Unfinished business

Hello everyone!

Been a heck of a week with the Statehouse and the storm. Now there’s also been a storm of bills with the dawn of another two-year session of the state Legislature. We talk about some of the ones that have been introduced, in addition to what else can be on the horizon for this year.

As always, I hope you enjoy the issue.

Take care and until next time…

— Jelani Gibson

Reporter’s Roundup: Factors for this year

It’s a brand new year with a whole host of brand new things to talk about. Let’s get into some of the things that are going to be on the horizon.

Business education

This is supposed to be the year that the New Jersey Business Action Center’s Cannabis Training Academy gets its technical assistance apparatus off of the ground.

That first iteration looks like it is going to be crucial in defining how education for the industry functions going forward. Partnerships with universities, colleges, and vendors in the space are all going to make up the program, which Executive Director Tauhid Chappell has noted is coming soon.

“Our inaugural cohort of CTA Instructors have been selected and I can’t wait to reveal them. They truly are powerhouse experts in the industry,” he said in a Thursday LinkedIn post.

Continued openings

The industry is on pace to see a continued number of openings. With that however, is also going to come the inevitable crunch.

The number of municipalities that are opening up to cannabis is not exceeding the number of licenses that have been granted on a conditional basis. This year could be when many run into that logistical reality. For those that have been up and running for the past couple of years, eyes will be on them them to see whether or not there are going to be sales, mergers or shutdowns altogether.

So this year we may see a market with businesses that open and others go under.

The commission and its makeup

Before the new year rang out, Senate President Nicholas Scutari, D-Union, made clear that he was unhappy with the Cannabis Regulatory Commission.

“We’re always trying to improve. We’re expecting improvements from the way that industry runs,” Scutari said this week. “They’ve come a long way, but we’re looking to make considerable, continued improvements. Whether that’s working with the currently constituted board or changing that, no decisions have been made upon that. And we have not gotten anywhere on that just yet.”

Scutari did not elaborate on what those continued improvements would look like.

Civil rights groups like the ACLU made clear they are prepared to fight him.

Gov. Phil Murphy for his part, has declined to comment on the spat and said the occasionally positive thing about the commission. That doesn’t necessarily leave it in a bad spot, but it’s not the best of circumstances when the governor doesn’t give an affirmative defense. That being said, Murphy has two years remaining in office.

A change in political leadership in the coming years has the potential to provide the commission with someone who supports their direction in aggressively fining companies, or may see someone who has more in common with Scutari’s viewpoint.

The ensuing political maneuvers along with probable litigation and protest would be quite the circus — but that’s New Jersey for you.

More grants

Seeing who gets built out with these NJEDA grants is another key factor here.

Keeping in contact with who has and has not gotten that grant money and what the timeline looks like for the disbursement of those funds is also going to be of critical importance.

Most of all, it will be important to track the success of the businesses that receive the grants.

Close to 50 cannabis bills have been filed for this legislative season. Here’s a take on some of the key ones and the factors behind it.

Consumer

A846: Authorizes homegrow of cannabis

The OG of most complaints about the cannabis market come back to this. Other states that have legalized it have already put homegrow provisions in the first draft of legislation. Scutari and Gov. Murphy keep repeating that homegrow could flood the market with unregulated cannabis, but more often than not, it’s been shown that when plants are limited, as it is under the bill, that tends to be less of a concern. What has been cited as more of a concern among applicants is the continuing fact that New Jersey is still roughly open for cannabis in just 30% of the state, thereby ceding the other 70% to the unregulated market Murphy and Scutari say they have concerns about.

A898: Establishes a program for subsidized purchase prices of medical cannabis for registered qualifying patients enrolled in Medicaid or NJ Family Care programs.

This has been another one on the list for medical patients. Subsidized weed and expanding the qualifications for that subsidy has been a consistent rallying cry of the medical community. Alongside homegrow, expect that to be high on the community’s agenda.

Finance

A1609: Protects financial institutions and insurers doing business with cannabis industry from being penalized:

This one is very similar to SAFE Banking. Not only does this include financial institutions, but insurers as well. The cannabis space has consistently noted its lack of access to capital in the same way other businesses can tap.

This won’t be a panacea given that large banks and insurers with international and multi-state portfolios are still hesitant to engage in something that’s not federally legal. This bill could, however, relieve that burden somewhat.

S1126: Establish a state bank for the handling of marijuana related funds.

We’ve talked about this before in the newsletter. One of the primary criticisms of banking is that it tends to be unsupportive of many of the people that are prioritized in the review process for cannabis applications. Social Equity applicants, the economically disadvantaged and others who have been locked up don’t traditionally have the credit score and financial backgrounds that banks look favorably upon in their qualification process.

One of the things that has been suggested to level that playing field is creating a state bank that could at the least hold funds and not charge a high fees to do so. It wouldn’t be clear about how loans would work since that’s currently happening under the New Jersey Economic Development Authority — but many in the industry would expect the bank to at the minimum offer low- or zero- interest loans for social equity applicants.

S2286: Authorizing interstate commerce

This one is being sponsored by Scutari. Authorizing interstate commerce among states is always going to be a tricky subject for something that’s federally legal. That being said, the other elephant in the room is what happens when you authorize interstate commerce in a state where it’s only legal in 30% of the municipalities versus New York, which is legalizing it in a much larger percentage.

There’s currently not enough retailers in New York to keep up with the amount of cultivation. As a result, many upstate New York farmers have resorted to either selling out the back door or destroying their crops all together.

Given New Jersey’s dense population and limited land availability, cultivation tends to be one of the harder licenses to get. It also happens to be one of the most controversial to get approved on the municipal level.

More financial questions such as how those goods would be taxed, who would be allowed to sell them and more would have to be parsed out. The other defining point here would be whether or not a new collection of MSOs will be coming into the state to play as opposed to local and craft operators from disadvantaged populations. That’s led to a call to allow interstate commerce for social equity and small operators only to address that concern. The other concern is that large companies would attempt to sue in order to get in.

Debate over criminal justice or injustice

There are a lot of bills on the agenda that talk about increasing penalties for cannabis, something that’s already been noticed by some activists.

We’ve already reported on some of the mentioned bills in the tweet, but here’s a rundown.

A2021: Require notification to appropriate departments if drug court participant tests positive from marijuana or cannabis

This one may not going go over well with the criminal justice reform community. How the substance abuse industry has responded to legalization has been convoluted in a variety of ways. In some states it has been supportive, and in other states it’s seen as assisting with the continued criminalization of cannabis.

S2066: Establishes division on marijuana and cannabis enforcement in DLPS

This would make a division for state troopers that are exclusively dedicated to enforcing violations of cannabis and more likely unlicensed shops. The constant criticism from some cannabis applicants is the state rarely shows a willingness to go after municipal officials and corruption within the licensing process and that scrutiny from this division won’t be applied to them. That’s going to be a continued point of conversation and debate for this year.

Oversight (somewhat)

A2524: Applied statutory ethics and conflict of interest standards for casino industry regulators to regulators and participants in legalized marijuana marketplace

The bill essentially says that state employees and commissioners can’t have an interest in cannabis companies. That part is usually done as a matter of practice within most regulatory institutions, however the provision about putting restrictions on employment within the industry after one is done being a commissioner will be interesting to see — especially if a commissioner leaves or is shuttled by the Legislature.

That being said, it runs into the same criticism as above. Even a previous Attorney General, John Farmer, noted in our interviews from last year, state agencies are subject to scrutiny in a way that legislators and local levels of government are not.

There’s plenty of other bills which can be found here. As usual we’ll keep everyone informed.

• ‘State of Affairs’ examines challenges of breaking into New Jersey’s cannabis industry by ROI-NJ’s Steve Adubato: Brenda Hopper, founder and owner of CannaBoy TreeHouse, and former CEO/state director of New Jersey Small Business Development Centers, joins Steve Adubato to share the challenges of a small business owner breaking into the cannabis industry in New Jersey.
• This Camden dispensary is the 1st nationwide to be located in a pharmacy by CBS News Philadelphia’s Wakisha Bailey: In 1937, nearly 90 years ago, the federal government outlawed marijuana, also known as cannabis. Camden Apothecary, a recently opened dispensary, is the only place selling cannabis now that could’ve sold you some before prohibition, too. “We’re the only facility that was dispensing cannabis prior to its prohibition in 1937, and here we are again doing it in God, 2024,” pharmacist Anthony Minniti said.
• NJ’s cannabis business is booming by NJ Spotlight’s Melissa Rose Cooper: Three years after recreational use was legalized, over 50 cannabis businesses opened in New Jersey in 2023, representing a big breakthrough of the industry in the state. The state has faced criticism for its expensive and lengthy licensing process, but over the three years after recreational marijuana was initially legalized, more and more small local businesses have been able to open, according to industry leaders and experts.
• DEA Tells Congress It Has ‘Final Authority’ On Marijuana, Regardless Of Health Agency’s Schedule III Recommendation by Marijuana Moment’s Kyle Jaeger: The Drug Enforcement Administration (DEA) is telling lawmakers that it reserves “the final authority” to make any scheduling decision on marijuana following an ongoing review, regardless of what the U.S. Department of Health and Human Services (HHS) recommends. In a letter sent to Congressional Cannabis Caucus co-chair Rep. Earl Blumenauer (D-OR), DEA Acting Chief of the Office of Congressional Affairs Michael Miller gave a general overview of the scheduling review process that was initiated under a directive from President Joe Biden in October 2022. That started with a scientific assessment from HHS that reportedly advised DEA to move marijuana from Schedule I to Schedule III of the Controlled Substances Act (CSA).
• With 2023 in rearview mirror, what should the cannabis industry expect in 2024? By Reuters’ Alex Malyshev and Sarah Ganley: 2023 wasn’t all doom and gloom. Public support for cannabis legalization reached an all-time high as several new states enacted laws legalizing adult-use and medical cannabis. On the federal level, the Biden Administration continued to take steps toward reform, expanding on last year’s proclamation pardoning people convicted of federal marijuana possession offenses.

For cannabis recruitment solutions please contact Deneen Wright, dwright@njadvancemedia.com or call 201-324-5092.