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Municipal Law Mess in New Jersey

A newly proposed state law extending New Jersey town’s time to adopt local cannabis specific laws will likely cause problems for applicants who may need to submit their applications before town’s are forced to take a position.

Under New Jersey’s adult use cannabis legislation, municipalities have until August 21, 2021 to adopt local ordinances setting zoning rules for cannabis establishments in each town. Under the statute, each of the State’s 565 municipalities has the right to adopt their own rules in terms of how many licensed establishments are permitted, their hours of operation, and in which parts of town they are permitted – or to opt out entirely and prohibit any cannabis establishment in town. If towns do not adopt a local ordinance by August 21, 2021, then the statute’s default rules apply for the next five years and adult use establishments are permitted in all industrial, commercial and retail zones in a town.

New Jersey’s local law process requires zoning laws like those to go through a time-consuming process to be enacted.  Each zoning law must go through a first and second reading at different town council meetings, be referred to the town planning board which will hold one or more public meetings, before the council can vote to adopt the law. As a result, with the August 21 deadline looming, towns are beginning to scramble to start that authorization process.

To date, at least 62 towns have taken an “opt-out” position either by formally introducing or adopting ordinances to ban cannabis establishments or by telling applicants they did not want cannabis in their town, and at least 21 towns have introduced or adopted ordinances to allow one or more licensed establishments in town. Some towns are permitting only cultivation and manufacturing, while banning retail dispensaries. Some towns are allowing only medical marijuana dispensaries and banning all other cannabis establishments. Some towns are permitting each class of establishment, but are imposing hefty local application fees, annual permit fees and imposing additional qualitative licensing application processes on top of the anticipated state application process.  For applicants trying to lock in real estate in anticipation of the upcoming license application window, knowing the status of these varying local rules is critical.

However, with hundreds of towns still undecided, on June 21, 2021 a bill was introduced to extend the deadline for towns to adopt local laws until October 20, 2021.   While this may provide more time for towns to make up their mind, it will likely create havoc for applicants.

Under the adult use statute, the Cannabis Regulatory Commission (CRC) is required to release its initial rules by August 21. The statute further provides that within 30 days thereafter, i.e., by September 20, the CRC “shall” begin accepting applications for licensure.

That process and timeline assumed that towns would be locked in on their local ordinances by August 21, so applicants would know if they are proposing to open a facility in a location that is compatible with local zoning requirements. By moving the town law deadline to October 20, applicants may be in a position in which they are submitting applications on September 20 without knowing what local zoning laws the town will impose. The potential extension of only the town ordinance deadline is setting the adult use application process up for significant litigation between applicants and townships over whether applicants will be subject to ordinances adopted after their applications are submitted.  If New Jersey is going to make changes to the process, it should do so in a comprehensive manner to avoid these problems.

Sean MackSean Mack

Sean Mack

Sean Mack is the co-chair of Pashman Stein Walder Hayden’s Litigation practice and chair of the Cannabis and Hemp practice.

With significant experience counseling business owners in complex disputes, and recognition on the InsideNJ “Insider 100 Cannabis Power List” in 2019, Mack brings a unique set of skills to businesses interested in cannabis and hemp. Beginning in 2015, Mack led a team of the Firm’s attorneys to analyze existing cannabis laws and regulations to prepare proposed legislation for New Jersey United for Marijuana Reform (NJUMR). NJUMR then presented the Firm’s proposal to a state senator for incorporation into an early draft of the bill to legalize adult use marijuana in New Jersey. Building on that experience, Mack advises businesses interested in applying for medical cannabis or hemp licenses in New Jersey, and has represented other clients in appeals of the 2018 and 2019 rounds of medical marijuana license applications. He also advises companies and individuals on the specific protections afforded to medical marijuana patients under the Jake Honig Act in employment, the receipt of medical services, and real estate. Mack advises Hemp-CBD companies on state and federal laws affecting their advertising and businesses. He also works in tandem with Pashman Stein’s attorneys to offer clients counsel in the interplay between cannabis/hemp laws and corporate, employment , intellectual property and real estate laws.

Mack’s business litigation practice focuses on complex disputes involving unfair business competition in a variety of forms. He regularly represents businesses, business owners and senior executives in lawsuits involving theft of corporate opportunities, theft of trade secrets, breaches of non-competition agreements, breaches of confidentiality and non-disclosure agreements, and other unfair business practices. Clients often retain Mack when a joint business venture has gone awry or when they believe it is time to divorce their business partners. Many of his cases arise from complicated contractual and licensing disputes. He also has represented clients in trademark and trade dress infringement cases and in counterfeiting cases.

He can be reached at [email protected]

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