After a brief hiatus, we welcome you back to CSG’s CannaBiz Law Blog. The August 31st RFA deadline was challenging, but I am pleased to report that an all hands on deck effort on behalf of our clients made for a successful application process.

With the deadline now behind us, and a fresh perspective on the challenges and opportunities future rounds of cannabis licensing in New Jersey may present, I was invited to author another guest column for NJ.com’s weekly NJ Cannabis Insider report (huge thank you to their editor, Justin Zaremba).

This time around, I thought it would be best to outline practical insights and takeaways gleaned leading up to August 31 since it has already been reported that there will be additional rounds of licensing available in the future — and a vote for recreational legalization may come as soon as this month. Both will undoubtedly present opportunities for those looking to service, operate or invest in the cannabis sector.

So, what should these aspiring entrants keep in mind as new opportunities emerge? The three factors detailed in my guest column include:

  • Now is the time to prepare for the next application round.
  • Legal counsel and/or a general consultant will be integral to finding a willing host community, as well as a properly zoned locale.
  • If there are underserved areas in the Northern, Central or Southern regions of New Jersey, applicants should consider locating there first.

I encourage you to read the full article here, and stay tuned for further updates from CSG’s Cannabis Law Group.

On July 16, 2018, the New Jersey Department of Health’s Division of Medicinal Marijuana (the “DOH”) issued a Request for Applications (“RFA”) for up to six additional Alternative Treatment Centers (“ATCs”), commonly referred to as medical marijuana dispensaries.  The DOH will award two licenses in the northern region of the state, two in the central region, and two in the southern region.  This would double the number of ATCs currently operating in New Jersey.

The six additional ATCs will be vertically integrated (similar to the current ATCs in operation), but will be allowed to operate either as non-profit or for-profit entities.  Applicants are allowed to submit an ATC permit application for more than one region, but must submit a separate application for each region and rank the priority of its applications.

The RFA process is open to all applicants with the exception of entities already holding a permit to dispense medical marijuana (including affiliates) in New Jersey and individuals/entities with a 25% stake or more in any of the currently permitted ATCs (or entities responsible for the management of such ATCs).

Those interested in submitting an application must act immediately as the DOH has set an aggressive timeline for the application process.  Instructions for the submission of applications and all necessary forms will be available on the DOH’s website on August 1, 2018 and all completed applications must be submitted no later than August 31, 2018.  Further, every applicant must attend a mandatory, pre-application conference on August 9, 2018.  The purpose of that conference is to provide a structured and formal opportunity for the DOH to respond to questions regarding the RFA process.  Applicants that fail to attend this conference will not be allowed to submit an application.

Applications will be evaluated on a 1000-point scale pursuant to three criteria, each of which has several measures.  Each applicant will also be required to provide detailed information regarding its organizational and ownership structure.

We suggest applicants work closely with their attorneys, accountants and other advisors to complete their applications timely and consistent with New Jersey law.

The number of authorized medical marijuana users in New Jersey is growing.  According to a 2017 Marist Poll, the number of adult Americans using marijuana is 22%.  Thus, employers should not be sitting idle, waiting for the decriminalization of recreational marijuana in New Jersey before making decisions regarding marijuana in the workplace.  Marijuana is already in the workplace.  Employers need to be proactive and should consider the following actions now:

  • Revisit drug-related policies – including, for example, to confirm that on-the-clock use or impairment is expressly prohibited.
  • Consider modifying or eliminating drug screens for marijuana, if appropriate.
  • Review job descriptions to ensure appropriate positions are properly identifiable as safety-sensitive.
  • Provide training to managers/supervisors on drug-related policies, as well as on the ability to spot physical manifestations of impairment.
  • To the extent possible, provide reasonable accommodations for an employee’s off-duty medical marijuana use and avoid related adverse employment actions, so long as doing so would not impact workplace safety or place the employer at risk of violating federal law or losing a federal contract or funding.
  • Document performance issues and do so consistently. Therefore, if someone who happens to be a medical marijuana cardholder is terminated for a legitimate, non-discriminatory reason, the employer has a defense to a subsequent allegation that the termination was discriminatory.
  • Apply all policies and procedures consistently.
  • Consult with legal counsel on the nuances of the changing landscape of New Jersey and federal law.
  • Consult with legal counsel if you are a multi-state employer as the laws in each state are drastically different.

While the likely decriminalization of recreational marijuana is all the buzz in New Jersey, employers cannot forget that they need to be prepared now to address an employee who is a medical marijuana card holder under New Jersey’s Compassionate Use of Medical Marijuana Act (CUMMA) to avoid inadvertent disability discrimination.

Under the Americans with Disabilities Act (ADA), there is no legal requirement to accommodate medical marijuana use because marijuana is illegal under federal law.  While CUMMA also states that “nothing [requires] an employer to accommodate the medical use of marijuana in any workplace,” it is not clear what this means for an employee’s off-duty medical marijuana use.  New Jersey also has pending legislation, Bill A1838, which establishes protection from adverse employment actions for authorized medical marijuana patients unless the use impairs the employee’s ability to perform job responsibilities.

Although New Jersey courts have not yet decided these issues as they relate to medical marijuana use under the New Jersey Law Against Discrimination (LAD), the LAD could also require employers to reasonably accommodate an employee’s off-duty medical marijuana use and may provide protection from adverse employment actions for such use.

Thus, unless an employee is using marijuana during work hours or showing up to work impaired – which no employer is obligated to tolerate – the best practice is to accommodate an employee and avoid any related adverse employment action, so long as doing so would not impact workplace safety.  Moreover, no employer would be obligated to place itself in violation of federal law or cause itself to lose a federal contract or funding.

Employers should consult counsel before making employment decisions related to off-duty medical marijuana use and should review their policies and job descriptions to ensure compliance with the changing legal landscape.

With the legalization of medical marijuana through New Jersey’s Compassionate Use of Medical Marijuana Act, and the decriminalization of recreational marijuana on the horizon, employers may want to revisit their drug screening policies and consider eliminating testing for marijuana for positions that are not safety-sensitive or subject to federal law mandating a drug-free workplace.

With the increasing number of authorized medical marijuana patients, and pending legislation that would render it illegal for an employer to take an adverse action against an authorized medical marijuana patient, eliminating or modifying marijuana screening may protect employers from inadvertently discriminating against an applicant or employee based on a disability.

Eliminating/modifying drug screens could also prevent employers from losing prime candidates for positions that are not safety-sensitive.  In fact, some employers are concerned that they would be unable to maintain staff if they declined to hire all qualified candidates that tested positive for marijuana.  This is particularly true where unemployment rates are low and, according to a 2017 Marist Poll, 22% of Americans use marijuana.

While employers who do not test risk workplace safety concerns/liability for employees who show up to work impaired as well as decreased productivity, it should be noted that marijuana screens detect the presence of marijuana in the system and not present impairment.  Accordingly, it may be more practical to train people to recognize when an employee is impaired at work as opposed to relying on a drug screen.

Marijuana policies will vary greatly depending on the nature of service an employer provides.  Employers should consult with their attorneys to decide how to approach marijuana policies and ensure compliance with the changing legal landscape.

I recently authored a guest column for NJ Cannabis Insider titled, “What’s next for medical marijuana in N.J.” The article outlines several compliance-related takeaways for the thousands of individuals and businesses eager to enter what is expected to become a multi-billion industry in New Jersey – medical (and, ultimately, recreational) marijuana.

There are three key considerations that any aspiring entrant to N.J.’s medical marijuana program should keep top of mind when developing a business plan that appropriately balances access with compliance:

  • Be well capitalized, and provide as much transparency around sources of funds as possible.
  • Because applications will be vetted by law enforcement, remember to provide a physical security plan, a cybersecurity plan, training manuals for employees and a written compliance plan demonstrating that the business will self-monitor. Having a retired law enforcement official as a consultant to the business is an additional, worthwhile consideration.
  • Provide regulators with a credible, written plan for product quality assurance since your business will be providing an ingestible product that is not subject to regulation by the Food and Drug Administration.

The coming months promise to be exciting as the state’s medical marijuana program continues to evolve. Please stay tuned for more updates from CSG’s Cannabis Law Group.

You can read the entire guest column here.

Governor Murphy’s administration is considering a phased-in tax rate for recreational marijuana following talks with Senator Nicholas Scutari, D-22nd District, according to state treasury spokesperson Jennifer Sciortino.

In his budget proposal address in March, the governor announced that the state stands to realize upwards of $80 million in annual revenues from taxing legal marijuana sales in 2019: $60 million from recreational marijuana and $20 million from the expansion of the state’s medical marijuana program. However, in its recently released tax revenue projections for 2019, the state treasury lowered the anticipated tax revenue from marijuana by $11 million, bringing the overall projected tax revenue down from $80 million to $69 million. For 2019, the treasury expects to garner $49 million – rather than $60 million – from taxing recreational marijuana, while the projected tax revenue from the newly expanded medical marijuana program remains at $20 million. The administration’s contemplation of a phased-in tax plan might explain the downward revision of the projected marijuana-related taxes in 2019.

Senator Scutari’s proposed recreational marijuana legislation – Senate Bill 830 – envisions a phased-in tax rate over five years: 7% in the first year, 10% in the second year, 15% in the third, 20% in the fourth and 25% in the fifth and following years.

With legalization of recreational cannabis on the horizon for New Jersey, several local governments have responded by preemptively passing ordinances banning or discouraging recreational marijuana sales or cultivation in their jurisdictions, while others have opened their doors. Because New Jersey is a home-rule state, municipalities are free to permit or prohibit the sale, cultivation and/or use of recreational cannabis within their borders. To date, twenty-six municipalities and three counties have staked their position on recreational cannabis.

Seventeen townships, including Berkeley in Ocean County, Old Bridge in Middlesex County and Wall Township in Monmouth County, have either approved a measure that imposes a blanket ban on recreational marijuana businesses or issued a resolution strongly opposing legalization of recreational marijuana. Seven other municipalities have discussed banning recreational marijuana, but have not yet done so. Monmouth, Ocean and Cape May counties have each issued resolutions opposing recreational marijuana legalization. Medical cannabis will still be fully legal for registered patients, however.

Only three of New Jersey’s 565 municipalities – Jersey City, Asbury Park and Atlantic City – have publicly indicated their support for legalizing recreational marijuana.