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Cannabis Regulatory Commission Updates from the Cannabis Law Department

Cannabis Consumption Lounges – Proposed Rules Open for Comment until March 18, 2023 

On January 17, 2023 the Cannabis Regulatory Commission ("CRC") published proposed rules that, if/when adopted, would permit Class 5 Cannabis Retail licensees and Alternative Treatment Center ("ATC") licensees to apply to the CRC for an endorsement to their CRC license to permit a cannabis consumption lounge to be operated on the same site as a fully-approved and licensed ATC or Class 5 cannabis retail facility.The proposed regulations contemplate indoor or outdoor consumption lounges that would be attached to and/or operated as part of a licensed ATC or Class 5 retail location subject to certain conditions regarding enhanced security, noise and odor control measures to limit impacts to surrounding properties.

A cannabis consumption lounge would be subject to the following limitations: it may only be accessible only from inside a licensed retail facility; a person must be 21 or older to enter the lounge and/or undertake cannabis consumption activities on site; and no retailer or cannabis consumption lounge would be permitted to serve alcohol, any type of tobacco product or food, however, patrons of the consumption lounge would be permitted bring food into the lounge with them or have food delivered to them while in the lounge.The fees for a cannabis consumption lounge endorsement would include an application submission fee ($200), application approval fee ($800) and annual license fee ($1,000 for cannabis microbusinesses and $5,000 for standard cannabis businesses).

The proposed regulations delegate to local municipalities the authority to adopt an ordinance to prohibit or permit cannabis consumption lounges.If permitted, a municipality may set reasonable limitations and/or conditions, including proximity to certain uses (for example, houses of worship or schools of any kind), hours of operation and whether the lounge is permitted indoor, outdoor or both.In municipalities that permit cannabis consumption lounges, the CRC would provide a copy of an endorsement application within 14 days of receipt of same.The municipality would have 28 days to review and advise the CRC whether the application complies with local restrictions.

The CRC would be able to deny or revoke a cannabis consumption lounge endorsement for failure to maintain a proper Class 5 or ATC license, if the premises upon which the lounge is proposed does not meet and/or no longer meets the requirements of the Jake Honig Compassionate Use Medical Cannabis Act or the Cannabis Regulatory, Enforcement and Marketplace Modernization Act or any of the regulations promulgated thereunder, or generally for other "good cause" which is further defined in the proposed regulations.Any person aggrieved by the CRC's approval or denial of a cannabis consumption lounge endorsement may appeal directly to the Appellate Division of the New Jersey Superior Court pursuant to the Administrative Procedures Act.Any person aggrieved by a municipal denial or revocation of an endorsement application may request a hearing in the Superior Court of New Jersey within thirty (30) days from the date of the municipal denial.Any such request for a hearing shall be heard by the Superior Court within thirty (30) days of the filing of the request.The proposed rules specifically indicate that neither a formal pleading nor a filing fee shall be required for any such hearing request.

A full copy of the proposed rules can be found on the CRC's website at: https://www.nj.gov/cannabis/resources/cannabis-laws/The public comment period on the proposed regulations ends on March 18, 2023.Comments can be submitted electronically through a link on the same webpage.

Class 4 – Distributors Licenses – March 6, 2023 Rule Adoption Should Lead to CRC Accepting Applications for Class 4 Distributors Licenses. 

At the February 28, 2023 Cannabis Workshop offered by the Chamber of Commerce of Southern New Jersey, the CRC Chairwoman, Dianna Houenou, advised attendees that the CRC rules governing Class 4 Cannabis Distributor activities were anticipated to be published in the New Jersey Register on March 6, 2023.The new rules will enable the CRC to start taking applications for Class 4 Cannabis Distributor licenses which Chairwoman Houenou indicated the CRC would be in a position to commence shortly after rule adoption becomes effective.

Until now, the CRC has only accepted applications and issued licenses to Class 1 – Cultivation, Class 2 – Manufacturing and Class 5 – Retail licensees.Under the current framework, only Class 5 retailers who also held a Class 1 and Class 2 license were able to obtain recreational or "personal use" cannabis products for sale in a Class 5 location.This is because they were permitted to distribute their self-grown and manufactured cannabis products to themselves under their existing licenses but they were not permitted to distribute manufactured cannabis products to others absent a Class 4 Distributors license.The issuance of Class 4 licenses will finally enable other Class 5 retailers, including microbusinesses, to obtain personal use cannabis products for sale in their otherwise fully licensed and approved retail locations.

The new rules also include regulations for pick up and delivery of cannabis products pursuant to a Class 6 – Cannabis Delivery Service license.The rules permit a licensed Class 6 Cannabis Delivery Service to receive a purchase order submitted to a Class 5 retailer, transport the order and deliver it off-site to a consumer.The CRC has not indicated when they will open the application process for Class 6 Cannabis Delivery Service licenses.

The new regulations were included as part of an overall readoption of the "Personal Use Rules" found at N.J.A.C. 17:30.The new rules can be found at N.J.A.C. 17:30-12, 13 (specific to Class 4 Cannabis Distributors), 15 (specific to Class 6 Cannabis Delivery Services) and 20.7.The rule amendments also included recodification and amendment of N.J.A.C. 17:30-2.2 to N.J.A.C. 17:30-2.3.A full copy of the CRC's responses to comments and the newly adopted rules/rule amendments can be found online at New Jersey Register.

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