As NJ cannabis regulators get going, lawmakers still tinker with legislation

Cannabis Regulatory Commission must finalize array of rules and regulations within months
Credit: (AP Photo/Robert F. Bukaty)
Jan. 7, 2021: A salesperson answers questions at a marijuana store in South Portland, Maine. Cannabis has rocketed to the top of the state’s agricultural crops.

It took more than four tortuous years — and the creaky machinations of New Jersey Democratic politics — before adult-use marijuana was legalized earlier this year. Now, the hard work actually began Monday with the first meeting of the state’s Cannabis Regulatory Commission.

The commission started the formidable task of constructing what is expected to be a safe and profitable $1 billion weed industry from scratch. That industry will be guided by a new regulatory bureaucracy created by this commission and given a mandate to mend the racial and social sins wrought by decades of biased and unjust law enforcement during marijuana prohibition.

It is “no small task,” commission Chairwomen Dianna Houenou said during Monday’s inaugural meeting, adding that New Jersey can provide the nation a model for legalization “by applying the values of safety and equity.”

In an earlier interview with NJ Spotlight News, Houenou promised to “instill a culture where every decision we make is through the lens of equity.”

And the clock is ticking.

“Now, this will take time,” Houenou cautioned. “It will take us several weeks before we develop procedures to guide our operations and hire full-time staff.”

Gov. Phil Murphy recently said that over-the-counter sales of recreational marijuana could commence as early as late summer or fall. Lawmakers are also at work on the plan for legalization, moving on bills to allow people to grow their own plants and other measures they say are needed now that the marijuana industry is almost here.

Deadline for regulators

Under the legal weed laws, the commission has six months from February to adopt an array of industry rules and regulations before it can start accepting applications for various permits and licenses, including those to run dispensaries, cultivation centers and delivery companies.

New Jersey’s 15 existing medical marijuana dispensaries will be given the first shot at sales, since they are already equipped to do so. New dispensaries will follow, as soon as the bidding process allows. Murphy believes that will likely be early next year, possibly sooner.

Edmund De Veaux, president of the New Jersey Cannabis Association, said he expects to see sales begin this summer. He points to the fact that the commission can tap into several licensing applications from 2019, that until recently had been held up in litigation.

Credit: (Edwin J. Torres/Governor’s Office; CC BY-NC 2.0)
Dianna Houenou chairs the Cannabis Regulatory Commission

One of the commission’s most pressing challenges is the ability to supply enough product for this new market. More growers will be needed. Usually about 20,000 pounds of inventory is available at any given time in the state’s medical marijuana industry. The new law allows for 37 cultivation licenses in the first two years of legalization, which should increase with the market.

Tax and spend

The commission, which also assumes control of the medical industry, is also tasked with determining how much the new industry should be taxed and how that revenue should be spent.

According to the legalization law, 70% of state sales tax on cannabis and a cultivation tax, also known as a Social Equity Excise Fee, must be used for programs in cities and towns disproportionately hurt by the drug war. These initiatives would include educational programs, legal aid, food assistance, economic development and health care. The commission will hold three public meetings throughout the state before making recommendations to the Legislature and governor’s office for allocating the money.

As the regulatory commission gears up, the Legislature is still tinkering with revisions to the marijuana legalization laws.

Sen. Vin Gopal (D-Monmouth) introduced a bill (S-3582) last month that would allow anyone 21 and older to grow up to six marijuana plants at home, with a maximum of 12 plants per household. Medical patients could grow up to 10 plants. Currently, growing five plants or less can result in three to five years in prison and a $25,000 fine.

The Garden State — where marijuana sells for $400 an ounce at medical dispensaries — is an outlier in its prohibition of “home grow.” All 14 other states that have legalized marijuana allow “home grow” for medical marijuana patients. New York, which just passed its own legalization bill, allows residents to grow up to six marijuana plants at home.

Another bill pending in New Jersey, also introduced last month, would mandate that regulated professions with safety requirements can prohibit on-the-job use of alcohol and drugs, including marijuana; this would cover health care, education and childcare, building trades, utilities and heavy construction, as well as truck drivers and equipment operators. The bill would allow for drug testing at the workplace.

The five members of the Cannabis Regulatory Commission are:

  • Dianna Hoenou, chair: Senior policy adviser to Gov. Phil Murphy, and a former policy director with the American Civil Liberties Union of New Jersey, where she helped craft the 2019 proposed marijuana legalization bills that laid the groundwork for the laws now enacted;
  • Sam Delgado, vice-chair: Retired Verizon public affairs executive, U.S. Marine Corps veteran, founding board member of the New Jersey Statewide Hispanic Chamber of Commerce (nominated by Assembly Speaker Craig Coughlin);
  • Charles Barker: Projects specialist on U.S. Sen. Cory Booker’s staff and member of the National Action Network, a civil rights organization;
  • Maria Del Cid: Policy and legislative services director at the New Jersey Department of Health;
  • Krista Nash: Social worker and director for the Program for Returning Offenders with Mental Illness Safely Effectively (PROMISE) with the Delaware Valley chapter of Volunteers of America.

The new laws, at a glance 

Legalization (A-21)

  • Permits adults 21 and over to possess up to 6 ounces;
  • Establishes the Cannabis Regulatory Commission to regulate a new, legal industry, and issue six types of licenses: cultivation, processing, wholesale, distribution, retail and delivery;
  • Directs (but does not guarantee) that 70% of the state sales tax revenue from purchases and all of an excise fee on growers go to certain minority communities disproportionately impacted by the drug war;
  • Limits the number of growers to 37 for the first two years, but does not limit retail outlets;
  • Prohibits all home growing;
  • Establishes a 7% sales tax and a municipal tax of up to 2% when sales begin. Includes a sliding tax for growers — from $10 an ounce up to $60 an ounce as the price of marijuana falls over time;
  • Permits the sale of certain edible products, that cannot be mistaken by children as candy.

Decriminalization (A-1897) 

  • Removes criminal and civil penalties for possession of up to 6 ounces for adults 21 and over;
  • Distribution of 1 ounce or less will result in a written warning for a first offense. Subsequent incidents would be fourth degree offenses.

Underage penalties (S-3454)

  • Removes criminal penalties for marijuana and alcohol possession by anyone under 21 years old;
  • Mandates a three-tiered warning system for underage alcohol or marijuana use and possession; on the first offense, the person would be issued a written warning; on the second offense, the person’s parents or guardians would be notified and provided information about community services or groups offering education on substance use; on a third or subsequent offense, the person would be referred to those community services or groups;
  • Requires police have their body cameras enabled during interactions, which must be reviewed by the state attorney general;
  • Lessens the criteria of criminal liability for police officers who conduct illegal marijuana searches. Bars the odor of marijuana as cause for a search.