Understanding NJ CREAMMA: New Jersey's Cannabis Regulatory Act

Understanding NJ CREAMMA: New Jersey's Cannabis Regulatory Act

The New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (NJCREAMM Act or NJCREAMMA) authorizes and regulates the use of recreational cannabis in New Jersey. For existing and prospective New Jersey cannabis businesses, the law establishes a wide range of regulatory requirements, ranging from licensing to ongoing compliance.

History of NJCREAMMA

After failing to reach a consensus on how to legislatively legalize adult-use marijuana, the New Jersey Legislature passed a resolution in 2019 that introduced a constitutional amendment to legalize and set the stage for a vote by the citizens of New Jersey.  On November 3, 2020, New Jerseyans overwhelmingly voted in favor of legalization, with 67% voting in favor of the referendum and 32% against.

The referendum forced the New Jersey Legislature to reach a consensus on implementing legislation. On February 22, 2021, Gov. Phil Murphy signed “The New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act” into law. The landmark law legalizes and regulates cannabis use and possession for adults 21 years and older.

Key Provisions of the NJCREAMMA Law

The NJCREAMMA law also establishes the rules and regulations for the legal recreational cannabis industry. Below is a brief summary of its most important provisions.

Cannabis Regulatory Commission

The CREAMM Act tasks the New Jersey Cannabis Regulatory Commission (CRC or Commission) with promulgating regulations to govern the medical and adult-use industries. The CRC is also responsible for licensing cannabis businesses. On August 20, 2021, the CRC released its much-anticipated initial rules, which govern the cultivation, manufacture, and sale of recreational cannabis in the state. The rules establish numerous requirements for the legal cannabis industry, including licensing, advertising, packaging, labeling, security, recordkeeping, and product testing.

Municipal Oversight

Under CREAMMA, New Jersey municipalities have the option to authorize and regulate the number of licensed businesses, as well as their location, manner, and times of operation within its jurisdiction. The law also gave municipalities the option to enact an ordinance prohibiting the operation of marijuana cultivation facilities, marijuana product manufacturing facilities, marijuana testing facilities, or retail marijuana stores in the 180-day period following its enactment. The deadline to adopt an ordinance was August 21, 2021.

Cannabis businesses may only be licensed by the CRC if they have demonstrated support from the municipality, zoning approval, and have been verified to operate in compliance with any municipal restrictions. Municipalities can determine hours of operation, the number and kinds of licensed businesses operating within their borders, and whether to enact a 2% transfer tax on any sales between cannabis businesses. They can also enact any requirement or restrictions on cannabis businesses that would apply for other business types, such as requiring compliance with all relevant codes and ordinances. Municipalities can’t restrict delivery of cannabis items to consumers within their jurisdiction or restrict transports of cannabis that are routed through their jurisdiction.

Cannabis Licenses

Conducting commercial cannabis activity generally requires a license from the CRC. NJ CRAMMA created several different categories of cannabis licenses:

• Class 1 Cannabis Grower license, for facilities involved in growing and cultivating cannabis; Class 2 Cannabis Processor license, for facilities involved in the manufacturing, preparation, and packaging of cannabis items;
• Class 3 Cannabis Wholesaler license, for facilities involved in obtaining and selling cannabis items for later resale by other licensees;
• Class 4 Cannabis Distributor license, for businesses involved in transporting cannabis items in bulk intrastate, from one licensed cannabis establishment to another;
• Class 5 Cannabis Retailer license, for locations at which cannabis items and paraphernalia are sold to consumers; and
• Class 6 Cannabis Delivery license, for business providing courier services for a licensed cannabis retailer in order to make deliveries of cannabis items and related supplies to a consumer.

While the NJCREAMMA law initially capped licenses, there is currently no established limit on the number of cannabis business licenses available statewide. The CRC is currently accepting license applications on a rolling basis until indicated otherwise, with priority review, scoring, and approval given to applicants that qualify as Social Equity Businesses, Diversely Owned Businesses, Impact Zone Businesses, and to applicants that receive bonus points on their applications. Priority is also given to conditional license applications over annual license applications within each category, and microbusiness applications are prioritized over standard cannabis business applications in every category.

Employment Protections

NJCREAMMA addresses employment issues ranging from drug testing to legal protections for employees who use cannabis outside the workplace. Most notably, employers are prohibited from firing or refusing to hire a person who uses cannabis on their own time. The law expressly states: “No employer shall refuse to hire or employ any person or shall discharge from employment or take any adverse action against any employee with respect to compensation, terms, conditions, or other privileges of employment because that person does or does not smoke, vape, aerosolize or otherwise use cannabis items.” New Jersey employers are also prohibited from making an employment decision “solely” based on an arrest, charge, conviction, or adjudication of delinquency for violation of certain New Jersey laws related to manufacturing, distributing, dispensing, or possessing certain amounts of cannabis.

Under NJ CREAMMA, employers may still prohibit cannabis in the workplace. This includes prohibiting the possession and consumption of cannabis in the workplace, as well as intoxication during work hours. Employers can also require random testing, or testing as part of a pre-employment screening, or regular screening of current employees to determine use during an employee’s prescribed work hours.

Work With an Attorney Who Understands NJ CREAMMA

For entities that are interested in entering the New Jersey recreational cannabis industry, there are numerous legal, logistical and operational issues that must be addressed. Scarinci Hollenbeck’s Cannabis Law Group has been at the forefront of the industry since its inception and remains dedicated to helping our clients navigate the ever-evolving regulatory landscape, intending to grow their businesses while also minimizing the legal risks. Contact us today to find out how we can help you. For more information, please check out Micro License NJ: Legal Essentials for Cannabis Microbusinesses.