities” include:

           * 25% of total licenses will be awarded to applicants employing 25% of individuals from “impact zones” negatively impacted by unemployment, poverty or past Marijuana enforcement activity;

           * residents of at least 5 years holding at least a 5% investment interest in an entity; and

           * requiring Labor Peace Agreements required except for microbusinesses.

Copyright ?2021 by Steven M. Schain, Esquire