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New Jersey Just OK’d its Legal Canna-bill – What Now?


At the moment, New Jersey is – ironically-- the most important thing to New York cannabis. The Garden State’s market will have direct, immediate impact on New York consumers and law enforcement alike. We will also likely see echoes of the very same political battles play out in New York’s negotiations over legal cannabis. The main sticking points are of course allocation of tax revenue, social equity provisions, and the role of law enforcement.

The New Jersey Cannabis Regulatory, Enforcement Assistance And Marketplace Modernization Act (S21) is a massive bill, covering recreational and the medical market at once – although we will mostly focus on the recreational aspect at the moment.

New Jersey law makers must pass the bill now, because otherwise, it would be legal in the constitution without any actual regulations to go along with it. S21 has been revised and will have been voted on by the time you read this newsletter (Lawmakers also plan to vote on another bill that would decriminalize possession of up to six ounces of marijuana). What happens then?

Social Equity

One of the most, if not the most pressing political issue has been the question of social equity. There is still sparring over this question. Some argue that the bill inadequately addresses advocates’ social equity demands.

The bill states that 25% of all cannabis licenses must be awarded to those who have lived in “impact zones,” with “additional priority” given to businesses hiring residents of said zones. An “impact zone” is an area with more than 120k population sitting in the top 40% of recent small-amount cannabis possession arrests, the top 15% of unemployment, and above a certain level on the state’s crime index. These zones have been hit the hardest by the War on Drugs. The bill also establishes programs which offers loans and other resources exclusively to minority groups, women, and disabled veterans.

The Assembly wanted a cap on the number of licenses (which is now 37), while advocates wanted no maximums -- as it can limit minority participation. The bill does not have a special category of licenses for equity business applicants.

New Jersey’s Senate wanted 70% of tax revenues to go to community reinvestment programs covering legal aid, workforce training and mentoring – which they won, but with a caveat.

Senator Ronald L. Rice of the New Jersey State Legislature goes into this caveat, arguing that it is a betrayal.

He argues in an op-ed that “black, brown and white residents have been played for fools with half-truths and empty promises from legislators enchanted by the conjuring of Wall Street investors.”

The 70% of funds going to Municipal Impact Zones Fund will stay that way for only one year, “after which it would be subject to a general vote at the polls."

That the provisions are not cemented into the bill means that voters can easily take away from these programs. Senator Rice also writes that he is allied with more than 500 Black elected officials and faith leaders throughout New Jersey, who consider this bill a “crumb thrown to the starving.” Senator Rice has said that he will vote against the bill.

The NJ Cannabis Regulatory Commission

The main decision-making authority will be the New Jersey Cannabis Regulatory Commission, whose members will be chosen on political grounds, appointed by the Governor. One will be chosen upon recommendation by Senate President Stephen M. Sweeney (D), one upon recommendation by of the Speaker of the General Assembly Craig J. Coughlin, and three without any recommendation needed. The head of the commission, already chosen, is Dianna Houenou (pronounced Way-New).

After initial appointments, which will not require the advice and consent of the Senate, all appointments will need to go through the State Senate. At least one of the appointees must be from an organization or branch of an organization with a “stated mission of studying, advocating, or adjudicating against minority historical oppression, past and present discrimination, unemployment, poverty and income inequality, and other forms of social injustice or inequality.” No one can be on the Regulatory Commission board if they have had “direct or indirect” interest in either medical or recreational cannabis businesses.

New Jersey will also establish an Office of Minority, Disabled Veterans, and Women [Medical] Cannabis Business Development, responsible for handling processes to promote recreational and medicinal industry participation by people from “socially and economically disadvantaged communities, including by prospective and existing ownership of minority businesses and women’s businesses.” They will advertise, conduct seminars and informational programs related to the medicinal and recreational cannabis industries. This department’s goal is to make sure at least thirty percent of all licenses for “personal use” cannabis (recreational) are issued to minorities, women, or disabled veteran business owners (of this >30%, it should be a 50/50% split between minority and women run/disabled veteran run businesses).

Among other things, it will also handle cannabis server and seller training and certification, the standards for serving sizes, regulations on outdoor and indoor growing (with a tiered system re: growing operation size), will establish a universal symbol for cannabis (examples from other states seen below) in addition to a tracking system to avoid counterfeiting. It will also be allowed to send representatives to check in on businesses with or without warning. It will give licensing priority to businesses which have collective bargaining agreements with labor organizations currently or seeking to represent New Jersey cannabis workers.

From: Compound Interests

Screening and training recs, sanitary recs, auditing and inspection requirements, security, means of transportation. The Commission will also deal with the sample testing (tested through third party labs), and re-tests are allowed depending on certain circumstances. Lastly, they will oversee figuring out the best way to tell if someone is high while operating a vehicle, or on the job.

The NJ Cannabis Regulatory Commission will also conduct a “disparity study” in order to figure out how to determine whether race-based measures should be considered regarding micro-licenses, which are their own thing entirely.

“Microbusinesses” are those with less than 10 employees, in a space of less than 2,500 sq feet, possessing no more than 1,000 cannabis plants per month, and possess and handle no more than 1,000 lb. While the cultivator license maximum does not apply to micro-businesses, micro-licenses are not a separate pool from regular licenses entirely. They should account for a small portion of all licenses up and down the supply chain.

Some Notes About Licensing

The number of licensed growers in the state will be limited for the first two years, and specifically the number of retailers will be based on “market demands.” For the first two years after the regulation is put into place, no one involved in cultivation or testing can have an interest in actual selling – that is, vertical integration is a no-go. Growing at home is still illegal, unfortunately.

NJ will have a conditional license system available, which is a temporary license, available to upgrade if and only if the license holder can meet specific legal and regulatory standards. This presumably would help the industry get off to a quick start. Separate and conditional licenses are required for each individual location where a “cannabis establishment seeks to operate”

Regarding funding the state coffers, there will be excise fees for Social Equity on cultivators, going into the Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Fund. Municipalities also can levy additional taxes as they like. These funds cover development, regulation and enforcement of activities related to cannabis use, also involving the Department of Health. It will reimburse expenses for training costs for law enforcement, and the rest will be thrown into the state general fund.

There also will be significant funds put into social equity appropriations in the form of grants, developments, centers, etc. However, as Senator Rice pointed out, this will be up for debate come the next election, just showing further how many obstacles there are to face when seeking full justice for the drug war.

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