CRC Releases Cannabis FAQs for New Jersey Municipalities

As the regulatory picture begins to get clearer, many New Jersey municipalities are likely reconsidering whether to give cannabis businesses the green light to operate within their borders. To help guide the process, the New Jersey Cannabis Regulatory Commission (CRC) recently published the answers to several frequently asked questions.

Municipal Authority to Regulate Cannabis Businesses

Under the “The New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act” (Act), municipalities have the option to authorize and regulate the number of licensed businesses, as well as their location, manner, and times of operation within its jurisdiction. The law also gave municipalities the option to enact an ordinance prohibiting the operation of marijuana cultivation facilities, marijuana product manufacturing facilities, marijuana testing facilities, or retail marijuana stores in the 180-day period following its enactment. The deadline to adopt an ordinance was August 21, 2021.

With many of the details still up in the air, many New Jersey municipalities decided to opt-out, at least until the regulatory picture became clearer. Under the Act, the failure to timely enact an ordinance prohibiting cannabis operations results in any class of cannabis business that is not prohibited as being authorized for a period of five years. However, municipalities that initially opted-out are free to approve the operation of cannabis businesses after the deadline.

CRC Cannabis Regulations

The CRC released its first set of regulations on August 19, 2021. As discussed in prior articles, the Act tasks the CRC with promulgating regulations to govern the medical and adult-use industries. The CRC is also responsible for licensing cannabis businesses.

With regard to municipalities, the regulations provide that cannabis businesses will only be licensed by the CRC if they have demonstrated support from the municipality, zoning approval, and have been verified to operate in compliance with any municipal restrictions. Municipalities can determine hours of operation, the number and kinds of licensed businesses operating within their borders, and whether to enact a 2% transfer tax on any sales between cannabis businesses. They can also enact any requirement or restrictions on cannabis businesses that would apply for other business types, such as requiring compliance with all relevant codes and ordinances. Municipalities can’t restrict delivery of cannabis items to consumers within their jurisdiction or restrict transports of cannabis that are routed through their jurisdiction.

In connection with the regulations, the CRC also published “Frequently Asked Questions for Municipalities.” The document summarizes the key provisions of the regulations and also addresses issues of concern for municipalities, including local tax collection, municipal authority regarding the establishment and operation of a cannabis business, and municipal approval of cannabis license applicants. We encourage all municipalities to thoroughly the CRC regulations, as well as the FAQs, and consult with an experienced attorney regarding any next steps.

Now that New Jersey has taken the final steps to legalize recreational cannabis, local municipalities have some important decisions to make. For more information about the new cannabis laws or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.

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