Summary of New Jersey’s Adult Use Cannabis Regulations

By Jennifer Cabrera, Heather Kumer, Michelle Bodian, Steve Pemberton, Bridgette Nikisher

Aug 24, 2021

On August 19, 2021, New Jersey’s Cannabis Regulatory Commission (CRC) adopted its long-awaited regulations governing the Garden State’s adult-use program. These regulations implement The Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization (“CREAMM”) Act and are effective immediately. At a future date to be determined, the CRC will issue a Notice of Applications Acceptance for adult-use cannabis businesses. In the meantime, New Jersey’s 10 operational Alternative Treatment Centers (ATCs) will continue to serve the state’s medical population of over 100,000 qualified patients.

The Rules Have Immediate Effect

These rules have been specially adopted per the CREAMM Act and are not subject to the normal requirement of public comment prior to adoption.

Term

Rules will be in effect for up to one year and will be readopted and incorporated into the final rules. Final rules will be adopted no later than August 19, 2022.

What is Covered in the Rules?

The rules take up 160 pages and are wide-ranging. Although they do not address all elements of the adult-use market, there is much to prepare prospective license applicants:

The rules contain operational requirements for cultivators, manufacturers, and retailers.
There is guidance on the state’s social equity program, including definitions of Social Equity Businesses, Diversely Owned Businesses, and Impact Zone Businesses. Further, the regulations indicate the priority by which applications will be scored (with the highest priority going to social equity applicants and conditional license applicants.
The rules contain detailed information on the contents, conditions, and grading of applications for annual, conditional, and microbusiness cannabis licenses as well as testing laboratories.
There are quite detailed rules on ownership, management and control, including guidance on Management Services Agreements, Financial Source Agreements, and guidance for vendors and contractors.

What is Not Covered in the Rules?

Medical regulations: The regulations do not address New Jersey’s Medical Cannabis Program. New medical regulations have been expected since 2019’s Jake Honig Compassionate Use Medical Cannabis Act (the “Honig Act”).
Clinical registrants: Clinical registrants were first contemplated in 2019’s Honig Act and are medical ATCs that have partnered with qualifying academic medical centers for research purposes. We are still waiting on rules for this program (and for a request for applications for clinical registrants).
Rules for several adult-use businesses: The regulations contain limited to no guidance for wholesalers, distributors, and delivery services. The CRC has indicated that these rules will follow at a later date.
Guidance for consumption lounges: Similarly, the regulations contain little guidance for retailers intending to open consumption areas. This will need to be supplemented later.
License application timing: Perhaps unsurprisingly, there is no guidance on the timing of notice of application availability.

What is Noteworthy?

There are several noteworthy features in these rules, some expected and some unexpected. These include:

No alternate names: A cannabis business shall not use, display, advertise, or operate under any alternate name, including doing business as names.
Restrictions on harmful additives to vapes: This includes vegetable glycerin and Vitamin E acetate.
No colorful packaging: All packaging must be fully enclosed, opaque, and of a single color.
Management services agreements: A “management services contractor” may contract with and provide management services to up to five license applicants or license-holders.
Financial source agreements: A “financial source” may provide funding to up to seven license applicants or license-holders.

Vicente Sederberg LLP clients should reach out to their firm contact to request a full summary of the regulations.

Register to attend the VS webinar "Diving into New Jersey's Cannabis Regulations" on Thursday, August 26, 2021.

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