Medical Marijuana in New Jersey
Question 1 added an amendment to the state constitution that legalizes the recreational use of marijuana, also known as cannabis, for persons age 21 and older and legalizes the cultivation, processing, and sale of retail marijuana. The constitutional amendment will take effect on January 1, 2021. New Jersey was the first state in the Mid-Atlantic to legalize marijuana.
The five-member Cannabis Regulatory Commission (CRC), which was first established to oversee the state’s medical-marijuana program, was responsible for regulating the cultivation, processing, and sale of recreational marijuana.
Question 1 applied the state sales tax (6.625 percent) to recreational marijuana but prohibit additional state sales taxes. The state Legislature was authorized to allow local governments to enact an additional 2 percent sales tax on recreational marijuana.
Under A21, the Cannabis Regulatory Commission (CRC) will promulgate regulations to govern the medical and adult-use industries and oversee the applications for licensing of cannabis businesses. The legislation further provides for the Legislature to reinvest cannabis revenues in designated “impact zones”; directs the CRC to promote diversity and inclusion in business ownership; and contains critical employment protections for people who engage in lawful behavior with respect to cannabis.
New Jersey Medical Marijuana Applications
In the end of 2020, New Jersey voters approved a ballot measure that amends the state Constitution to legalize recreational marijuana. Now, state lawmakers must pass a bill that will detail the rules and regulations surrounding the industry.
New Jersey has 12 existing Alternative Treatment Centers with approximately 100,000 patients. New Jersey has issued only 12 vertical MMJ licenses, and just 13 dispensaries were in operation as of Nov. 30. State lawmakers approved an expansion to issue a mix of 24 additional MMJ licenses, but the licensing has stalled because of litigation.
Under the timetable laid out by the bill, rules must be developed within 180 days of the bill’s enactment or within 45 days of all five members of a Cannabis Regulatory Commission being appointed.
Below are key provisions spelled out in the legislation, according to a bill statement published Dec. 14:
- The bill would establish six classes of licensed businesses: cultivator, manufacturer, wholesaler, distributor, retailer and delivery.
- The 12 licensed medical marijuana operators would be permitted to get an adult-use license. Some would get licenses to cultivate, process and sell, while others would get wholesale/distributor licenses. The process is more complicated for the potential, yet-to-be-issued 24 additional MMJ licenses.
- Cultivation licenses would be capped at 37 for the initial 24 months. The limit wouldn’t apply, however, to licenses issued to microbusinesses, which are firms of no more than 10 employees and 2,500 square feet of canopy space.
- The Cannabis Regulatory Commission (CRC) would determine the maximum number of licenses for each class based on market demand and would be authorized to accept new license applications to meet increasing demand.
- The CRC would determine an application points system based on criteria such as an applicant’s operating, environmental and safety and security plans. The referendum passed by voters calls for regulators to give priority consideration to minorities, women and disabled veterans.
- In addition, priority would be given based on “impact zones,” or municipalities negatively impacted by unemployment, poverty or past marijuana enforcement activity. To the extent possible, the CRC would grant at least 25% of the total licenses to such applicants or those who employ at least 25% of their employees from such zones.
- Other priority factors would include residents of at least five years who hold at least a 5% investment interest in an entity.
- Labor peace agreements would be required, except in the case of microbusinesses.
- The bill would make it more difficult for municipalities to prohibit marijuana operations. All past prohibitions would be “null and void” and a municipality would have 180 days from the bill’s enactment to prohibit adult-use operations but wouldn’t be able to ban delivery services to consumers in the area. Every municipality also would have the option to decide how many licensed businesses to permit.
- Adult-use sales would be taxed at 7%. The CRC also could levy a small “social equity excise fee” on marijuana growers that would fluctuate depending on the average retail price of cannabis.
- Proceeds from the excise fee and 70% of the state sales tax would go to programs in communities disadvantaged by the prohibition on marijuana.
- The initiative also would allow municipalities to pass ordinances to charge local sales taxes of up to 2%.
As the rules and regulations that will apply to the application process develop, we will continue to provide updates.
Medical Marijuana Business Licenses in New Jersey
In the near future, there will be an open application process for Medical Marijuana Business Licenses in New Jersey. Now is the time to get started with your business plan. You can provide your information here to receive notification updates related to New Jersey cannabis matters. In addition, if you are interested in acquiring a New Jersey Medical Marijuana Business License, contact us to discuss your options. There are several additional requirements that we can discuss with you. You can schedule a consultation to further discuss your options here.