Where is NJ with legal marijuana, and will NY steal our thunder?

Gabrielle Saulsbery//September 10, 2018//

Where is NJ with legal marijuana, and will NY steal our thunder?

Gabrielle Saulsbery//September 10, 2018//

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Since actress Cynthia Nixon stepped onto the New York gubernatorial stage earlier this year with a strong pro-marijuana platform, more and more buzz about adult-use legalization has been emanating from the state. Her Democratic primary opponent, incumbent Gov. Andrew Cuomo, recently an-nounced a series of 15 statewide listening sessions regarding…

Though the pro-weed fire has been lit in New Jersey since Gov. Phil Murphy took office in January, the Legislature has twice missed its deadlines to get a bill to the governor — and another is fast approaching.

So how far along is New Jersey, and what if our neighbors beat us to the punch?

Sen. Nicholas Scutari, D-22nd District, co-sponsor of a bill to legalize adult-use of marijuana, told NJBIZ he has his sights set on the end of this month — and he’s not overly concerned about New York.

The bill checks all the hot-topic boxes that have existed in the cannabis conversation since Murphy became governor: what expungement looks like, who makes the rules, how many licenses is too many, etc.

“All the parties came together with leadership to discuss where we were going and how we were going to come to grips with what we hope to be the best cannabis legislation in the nation so that we have learned from the errors of other states and we’re using best practices,” said Wayne Dibofsky, chief of staff for Assemblyman Joe Danielsen, D-17th District, who’s sponsoring a separate bill that would loosen the tightly regulated medicinal marijuana market.

Dibofsky said he believes the bill will be heard in the Legislature within the next two weeks or so, though he added that’s unofficial.

According to Scutari, the biggest change between this draft and previous iterations of his bill is there are no license caps. The Legislature will leave that up to a five-member marijuana oversight commission made up of members recommended by the governor, speaker and senate president.

“We’re going to let the market factors drive the appropriate amount of licenses,” Scutari said. “The commission will work with the administration to try to grant the appropriate amount of licenses to start off, and revisit the industry as it grows to see how many there are so we don’t run into the same problem we have with liquor licenses, where we have a finite amount of licenses and people are fighting over the ones we have.”

In terms of the bill’s social equity components, it contains language giving an additional boost to women and minorities seeking licenses, as well as people who live in areas disparately affected by the war on drugs.

It gives everyone that has a marijuana possession charge the automatic right to expungement, though they have to apply for it themselves, and Scutari said the Legislature will be asking the judiciary to expedite those applications. Additionally, the bill allows for micro-licensure.

“That’ll help get more local people involved in the process versus just the multinational corporations,” Scutari said.

Though Cuomo’s statewide listening sessions mark a ramp-up in New York’s marijuana conversation, Scott Rudder of the New Jersey CannaBusiness Association implied this also shows how much further it lags behind New Jersey.

“The hearings we’ve held, the discussions we’ve had, we’re much further along than any of the states in our region,” Rudder said. “We will have competition in other states in the future, and we’ll see cannabis legalized across the country as well. But for now we have this moment where we’re going to be unique in the space and we have a responsibility to do that and pass a responsible bill. I believe that’s this bill.”

In the event New York does pull ahead and manages to set up its market first, Rudder doesn’t see it undermining New Jersey’s movement.

“We already have a robust market in New Jersey — it’s called the black market,” said Rudder. “A big part of our objective here, though, is to drive the black market and put it in the hands of small business owners. The industry in New Jersey will flourish.”

Patrick Harrity, an associate in law firm McCarter & English’s East Brunswick office who has been representing cannabis businesses and investors for the past two years, compares where New York is now to where New Jersey was four to six months ago. As he sees it, the only issue that might arise for New Jersey is holding the attention of investors.

“The investments are the only thing I can think of that may matter as far as which state gets legalized first,” Harrity said. “All of the funding comes from private investments similar to what I’ve seen on the West Coast firsthand. An argument could be made that the private funding will go to that state legalizing first. But in my opinion, I don’t think there will be any shortage of private money available regardless of who legalizes first.”

Lee Vartan, who heads the cannabis practice at Chiesa Shahinian & Giantomasi, thinks if New York were to pull ahead, it might dampen some of the enthusiasm in the Garden State, but not undercut it entirely. The announced rounds of Alternative Treatment Center applications will keep New Jersey’s medical program growing irrespective of activity in a recreational-use program here or elsewhere.

“Assume for a moment that legalization is put off in New Jersey and New York for the short term,” Vartan said. “If that were to happen, you’re going to see continued heavy focus on ATC licensure. Folks seem to think, with good reason, that’s a way to easily slide into recreational once it becomes law. I think folks are making an informed bet in thinking if they get an ATC license, they’ll be able to rotate onto one toward recreational.”

According to Scutari, the drafted bill allows current ATCs to apply immediately for an adult-use license if they can certify they have enough product to sell to medical patients.

Even without recreational marijuana, a medical program with over 30,000 people spread out amongst 12 ATCs makes any New Jersey license quite valuable.

“Right now they’re very large private investors taking advantage of this space and considering the density of the area. I’m sure they’re salivating at the thought of being in the region,” said Harrity. “But I don’t think there’s going to be any shortage of money regardless of how far apart the [New York and New Jersey] legalizations take place.”