Governor and Lawmakers Diverge over Medical Marijuana Expansion

Carly Sitrin | June 6, 2019 | Health Care
Legislators are working on a bill to expand the state’s medical marijuana program, but the Murphy administration already is a step ahead and has announced its own expansion plan

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Medical marijuana
Gov. Phil Murphy this week made good on his promise to rapidly expand the medical marijuana program in New Jersey, but his unilateral move may put the Legislature’s own expansion plan in jeopardy.

As part of the governor’s expansion, the state Department of Health announced on Monday it is seeking new applicants to operate up to 108 additional Alternative Treatment Centers in the Garden State for cultivating, manufacturing and dispensing medical marijuana. This represents a major increase. Currently, there are six ATCs in operation; another six permits have been granted but those facilities are not yet up and running.

Meanwhile, state lawmakers are attempting to move their own bill that would expand the program — and it contains elements that Murphy’s plan does not. The bill (S-10) would remove medical marijuana from the Department of Health’s jurisdiction and give it to a new five-member Cannabis Regulatory Commission in the Department of Treasury. It would also cap cultivator licenses at 23: Murphy’s request for applications (known as an RFA) calls for 24.

“Patients cannot continue to wait for access to life-changing medical treatment, and this week’s announcement is an important step toward ensuring sustainable and affordable access,” Murphy’s spokesperson Alyana Alfaro said in a statement. “The Department of Health is overseeing the expansion of the Medicinal Marijuana Program to ensure that it is done responsibly and in a way that puts the needs of patients first. There was no agreement on the bill as currently written.”

The governor and his administration have said expanding the program was urgent as the demand in the state for medical marijuana has skyrocketed. Indeed, since Murphy took office, the number of patients in New Jersey’s medical marijuana program has swelled, from less than 17,000 to more than 47,500 as of June 3, 2019.

State Commissioner of Health Dr. Shereef Elnahal
“We are at a point where patients just cannot wait any longer for easily accessible, affordable therapy. This request for applications allows for specialization of businesses to increase medical product in our state,” said New Jersey Health Commissioner Dr. Shereef Elnahal in a statement.

How the expansion will work

Three types of licenses will be available under the new expansion — for growing, manufacturing and selling. This is the first time the state is issuing separate permits for these categories as the six ATCs already in operation — and the additional six license holders selected last year — were required to be vertically integrated, meaning they must all grow, process and sell marijuana on their own. The Department now will seek to issue up to 24 cultivation licenses (or endorsements, as the department terms them), up to 30 manufacturing licenses and up to 54 dispensary licenses.

These ATCs would be throughout the state, with up to 38 in the northern region of the state (in Bergen, Essex, Hudson, Morris, Passaic, Sussex and Warren counties), up to 38 in the central region (Hunterdon, Middlesex, Mercer, Monmouth, Ocean, Somerset and Union counties), and up to 32 in the southern region (Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester and Salem counties).

According to the DOH, these regional specifications are based on an assessment it conducted of patient need.

Applications will be accepted from both for-profit and nonprofit groups now that the current law’s mandatory threshold for two nonprofit alternative treatment centers in each region has been met. To avoid conflict with national law, because cannabis is still federally categorized as a Schedule I drug, applicants from a nonprofit entity will not be required to be recognized as a 501(c)3 organization by the Internal Revenue Service.

Permits (or licenses) would be granted according to a scoring system which takes into account factors like ties to the local community (20 points), ability to provide appropriate research data (10 points), experience in cultivating, manufacturing, or dispensing marijuana (100 points) and a workforce and job creation plan that would involve women, minorities and military veterans (100 points).

There will also be a $20,000 application fee separated in two payments to the state Treasurer, one $18,000 payment and one $2,000 payment. For unsuccessful applicants, the $18,000 will be returned, but the Department of Health gets to keep the $2,000 fee.

Murphy takes control

This new request for applications was not wholly unexpected. Murphy campaigned on adult-use cannabis legalization and once that plan stalled in the Legislature, he turned his attention to medical expansion.

The state Senate passed its expansion bill just last week, and the Assembly approved its measure two weeks prior. Because the Senate added a requirement for labor peace agreements, that has sent the bill back to the Assembly before it can go to the governor for his signature.

Initially, the medical expansion bill was to be packaged with legalization language and expungement reform, allowing those convicted of low-level cannabis crimes to clear their records. At the time, Murphy deferred to lawmakers to pass their bills but noted if they couldn’t get it done, he would step in.

“I’m prepared to hold off for a short amount of time, and I would say the month of May would be the edge of that,” Murphy said in March.

When the Legislature failed to secure the votes to pass all three bills, Murphy went ahead in early May with his own new rules that would extend the program’s reach, widen the list of qualifying conditions, reduce patient costs, and allow doctors to participate without being named publicly.

And when the Senate sent its bill back to the Assembly again last week, Murphy pulled the trigger on further medical expansion, earning the ire of Senate President Steve Sweeney (D-Gloucester).

“Once again, the governor is ignoring the hard work of the Legislature and the agreement between the Senate, the Assembly and the administration on this issue,” Sweeney (D-Gloucester), said in a statement. “The legislation that is in the process of being approved by both houses is a direct reflection of that agreement — and now the governor wants to preempt what is a thoughtful plan to expand medical marijuana in an effective and responsible way.”

The Legislature’s plan differs slightly from Murphy’s as it would install a Cannabis Regulatory Commission to oversee the industry and set rules and regulations for how permits would be granted, and businesses run. The proposal for a commission was copied directly from the adult-use bill and had been an ongoing point of contention between Sweeney and Murphy, as both wanted power to appoint members to it.

In addition, the lawmakers’ bills would cap cultivator licenses at 23 whereas Murphy’s plan would grant 24.

All of this could mean Murphy is squaring up to conditionally veto the bill once it makes it to his desk. Another option on the table could be amending the request for applications to align with the Legislature’s cap but that still would not address the conflict over the commission.

The medical expansion bill — with the Senate’s small labor agreement changes — will be put to a vote in the Assembly again on June 10.