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OP-ED: The problem(s) with cannabis

Why won’t the Legislature give the people of New Jersey what they want?

Inside one of the cannabis flowering rooms at PharmaCann in Montgomery, N.Y. – AARON HOUSTON/NJBIZ

 

The news this week that the Legislature is abandoning its efforts to allow adult use of cannabis is disappointing when one considers the recognition among the vast majority of New Jerseyans that prohibition has failed. While a significantly expanded medical program will provide some balance to this scenario for those in need of treatment, the absence of a recreational-use program represents an enormous loss of not only a fiscal opportunity, but of a platform to cure social inequities that will continue to plague people of color.

The problem with passing a cannabis bill in New Jersey is that it is not a single issue; it is a confluence of multiple issues. Taxation, expungement, regulatory control and home rule — each provide legislators with something to object to, undermining the broad compromise efforts that have occurred over recent months. None of these concerns alters the accepted reality that adults should have the freedom to consume cannabis if they choose. While the issues should prompt a sincere debate and compromise on the issue, that has not happened. What is missing?

Acknowledge the mistake

While we instruct our children to acknowledge their mistakes and insist they ameliorate the consequences, legislators seemed to have missed this lesson. The mistake of prohibition — particularly in New Jersey — resulted in the mass arrest and incarceration of people of color at an alarming rate arising from behavior that we now want to legalize. New Jersey still is near the head of the pack in arresting its citizens for possessing a product that most of our citizens believe should be as legal as Budweiser.  In 2016 New Jersey arrested more folks for cannabis offenses than the entire population of Fort Lee at a cost in excess of $130 million.

It is absurd that a decision to end the treatment of cannabis users as criminals should be obstructed by disagreements over how to address the disproportionate and unfair consequences to minority populations. Some legislators have no problem forgiving and expunging a crime of possession of a small amount of cannabis, and some chafe at the thought of expunging the crime of possessing greater quantities. True leaders wouldn’t be deterred by this nonsensical and irrelevant concern. Cannabis of any quantity never should have been considered a Class I drug and recognizing this leads to the moral imperative to expunge all these offenses, full stop.

By failing to act to cure obvious wrongs, our Legislature is complicit in continuing the adverse consequences of this policy if they fail to do so.

Finding the votes

When we hear that 18 senators support regulated cannabis and 21 are needed, we know that modifying the proposed bill might attract a few more. A broader question exists. That is: What is it about the status quo that any senator thinks is working? The excessive and unfair enforcement? The exorbitant cost associated with enforcement of a failed policy? The loss of opportunity and tax revenue as others open up new marketplaces?

The legislative reluctance to achieve what the majority of New Jersey voters want is sadly not surprising.  ur legislators look to their constituent municipalities as a virtual “canary in the coal mine.” What do they see? “Not in my backyard” actions by more than 60 towns, including some of the most populous, has resulted in “local prohibition ordinances” being adopted. Senators can count. There may be more political pain from supporting a state wide cannabis marketplace than there is in creating competent legislation, unless it is precisely what their constituents want — particularly if those constituents aren’t the ones being imprisoned for cannabis.

Expansion of medical cannabis

Thankfully, we have a savvy administration that has already increased availability of medical cannabis through the Alternative Treatment Center program by 400 percent as it seeks a pathway to a regulated adult marketplace. The administration anticipated $100 million in cannabis revenues in its 2018 budget, and when the Legislature failed to deliver, its first act after passage of the spending plan was to invite applications for six new medical cannabis ATC locations. It surprised few when more than 150 applications from the most esteemed cannabis operators were filed seeking these six additional licenses. New regulations that will govern medical cannabis operators are likely to be far more practical than the initial regulations and allow for-profit operations to take part, and encourage product differentiation, modern cultivation techniques, and market-driven retailing.

Thus, while the medical market demonstrates a glidepath to expansion, the end of cannabis prohibition remains in political gridlock here. The medical market is already experiencing market consolidation as multi-state operators are leveraging their knowledge of the market and acquiring licenses throughout the country. The most recent example is the $850 million acquisition of Verano Holdings — one of the successful applicants for the most recent medical cannabis ATC permits. Capital markets, unencumbered by weak-kneed political leaders, recognize the dramatic opportunity as both medical and recreational cannabis models are being embraced in the majority of states now.

Given how the population’s view has coalesced, with the majority of New Jersey residents favoring the end of cannabis prohibition, we continue to be baffled by the Legislature’s inability to deliver what the people want. Indeed, we are disappointed, but we do have a glimmer of hope that the lame duck session this year will allow the Legislature to act as it has so many times before, in cowardice, passing a bill whose controversy is of its own making under the cover of darkness and with a long run-up to the next election.

Otherwise, it looks to us like New Jersey is, once again, set to be its own worst enemy in a battle to advance its interests and that of its residents.

Charles Gormally is co-chairman of the Cannabis Practice at Roseland’s Brach Eichler.

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