New Jersey Regulators Adopt Interim Rules For Legal Cannabis Industry

New Jersey cannabis regulators have provided the first glimpse into the shape of the state’s forthcoming marketplace. 

On Thursday, the Cannabis Regulatory Commission voted to adopt the first set of draft rules for entities hoping to grow, process, or sell cannabis. At the start of the meeting, ahead of the vote, Commission Chair Dianna Houenou said, “Today is a very special meeting for the commission, as today we will be considering the adoption of the initial set of regulations that will govern the cannabis industry,” adding that Commission members “are very excited.”

The rules include low license fees and the prioritization of license applications from businesses that are owned by minorities, women, or disabled veterans, from applicants who are living in or planning to operate in “economically disadvantaged areas,” or from microbusiness applicants. And, these business applicants will always be fast-tracked, or as the rules put it, they “will be prioritized in the licensure process so that their applications are reviewed before other applicants – regardless of when they apply.” 

Additionally, the rules already “establish guardrails to combat exploitative business contracts and prevent deceptive license ownership transfers.” 

While the initial rules are more than 150 pages long, Houenou made it clear during a July meeting that the initial rules would cover only “the subjects that are most critical to the beginning stages of establishing the regulated cannabis industry.” 

“We are keenly aware that everyone is eager to get the regulations in place, as are each of us. But writing regulations is hefty work. And so it’s important for us to get the content right, especially given these tight deadlines,” Houenou said. “Draft language might change. We may make revisions as we continue to hear from experts and from the public, especially on some of these important issues that come before us.”

One way that New Jersey is trying something new: a Social Equity Excise Fee, levied on cultivators, that has the “potential to increase as consumer prices decrease and will raise money that can be appropriated to initiatives like educational support, economic development, and social support services within municipalities designated as Impact Zones.” 

And, cannabis business owners will have to submit environmental sustainability plans. 

There are many areas of New Jersey’s first set of rules that have become boilerplate for states that allow cannabis, including childproofing requirements and restrictions on advertising that seek to avoid youth exposure. And, New Jersey is so far taking edibles restrictions a step further than some states by banning “edible products resembling food,” like cookies and brownies, and only allowing forms like syrups, capsules, and chewables. 

New Jersey has an existing medical cannabis industry, and one noteworthy provision will allow those license holders to skip the full application process and instead to simply prove to the Commission that they will be able to serve consumers without limiting the supply available to patients. They will also need to get approval from the municipality in which they operate. 

The rules come just two days ahead of the August 21 deadline for municipalities to decide whether to allow adult use cannabis businesses to operate within their borders. A majority of municipalities are expected to opt out, for now at least, not because they expect to ban aspects of the cannabis industry over the long-term, but because they can choose to opt back in once regulations are complete and local leaders have the full picture. 

During the Commission’s June meeting, Janice Kovach, the mayor of Clinton Town and the president of the New Jersey State League of Municipalities, said, “Opting out is not necessarily saying ‘no.’ In some cases, an opt out is a ‘maybe later.’”

“Municipalities that are opting out of all licensed establishments may not necessarily be against hosting cannabis establishments within their communities. They are simply delaying a decision until they know all the rules. It’s challenging to properly plan without knowing all the parameters,” Kovach continued, while also urging the Commission to give municipalities “flexibility” when it comes to crafting additional rules for cannabis businesses.

The initial rules allow for municipalities to determine where shops can be located and the hours during which they can operate, which addresses one of Kovach’s concerns expressed during the June meeting, which was traffic. Municipalities can also require additional steps prior to approval of an application, for example. The rules also give municipalities the “opportunity to weigh in on which applicants seeking to operate within their town should be issued a license from the Commission.” 

The Commission held its first meeting in April, as Cannabis Wire reported, and has since met a handful of times. 

In November, New Jersey voters approved a ballot measure to legalize cannabis for adult use. After lengthy debate among lawmakers and Gov. Phil Murphy on a bill to implement the measure, as Cannabis Wire reported, Murphy signed the legislation in February. 

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