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Garden State Green Rush: The Legalization of Marijuana in New Jersey

Posted by Issac Cwibeker | Nov 25, 2020 | 0 Comments

You will soon be able to purchase weed in New Jersey, like buying a six-pack of beer. On November 3, approximately 2 million New Jersey residents (67% of voters) voted to amend the state's constitution legalizing marijuana, opening the door to a multi-billion dollar marketplace bursting with potential. New Jersey lawmakers are quickly working to finalize the new law's terms, so now is a great time to introduce yourself to the industry. If you're planning to open a dispensary or looking to expand your investments, we're here to help.

However, before you jump in, it is important to emphasize that possession and distribution of marijuana remain illegal under federal law in the same way as cocaine and heroin. So, any out-of-state influence like selling to a buyer outside of New Jersey or a New York investor looking to diversify her portfolio will open the door to possible criminal activity. It makes no difference whether you touch the plant or not. Any involvement in a business that includes cannabis can be criminally risky if it's not 100% within state compliance.

This drawback fundamentally underscores the obstacles one faces when entering the market, and why it's vital to seek legal counsel. For instance, every startup needs capital. But securing financing in the marijuana industry may prove extremely difficult. Many banks and financial institutions do not want to get involved because it's federally outlawed. Therefore, private money and investors are usually the only launching pad for new cannabis startups. These private investors, however, run a considerable risk. Generally, these individuals cannot utilize the federal court system to protect their assets, and if their businesses fail, they have no bankruptcy protections shielding them from creditors. It does not mean it's impossible. It just means you're going to need legal experts by your side, guiding you through the process.

Finding a location to open a dispensary may also prove to be challenging. Carefully drafted zoning and licensing laws will likely protect underage teens and youth from being heavily exposed; parents will strongly object to pushing strollers while plowing through clouds of smoke to enter a playground. It would be similar to policies regulating alcohol for adults. New Jersey's Cannabis Regulatory Commission (“CRC”) will oversee these new regulations and decide who, what type, and how licenses are issued. Local municipalities will probably be allowed to choose how they adapt and be encouraged to limit the number of licenses granted in a geographical area. Some counties will perhaps only issue permits for indoor growing and prohibit outdoor greenhouses and retail dispensaries. Each county will decide how best to respond to these new laws, specific to its demographic characteristics.

This type of framework is nothing new. Medicinal marijuana is legal in the Garden State, with strict guidelines already in place. Therefore, some policymakers suggest allowing previously approved dispensaries to expand their operations to meet the new demand. However, such measures would likely still jeopardize the safety of the 100,000 patients enrolled in the state's medical-marijuana program who desperately rely on cannabis to ease their pain. Adding one million new customers may overwhelm dispensaries, destroying the already meager supply. It's heartbreaking to imagine a terminally ill patient returning from a chemotherapy session to see the local dispensary sold out because of a bachelor party. Some states have failed to address this issue adequately. New Jersey lawmakers are hoping to get it right. It's going to be a precarious balance of having strict guidelines but, at the same time allowing for rapid licensing expansion to meet the growing demand.

The ever-developing legal framework will be hard to navigate. Contact Issac Cwibeker at Novak Juhase and Stern if you're considering entering into the market, concerned about staying compliant with day-to-day operations, or how these new laws will affect your industry. We're excited to see how this new era will roll out.

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About the Author

Issac Cwibeker

Associate | Issac focuses his practice on civil litigation, consumer bankruptcy, commercial collections, and judgment enforcement. Issac also represents clients in a variety of real estate matters, creditors' and debtors' rights, and helping clients plan for the need of advance directives, healthcare proxies, powers of attorney, and wills.

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