The Division of Consumer Affairs issued warning letters to several businesses that “gift” customers cannabis when they order baked goods or snacks.
NJ Green Direct, Sky High Munchies, Slumped Kitchen and West Winds Wellness received letters from the DCR on June 15.
In the letters, the DCR told the four companies that they’re under investigation for violation of the Consumer Fraud Act, which prohibits unconscionable business practices, misrepresentation and deception in the marketplace. The letters note that, despite the characterization of the included cannabis as “gifts,” it appears to be central to the sales transaction and not really gifts at all.
“In legalizing adult-use cannabis in New Jersey, the Legislature made it clear they were creating a regulated market with restrictions on how that market operates,” said Attorney General Grewal in a prepared statement. “Instead of waiting for those regulations to be established, some vendors have decided to move forward on their own, in ways that the law does not allow. Today we’re making it clear that we will not permit these entities to undermine the regulated cannabis marketplace the Legislature created or to compete unfairly with properly licensed cannabis businesses.”
The New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act legalizes and regulates cannabis use and possession by adults 21 years and older and authorizes adult-use cannabis sales by certain businesses licensed by the Cannabis Regulatory Commission.
“The CRC is committed to establishing a safe marketplace of cannabis products,” said CRC Chairperson Dianna Houenou in a prepared statement. “Those trying to preempt the rules and transfer unregulated and untested marijuana items jeopardize public health and undermine confidence in the forthcoming regulated cannabis industry.”
The CRC’s licensing scheme was “designed to eliminate the problems caused by the unregulated manufacturing, distribution, and use of illegal marijuana within New Jersey,” to “strike a blow at the illegal enterprises that profit from New Jersey’s current, unregulated illegal marijuana market,” and to “prevent the sale or distribution of cannabis to persons under 21 years of age,” among other objectives.
The rules that will govern the adult-use market aren’t yet established, and adult-use licenses haven’t been granted.
By inaccurately claiming to give free “gifts” of cannabis along with the purchase of snacks, generally at high prices, companies may be in violation of the Consumer Fraud Act, the Division’s Advertising Regulations, and other laws or rules, according to an announcement.
Each misrepresentation in the sale or advertising of merchandise constitutes a separate violation under the CFA. Violators may be subject to a penalty of $10,000 for the first violation and $20,000 for each subsequent violation.
“We will not allow vendors to misrepresent what they’re selling,” said Kaitlin Caruso, acting director of the DCA, in a prepared statement. “Under our consumer protection laws, vendors are subject to fines and penalties for making false or misleading statements about what they’re selling. We have warned these companies about our concerns, and to stop conduct that could violate our laws.”
On June 15, the DCR also issued a final consent order to Dr. Anthony Anzalone, who the attorney general filed an administrative complaint against in December 2018 after alleging he had failed over multiple years to comply with the rules of New Jersey’s Medicinal Marijuana Program.
According to the complaint, Anzalone engaged in fraud, gross negligence, and professional misconduct by indiscriminately authorizing medicinal cannabis to groups of people who attended conferences he held in hotels around the state. He allegedly charged each person an initial consultation fee of $350 and subsequent quarterly fees of $100 to$150 for continued authorization of the drug.
A month after the complaint was filed, Anzalone voluntarily agreed to a temporary suspension of his medical license; and in April 2021, the State Board of Medical Examiners accepted his permanent retirement from medical practice.