On March 18, the New Jersey Assembly Appropriations and Senate Judiciary committees passed the latest version of New Jersey’s Cannabis Regulatory and Expungement Aid Modernization Act (Senate Bill 2703).  Now Governor Murphy, Senate President Stephen Sweeney, and Assembly Speaker Craig Coughlin must secure the necessary votes to pass the legislation in both the Assembly and the Senate with a vote on March 25, which is the last opportunity for the full Legislature to vote on the bill before the three-month budget negotiation process kicks off.  All three politicians have acknowledged that they do not currently have the 21 votes in the Senate and 41 votes in the Assembly needed to approve the bill.

“We’re going to have to put everything into this. There is only one state in America that has done this legislatively. Public opinion is overwhelmingly in favor of this. We’re not only expunging and undoing a whole lot of social injustices but creating a new industry. This is not an easy lift,” Gov. Murphy said.

New Jersey Cannabis Regulatory and Expungement Aid Modernization Act

S-2703 will legalize the adult use of recreational cannabis in New Jersey. The bulk of S-2703 is unchanged from the prior iteration the Senate and Assembly committees approved in November. Some of the major points of the bill are below.

• A Cannabis Regulatory Commission (Commission) would regulate the medical and recreational cannabis industries in New Jersey. Comprised of five members, the Commission would include three members appointed by the Governor, with the Governor’s initial appointments to serve terms of at least four years and not be subject to Senate confirmation. Two other members would be appointed by the Governor upon the recommendations of the Assembly Speaker and Senate President. The Commission would promulgate all regulations to govern the industry and would oversee the applications for licensing of adult-use marijuana dispensaries.
• The Commission would be established within six months of the date that S-2703 becomes law. The Commission would begin to accept and consider license application within 30 days of its adopting of final rules and regulations, and sales would begin within 180 days of rules adoption. 
• Four classes of licenses would be offered: cultivator, processors, wholesaler, and retailer. 
• 28 cultivation facilities would be licensed for the first 18 months of the program, but the number of other types of licenses to be issued has not been determined.
• For a period of 18 months after the date that regulations are adopted, retailers would be prohibited from participating in cultivation, processing, or wholesaling.
• 35% or more of the total number of licenses issued for each class would be “conditional licenses.” Such licenses would be subject to a simplified application process, and applicants would have 120 days after approval to provide the Commission with additional required information in order to be issued a full annual license.
• Incentives would be established to support the license applications of minority-owned and women-owned businesses, and an Office of Minority, Disabled Veterans, and Women Cannabis Business Development would be established to facilitate such efforts. The State would set a goal of issuing 30% of licenses to minority, women, or disabled veteran-owned businesses.
• At least 10% of the total licenses issued in each class and at least 25% of the total number of licenses would be issued to “microbusinesses,” which are small-scale cannabis establishments. 
• Cannabis delivery and social consumption areas would be authorized. Home cultivation would be prohibited.
• Each municipality would have 180 days after S-2703 becomes effective to determine whether to prohibit cannabis businesses within its limits. The municipalities would be allowed to prohibit certain types of facilities while allowing others. If a municipality does not affirmatively “opt-out,” cannabis establishments will be allowed in the municipality for the succeeding five years. Local governments could also impose a separate licensing process if they choose to do so.
• 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 cannabis establishments would receive the revenue from a 2% tax on cultivators, 2% tax on processors, 1% tax on wholesalers, and 3% tax on retailers within their jurisdiction.
• Incentives would be established to support license seekers who apply to operate in “impact zones,” which would include Atlantic City, Bridgeton, Camden, East Orange, Elizabeth, Hamilton Township, Irvington, Jersey City, Newark, Millville, Passaic, Paterson, Perth Amboy, Plainfield, Trenton, and Vineland.
• An expedited expungement process would be established for individuals convicted of low-level marijuana offenses, as well as a virtual expungement process that would automatically prevent certain marijuana offenses from being taken into account in certain areas such as education, housing, and occupational licensing.

What’s Next?

If the Governor, Senate President Stephen Sweeney, and Assembly Speaker Craig Coughlin are able to generate enough support in Trenton in the next several days, the full Senate and Assembly will vote on the adult use bill a related expungement bill (S-3205), and the medical marijuana expansion bill (S-10), all of which are moving through the legislative process together.

If approved, the bills will go to Governor Murphy to be enacted into law and New Jersey will be the first state in the nation to legalize, tax, and regulate adult-use cannabis through legislation.  If the recreational cannabis legislation fails to gain enough votes, legalization efforts will be on hold for at least three months. "It's got to get done on March 25 or it's not getting done until fall," Sen. Sweeney stated. "Trying to move a marijuana bill during a budget break is not healthy."

The Scarinci Hollenbeck Cannabis Law Practice group will be continuously tracking the status of the legislation. We encourage current and prospective members of the New Jersey cannabis industry to check back regularly for updates.

If you have any questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact me, Dan McKillop, at 201-806-3364.

This article is a part of a series pertaining to cannabis legalization in New Jersey and the United States at large. Prior articles in this series are below:

• New Jersey Medical Marijuana Program Adds Opioid Addiction as Qualifying Condition
• Gov. Cuomo Outlines Plans to Legalize Adult Use Cannabis in New York
• Hemp Legalization & Other Top Cannabis Developments of 2018

Disclaimer: Possession, use, distribution, and/or sale of cannabis is a Federal crime and is subject to related Federal policy. Legal advice provided by Scarinci Hollenbeck, LLC is designed to counsel clients regarding the validity, scope, meaning, and application of existing and/or proposed cannabis law. Scarinci Hollenbeck, LLC will not provide assistance in circumventing Federal or state cannabis law or policy, and advice provided by our office should not be construed as such.