Marijuana Law Dies: What Now for Expungement, Investors and Medical Use?

Carly Sitrin | May 17, 2019 | Politics
After Senate President Sweeney decides to leave legalization of recreational cannabis to voters, there’s widespread confusion about what comes next

Credit: NJTV News
Marijuana smoking
Adult-use marijuana legalization is now all but certain to be on the 2020 ballot in New Jersey as attempts to make the state the first in the nation to legalize it and establish a marketplace through legislation have gone up in smoke. While lawmakers in Trenton were not able to pass legislation, New Jerseyans are now left confused as arrests for low-level marijuana crimes continue and business plans stall.

Senate President Steve Sweeney announced on Wednesday that the long-debated recreational legalization bill is effectively dead in the Legislature and the issue will be put on the ballot for voters to decide in 2020. Lawmakers in favor of legalization noted that adding it to the ballot for this 2019 election season might be too risky as Assembly seats will be at the top of the ballot, meaning turnout is likely to be far lower than in 2020, a presidential election year. Legalization has consistently been popular with New Jersey voters and the latest Rutgers-Eagleton poll shows more residents favor completely legalizing than oppose it by a margin of 58 percent to 37 percent.

Sweeney and Democratic Gov. Phil Murphy — who made legalization one of his campaign issues when running for governor — have said social-justice concerns make reforming the state’s marijuana policies of the utmost importance. Studies have shown approximately 600 New Jersey residents are arrested for cannabis-related charges every week and most of those arrests are of people of color.

Accordingly, plan B, they have said, is to significantly expand the current medical cannabis system and push through a separate bill (S-3205) for expunging the records of individuals with arrests or convictions for low-level marijuana crimes.

Credit: NJTV News
Senate President Steve Sweeney (D-Gloucester)
“Adult use marijuana will be legalized in New Jersey, but it won’t happen now,” said Sweeney (D-Gloucester) in a statement. “It would have been best to move the adult use and medical expansion bills at the same time, but it is wrong to hold the medical and expungements bills hostage. We want to move forward to help transform the state’s medical marijuana program and to achieve the progressive reforms for social justice.”

$60-million hole in the budget

The death of the bill to legalize adult use of marijuana has created confusion over expungements and business plans, and has left a $60-million budget hole that was to have been filled by anticipated revenue from recreational legalization.

The proposed medical marijuana expansion bill (S-10) could include the regulatory oversight commission laid out in the adult-legalization bill, according to Sen. Nick Scutari (D-Union), its sponsor. He told reporters it would offer more licenses for medical dispensaries and make the licensing process easier to navigate by breaking up the permitting system which had been prohibitive for those seeking to get involved.

To become a licensed medical dispensary under the current medical marijuana law, businesses had to be vertically integrated — meaning they had to be permitted to cultivate, manufacture and dispense cannabis products, an incredibly expensive demand. S-10 would allow more licenses to be made available, (there are 12 licenses currently) and the six dispensaries now operating would be allowed to convert their practices from nonprofit to for-profit businesses. That move would allow them to diversify their funding mechanisms by gaining access to more affordable loans and investment funds. And, New Jersey Cannabusiness president Scott Rudder said, more functioning dispensaries would create a flourishing ancillary market of security firms, marketing firms, and attorneys looking to get into the cannabis space. Murphy addressed some of this through regulations the Department of Health put in place this week.

medical marijuana
But some skeptics say expanding the medical program may hurt the recreational legalization goal. Sweeney has said that since Murphy’s last expansion of the medical marijuana program, lawmakers were more hesitant to commit their support for recreational legalization. Bundling the bills, he said, was key to gathering votes for both issues.

But the real linchpin in legalization talks was social justice and given that, Sweeney said lawmakers would still be moving forward on expungements.

Arrests continue to soar

Meanwhile, arrest rates for low-level marijuana crimes continue to soar. New Jersey is among the top three states for total marijuana arrests and racial disparities in those arrests are very high. Despite similar usage rates, black New Jerseyans are nearly three times more likely to be arrested for marijuana possession than white New Jerseyans.

But lawmakers are struggling with a new wrinkle: how do you expunge past convictions without legalizing the consumption and possession of marijuana. According to Bill Caruso, lawyer and founder of lobbying group New Jersey United for Marijuana Reform, there are three likely pathways to expungements.

He said the first option would be to move a decriminalization bill alongside an expungement bill.

Lawmakers like Sen. Ron Rice (D-Essex) have been pushing for decriminalization of small amounts instead of full legalization, saying it would be better for communities of color that have been devastated by the “war on drugs.” Rice has been a vocal opponent of the model proposed by Murphy and Sweeney as he believes it would make access to cannabis easier for black children and would further damage the fabric of minority communities. Sources close to legislative negotiation sessions have said several lawmakers of color share his concerns.

“Everything being sold by the governor and being sold by my white colleagues is social justice for black folk,” Rice said. He added that this mentality fundamentally misunderstands African-American communities. “If you don’t do decriminalization first, you’re going to move expungement, knowing it’s not going to go anyplace. You’re going to make people sit in jail knowing that expungements have passed until we get a ballot measure passed and that’s not right.”

Caruso noted, however, that working out details and getting votes for a decriminalization bill wouldn’t be any easier than working on a legalization bill. He said those who have been opposed to legalization for safety reasons would likely have a difficult time supporting decriminalization which would, as he put it, “allow for open air drug dealing,” as opposed to closed, controlled dispensary locations.

Sen. Ron Rice wants no ‘arm-twisting’

The second option for expungement would be to move legislation for it, adding a trigger that it would be passed but not enacted until legalization occurred.

Though Sweeney has suggested this option may be the most likely, Caruso is doubtful. “I just don’t know who’s going to go for that,” he said. What’s more, Rice on Thursday introduced a measure that would prohibit the Legislature from passing — and the governor from signing — any legislation that “has an effective date or operative date that is contingent upon the effective date, approval, signing, passage, or enactment of other legislation,” which he acknowledged as a shot fired at this plan.

Sen. Ron Rice (D-Essex)
“We shouldn’t be tying these bills together and arm-twisting,” Rice said. “Let me be a part of what I want to be a part of. We will negotiate with you in good faith whether or not you want to legalize recreational marijuana or medical marijuana on its own volition.”

The third option for expungement would allow for a revolving door, with individuals who get arrested having their records expunged, and that would be repeated however many times they were caught.

Caruso said this possibility would “waste an absurd amount of resources,” in terms of the courts, prosecutors, and police officers’ time and money. An alternative, he said, would be something similar to what Jersey City and the state Attorney General’s Office attempted last July: decline to prosecute low-level marijuana cases until a more permanent solution can be found.

Would-be business owners in limbo

Killing the recreational bill in the Legislature also leaves many aspiring business owners in limbo.

Patrick Grega, a co-owner of New Jersey Grow Solutions LLC which was gearing up to open a shop in Ewing as soon as the legalization bill was signed and applications were accepted, said this news shakes up their whole business plan. Now they will switch to seek a medical license.

Grega said as a minority, woman-owned business (his mother Lisa is also a co-owner), they had been excited to take advantage of the micro-business provisions in the adult-use bill that would remove a lot of barriers for entry and help them, as local residents, have a better shot at getting a license than monied out-of-state corporations.

“Those provisions were assisting us and gave us high hopes to compete with big corporate giants,” Grega said.

Grega noted that in pivoting to a medical model, they would have to completely change their business model from a small business to a dispensary that runs according to patients’ needs. They also would have to expand their company, begin seeking investments, and take out private loans.

“In a recreational market you’re there to run a business, and we were looking to be that mom-and-pop boutique, small and limited but high-end. Now, we need to have a consistent supply for a purpose … we need to bring a doctor on board, create a board of directors, and have a more corporate environment,” he said.

Medical marijuana business is different

Grega added that the team had been planning to take advantage of other provisions in the recreational marijuana bill that would give New Jersey Grow Solutions priority for hiring members of the community — especially New Jerseyans of color who may have previous arrest records for cannabis-related crimes. He said he had planned to pay at least the new statewide minimum wage of $15 an hour, if not more. With a medical marijuana business, those minority provisions wouldn’t come into play.

“Giving some opportunity for residents here would be the right thing to do,” Grega said. “We put a lot of blood, sweat and work into this company and if corporate guys come in, that’s a big loss to helping out our communities.”

What’s more, Grega’s company is in much better shape than a lot of other potential cannabis business operators. Caruso said anecdotally he’s heard many stories of people who had liquified their life savings in anticipation of legalization only to find out that it may be years before they see any return on their investment.

Caruso said that without bill language in place, lawmakers will likely find themselves right back where they are now even after a ballot measure.

Back to square one?

“We went down this path for five years looking at all of this,” he said. “A ballot question doesn’t accomplish anything other than directing the Legislature to do something, and then, with a narrow amount of time, we’ll go into the new year and end up in the exact same place we are now: still arguing about what the tax rate should be, how many minority licenses there should be, how to handle DUIs and more.”

In the meantime, there are several peripheral issues lawmakers may seek to tackle to ease the ballot process in 2020 — primarily, changing state law that groups marijuana possession convictions by weight. Many legislators were hesitant to commit to the adult-use bill because it would expand expungement eligibility for past convictions that involved marijuana in an amount up to five pounds. Current state law calls for penalties for possessing one ounce or less, one ounce to five pounds, and more than five pounds. So whether you are convicted of possessing one ounce of cannabis or five pounds of cannabis, the conviction and penalties are the same. Legislators may work to alter that statute — making it so that arrests could be more specifically categorized which in turn could make expungements easier and ease some of the fears of the more hesitant senators.

Ultimately, even if a ballot measure were to pass, many details would still need to be sorted out in Trenton and Caruso thinks killing the recreational legalization bill may in fact help the cause down the road.

“I’m hopeful,” Caruso said. “Maybe people will come back and say ‘Why don’t we come back to the original plan?’ Maybe everybody just has to go through this one more time.”