Steps toward the legalization of cannabis in New York and New Jersey have been in the news recently. But how close are these states to having fully licensed legal cannabis supply chains? Here's a brief overview of the two states' marijuana laws and where they stand in regard to cannabis licensing.
NY State Licensing Overview
Currently, there are ten (10) “Registered Organizations” responsible for manufacturing and distributing medical marijuana in New York State. Pursuant to the Compassionate Care Act (CCA), which established New York’s comprehensive medical marijuana program in July 2014, each Registered Organization is authorized to have up to four (4) dispensing facilities.
New York’s State Department of Health (NYSDOH) began accepting applications for registrations for a Registered Organization on April 27, 2015, with a deadline for receipt of applications on June 5, 2015. Of the original 43 applicants, five (5) Registered Organizations were approved July 31, 2015; another five (5) were registered by NYSDOH on August 1, 2017. The NYSDOH has yet to announce opening another application window for additional prospective Registered Organizations.
While New York’s Medical Marijuana Program is currently closed to would-be applicants looking to manufacture and dispense medical marijuana under the CCA, a spokesperson for Gov. Andrew Cuomo recently stated that the administration expects to introduce a comprehensive proposal for legalizing and regulating recreational adult-use marijuana in 2019. Therefore, cannabis businesses interested in becoming licensed in New York State should be looking down the road to determine next steps in preparation for licensure.
NJ State Licensing Overview
Currently, there are six (6) “Alternative Treatment Centers” (ATCs) responsible for manufacturing and distributing medical marijuana in New Jersey, pursuant to the Compassionate Use Medical Marijuana Act, which established the state's medical marijuana program in 2011. In August 2018, the New Jersey Department of Health (NJDOH) accepted 146 applications in response to its request to add up to six (6) additional ATCs. Despite a November 1st target date, NJDOH has yet to announce the successful applicants, stating that additional time is needed to complete a full review of the applications submitted. The NJDOH is not currently accepting applications to open additional ATCs. But on November 26th, the state Senate and Assembly budget committees passed Senate Act S2426, which, once passed by the full Senate and Assembly and signed into law by Gov. Phil Murphy, would require the NJDOH to issue licenses for 34 new dispensaries and six new cultivation facilities within 90 days.
Additionally, the most recent version of the New Jersey Cannabis Regulatory and Expungement Aid Modernization Act (the NJ Act) was released last week and also passed by the state Senate and Assembly budget committees yesterday, November 26th. The next step for New Jersey is a vote by the full Senate and Assembly slated for mid-December. Until then, negotiations between Gov. Phil Murphy and NJ’s legislature will continue, mostly with regard to the tax rate and how much power the proposed Cannabis Regulatory Commission will exercise over the industry.
Because New York is at the inception of legalizing recreational marijuana, regulations and licensing requirements for adult-use cannabis businesses have not yet been implemented. That being said, a review of the NYSDOH Medical Marijuana Program Application for Registration as a Registered Organization (https://www.health.ny.gov/forms/doh-5138.pdf) is likely a good place to start for prospective medical and recreational cannabis businesses alike.
New Jersey is closer than New York to recreational legalization, and could have a bill passed before 2019. It is important for anyone looking to establish a medical cannabis business in New Jersey to keep an eye on the passage of S2426, which would mandate NJDOH’s licensure of 34 new dispensaries and 6 cultivation facilities within ninety (90) days. However, it remains unclear whether the NJDOH would open another application window, or choose from the 146 applications submitted in August 2018. In the meantime, it would behoove any prospective cannabis business licensee to take a look at both the NJ Act (S2703), as well as the ATC permit request application materials (https://www.nj.gov/health/medicalmarijuana/alt-treatment-centers/applications.shtml). Because the NJ Act gives local governments the power to enact their own cannabis regulations and ordinances – prospective licensees will first need to make sure their cannabis business will be permitted by their local jurisdiction.
While we recognize that any future recreational adult-use business license applications will differ from the above-mentioned applications for Registered Organizations and ATCs, much of the information requested will most certainly be the same. As is standard throughout jurisdictions that have legalized the use of both medical and recreational marijuana, any cannabis business seeking licensure will need to make full disclosures of entity, ownership and financial information, as well as identify and describe proposed facility locations, buildings and equipment. Additionally, those seeking licensure will need to provide licensing authorities with an extensive operating plan with detailed descriptions of policies and procedures related to its operations including but not limited to: processes, devices, security, quality assurance, recalls, staffing and record keeping.
To get a head start as the regulatory frameworks for cannabis businesses in New York and New Jersey continue to develop, anyone looking to establish a cannabis business in either state should be taking steps to create a tentative operating plan, focusing on those aspects and information that can be reasonably assumed as required for any future licensing application.
For more information on cannabis licensing in New York, New Jersey, and any other state, contact our cannabis attorneys at firstname.lastname@example.org.
With a recent study, the state of New York signaled receptiveness to the possibility of legalizing cannabis for recreational use. Specifically, the report, commissioned by Governor Cuomo, recommends that adults be allowed to legally consume marijuana. While the study has yet to be finalized by the New York State Department of Health, its announcement indicates that New York is planning to embrace the marijuana industry to the same extent that states like California and Colorado have, switching from a relatively restrictive medical-only marijuana program to a system which legalizes the recreational use of cannabis. Given the size and influence of New York State’s population and economy, this shift would have major implications for the status of cannabis in the nation at large.
Currently, New York State’s regulations only allow marijuana to be legally used for medical purposes. Additionally, only 10 companies are licensed to operate as medical marijuana suppliers, a restriction with the potential to greatly limit patients’ access to marijuana and drive prices up. Further, patients aren’t even allowed to smoke marijuana – as of December 2017, the drug can only be legally taken in the form of cannabis extracts like oils, tinctures, and chewable tablets. According to the New York Times, these restrictions were initially put in place by Cuomo, out of concern that marijuana would become a “gateway” drug leading to use of other illicit substances. Therefore, this study, with its conclusion that marijuana (even when smoked) is not harmful for adult recreational use, indicates a major pivot on the governor’s part when it comes to legalization.
This shift may be due to the upcoming election for the governorship, where Cuomo’s most prominent challenger, Cynthia Nixon, has made marijuana legalization a central campaign issue. Nixon has positioned herself as even more pro-legalization than Cuomo, calling for a fully regulated and taxed recreational marijuana industry in New York as well as a statewide program to expunge past marijuana convictions. Therefore, whichever candidate wins the governorship, it seems likely that New York State will continue to liberalize its cannabis regulations. Together with New York City moving to limit marijuana arrests, this indicates that, while New York may not have a full recreational cannabis industry for some time, the region’s political climate has shifted significantly against the restrictive laws which are currently in place.