After nearly losing its approvals to grow and sell cannabis in New Jersey, Curaleaf is riding high.
The New York-headquartered multistate operator began last week under a cloud of uncertainty when the New Jersey Cannabis Regulatory Commission (CRC) declined to renew its annual licenses for manufacturing, cultivation and retail.
Hours after the stunning April 13 vote – which would have prohibited Curaleaf from selling adult-use cannabis at two of its three storefronts and impacted operations at both of its South Jersey cultivation facilities – the company raised concerns about the decision, requesting a stay to allow time for judicial review.
On behalf of Curaleaf, Lowenstein Sandler partner Christopher Porrino wrote in an April 14 letter to the CRC that refusal to respond by April 17 would be treated as a denial and the company would be ready to immediately file an appeal with the New Jersey Appellate Division.
Following the reversal, Curaleaf Chief Executive Officer Matt Darin called the CRC’s decision “to vacate their unprecedented action” an “incredible victory” for the company’s 500 workers in New Jersey – many of whom showed up in Trenton to rally against the initial vote a few hours before the follow-up CRC meeting.
— Matt Darin (@darin_matt) April 17, 2023
He went on say the renewals are “vindication for what we knew all along: Curaleaf is in good standing with the CRC and has fulfilled every requirement necessary for the renewal of our licenses.”
“I am incredibly proud of and grateful to every one of the hundreds of dedicated team members who showed up today, not just for their jobs and livelihoods, but for a better, safer cannabis industry in New Jersey,” Darin said.
Curaleaf chairman Boris Jordan – who had pledged to use “any legal means necessary” to “ensure renewal”– also described the CRC’s reversal as “a victory.”
The chairman noted that since entering New Jersey’s medicinal market in 2015, the MSO has invested upward of $75 million to support the state’s industry and contributed more than $5 million in state tax revenue as well as roughly $1.8 million in local tax revenue.
“Curaleaf remains open for business and will continue working collaboratively with the CRC board and its staff to ensure our good standing in the State of New Jersey,” he said in a statement.
A few days later, Curaleaf had another reason to celebrate.
Its dispensaries in Edgewater Park, Bellmawr and Bordentown – which are all licensed to sell recreational and medicinal cannabis – posted record sales on April 20, the unofficial marijuana holiday.
Considered the biggest shopping day of the year for the cannabis industry, 4/20 typically brings a sales spike of anywhere from 30% to 50% for legalized storefronts.
According to a company spokesperson, this year, Curaleaf’s dispensaries in New Jersey saw a 75% uptick in business April 20 over an average day.
Compared with April 20, 2022, a day before the state’s legalized adult-use marketplace launched, Curaleaf says it welcomed 3,000 more customers this year and recorded two times as many sales.
Darin told NJBIZ, “4/20 is the most significant day across the cannabis industry and we had a historic showing in New Jersey.”
“This year’s celebration – the first since the start of adult use sales – resulted in Curaleaf’s highest ever in New Jersey,” he said. “We are so thankful for all of the team members and loyal customers who made the day such a huge success.”
Curaleaf, the largest publicly traded cannabis company in the world, has 151 dispensaries across 19 states and employs nearly 5,000 workers.
Companywide, Curaleaf saw an increase of around 45% in net sales on April 20, 2022, compared with the year prior and expects a similar performance this year, Reuters reported.
However, the MSO has taken steps in recent months to cut operational costs in response to slowing sales growth in some markets as well as capital challenges and price compression.
Earlier this year, Curaleaf announced plans to exit production and cultivation facilities in California, Colorado and Oregon. Additionally, the company said it will consolidate activities in Massachusetts to a single facility, resulting in one closure.
The CRC’s April 13 vote came a few weeks after Curaleaf announced plans to wind down cultivation at its Bellmawr facility and consolidate growing operations in Winslow as part of an effort to streamline business. Of the roughly 40 workers affected by the Bellmawr closure, all but five were offered employment at other locations, according to the company.
In its initial rejection of Curaleaf’s license renewals, the CRC cited the closure in addition to concerns over whether layoffs had been made without proper notice to the commission, clashes with unionization efforts and overall transparency.
In an April 17 application for permission to file an emergent motion in the Appellate Division, Porrino noted that that the board’s initial vote disregarded CRC Executive Director Jeff Brown’s recommendation to renew Curaleaf’s annual licenses.
Additionally, it violated “all notions of procedural due process, the strictures of the Administrative Procedure Act and the cannabis statutes” and did not have sufficient votes for commission action, according to the filing.
“While the CRC staff found Curaleaf’s renewal applications complete and recommended renewal, two of the five CRC commissioners voted to the contrary,” Porrino wrote in his April 14 letter requesting a stay or declaration that the decision is ineffective. “One commissioner voted in favor, two voted against and one abstained. By statute, three votes are necessary for the CRC to act.”
Curaleaf maintained that no decision had actually been made since the CRC failed to deliver three votes and that under the Administrative Procedure Act, a hearing is required if an agency declines to renew a license. Until that hearing occurs, the license remains active, by law.
“The CRC chair nevertheless issued a ‘decision’ that Curealeaf must immediately ‘cease operations’ today. Curaleaf received no notice, hearing or other due process protections to challenge the purported ‘decision,’” Porrino said.
Calling it a “wrongful action,” the letter went on to say emergency cessation of New Jersey’s largest cannabis business would “be extreme,” causing “mass consumer confusion, market disruption and reputational harm” and noted that the company serves around 41,555 patients and adult-use customers per month.
Had the CRC not reversed course, Curaleaf planned to show that the board’s “stated reasons for not renewing the license – union negotiations and a facility’s downsizing – were an illicit disguise to justify the CRC’s retaliation against Curaleaf for consolidating certain operations.”
At this juncture, the cannabis industry in this state is at a crossroads. Either we hold true to the law and protect the hard-working men and women of New Jersey who want fair wages and working conditions, or we can reward bad behavior and ignore these mandates for the sake of money and profits.
– Krista Nash, commissioner, CRC
At its April 17 meeting, the board voted 4-1 to approve the licenses, with Commissioner Charles Barker opposed. Previously, Commissioner Samuel Delgado was the lone supporter of Curaleaf’s renewals.
Commissioner Krista Nash said during the April 17 meeting, “In my opinion, Curaleaf, in several of its locations, have not complied with the mandatory labor provisions set forth in the law and that alone was reason to deny their application for renewal. I base my opinion on several factors including public testimony from workers and the union, stating that the company has not been compliant with the law.”
“At this juncture, the cannabis industry in this state is at a crossroads. Either we hold true to the law and protect the hard-working men and women of New Jersey who want fair wages and working conditions, or we can reward bad behavior and ignore these mandates for the sake of money and profits. The conditions contained in these resolutions presented today offer Curaleaf a second chance to course correct,” she said.
According to the CRC, the renewals are contingent upon a few conditions and failure to comply could result in penalties, including fines or license revocation.
Those provisions include a requirement that Curaleaf provide the board with evidence it is making good faith efforts with bargaining units, submit information regarding plans to modify its local operations, and produce details on hiring workers and vendors who meet “certain criteria.”
If Curaleaf fails to meet the conditions by the CRC’s next meeting on June 1, CRC Chair Dianna Houenou said the company would be subject to penalties including fines and revocation of the renewed licenses.