Growing Business Opportunities in NJ’s Cannabis Industry: A Legal Perspective

Growing Business Opportunities in NJ’s Cannabis Industry: A Legal Perspective

NEW JERSEY’S LAWS ARE BEING reviewed to accommodate a new cannabis industry that will create jobs, increase tax revenues and launch ancillary businesses. Law firms are actively involved in shaping this market for clients that want to invest and oper­ate companies that will face conflicting state and federal laws. COMMERCE asked the Cannabis Practice Leaders at New Jersey’s top law firms to game out the legal landscape facing this growing industry in the Garden State.


By William J. Caruso, Esq., Of Counsel, Cannabis Group Practice Leader

New Jersey has a chance to do something profoundly different than other states that have previously taxed and regulated marijuana for adult use. Our location, experience in pharma and agriculture, a highly-educated workforce, and proximity to a large con­sumer market give New Jersey a signifi­cant advantage. Our challenge is to make sure that all New Jerseyans can benefit from this new economy, if they choose.

Brach Eichler LLC

By Charles X. Gormally, Esq., Member, Co-Chair, Cannabis Law Practice; Chair, Litigation Practice

New Jersey is moving to an adult use, taxed and regulated cannabis market­place. By creating a licensing regime that vets business participants, the state can insure a responsible and account­able model for others to emulate. Enhanced tax revenues driven by the cultivation, distribution and retailing of cannabis products will generate hun­dreds of millions of dollars in new tax revenue. Investment in vacant land, distressed retail space and warehouse facilities will promote higher local tax revenues. High quality jobs in produc­tion facilities, testing labs and retail environments will create a multiplier effect of economic activity as the mar­ketplace matures. Challenges remain. Federal reclassification of cannabis as currently proposed is a vitally impor­tant change that would foster business growth. We must also aggressively correct the social unfairness of prohibi­tion that has unfairly impacted minority populations through failed incarcera-tion policies.

Chiesa Shahinian & Giantomasi PC

By Lee Vartan, Esq., Member, Chair, Cannabis Law Group

The Murphy Administration has left no doubt—in 2019, the state will have many more medical marijuana dispensaries, cultivators and processors. Legislative action is not required. Expansion can happen—and will happen—through regulatory change alone. New Jersey’s Department of Health has already begun the process, which is good news for patients and the econ­omy alike. New Jersey will see the creation of a robust cannabis industry, complete with strong, New Jersey-based businesses and thousands of new jobs. Legally, it is also an exciting time. As the Department of Health wrestles with new regulations and the legislature new statutes, there is incredible opportunity to help form the laws that will ultimate­ly shape the industry. CSG is helping to position its clients to be among those awarded licenses from the state.

Connell Foley LLP

By W. Nevins McCann, Esq., Chair, Cannabis Law Group

Overall, the multi-billion-dollar North American cannabis industry will no doubt bring jobs and tax revenue to New Jersey; howev­er, the state is well-situated to create a distinguished path of its own. With New Jersey’s reputation as being both the “Garden State” and the “pharmaceuti­cal belt” due to its strengths in the agri­cultural and biopharmaceutical indus­tries (being home to 14 of the world’s 20 largest pharmaceutical companies), the cannabis industry plays a future and vital role in both New Jersey’s economy and the entire medical field. While ille­gal under federal law, the FDA recently approved cannabis-derived medication for epilepsy, signaling new opportunities for New Jersey’s pharmaceutical, med­ical, agricultural and cannabis industries to collaborate and develop new medica­tions, thereby addressing debilitating health conditions while also increasing employment opportunities in a growing industry.

Day Pitney LLP

By Steven Cash, Esq., Counsel, Chair, Cannabis Practice

The opportunities for New Jersey’s cannabis industry are immense; namely, to profit from one of the largest state economies in the country. This will no doubt draw many cannabis entrepreneurs to the Garden State. However, the challenges faced by the industry are also immense. Marijuana possession, sale or cultivation remains a federal felony; federal conspiracy and aiding and abetting of the law criminalizes the assistance or much participation in cannabis enterprises. Many New Jersey municipalities will reject grow facilities and dispensaries. The black market for marijuana won’t go away overnight. Nevertheless, while the industry’s potential may be realized over a longer time period than many would like, New Jersey seems poised to generate revenue through taxation of cannabis. New Jersey’s economy will likely benefit from an influx of jobs and investment.

Fox Rothschild LLP

By Joshua Horn, Esq., Co-Chair Cannabis Law Practice Group

New Jersey is sitting on a potential revenue and job-creating opportunity through its medical mari­juana program. The key to its success is the fact that New Jersey, by being a commuter state for New York and Philadelphia, has certain population densities throughout the state who can benefit from a more robust pro­gram. The other advantage that New Jersey has over other states is the fact that it is a farming state—it has space to develop large-scale cultivation centers. The challenge for New jersey will be if Delaware, New York and/or Pennsylvania adopt adult-use pro- grams. If that happens, there is a risk that patients would go over state lines to get cannabis without the need of a doctor and then self-medicate.

Genova Burns LLC

By Michael McQueeny, Esq., Chair, Cannabis Law Group

Like any emerging indus­try, new entrants in New Jersey have the distinct opportunity to help craft and define the outcome of a regulated marketplace. Social justice and revenue initiatives aside, demystify­ing medical marijuana and getting the public to understand the medical benefits and uses of cannabis has been a challenge, based on our conversations in the marketplace. In addition, due to issues concerning the legality of marijua­na and confusion over adult-use legal­ization in New Jersey, it has been diffi­cult for certain companies to conduct business and get financing. Yet the opportunities are endless. Harmony Dispensary, which just opened its state-of-the-art facility in Secaucus, has hired about 40 employees and continues to expand. New Jersey is poised to add a slew of other dispensaries, and these and other cannabis-related businesses will require attorneys, accountants, real estate consultants and other ancillary services.

Greenbaum, Rowe, Smith & Davis LLP

By Jack Fersko, Esq., Chair, Cannabis Industry Practice Group

Proper regulatory controls are essential. The business sector will need to understand the fine line between federal and state law, as well as complex accounting, banking and financial issues. Social justice issues must be properly satisfied. Potential tax revenues and savings, however, are significant, and are not limited to revenues from taxes on sales alone. Revenues will also come from state and municipal application fees and business opportunities in the areas of agriculture, architecture, construction, consulting, engineering, lighting, packaging, security, transporta­tion and waste disposal. These will add significant job growth and related income. The legalization of possession and use of marijuana will also save mil­lions of dollars in enforcement and incarceration expenses. Properly imple­mented, these challenges will be met, and the resulting opportunities will benefit the entire state.

Harwood Lloyd, LLC

By John W. McDermott, Esq., Cannabis Practice Leader

A host of opportunities will be created as New Jersey moves toward uniting its medical cannabis industry with a legalized recreational one. Notwithstanding the same, the addition of recreational sales will also create a host of bureaucratic difficulties integrating traditional business, lending, zoning and employment laws (to name a few), with both federal and state reg­ulatory laws, some of which conflict with each other. Our professionals are familiar with navigating these chal­lenges and look forward to working with those seeking to capitalize on the opportunities this growing industry will present. The regulation and controlled distribution of cannabis will help stimu­late job creation and foster business opportunities for entrepreneurs, while concurrently offering an added source of tax revenue to help alleviate the heavy fiscal burden currently plaguing our state.

McCarter & English, LLP

By David F. Broderick, Esq., Cannabis Practice Leader

Besides issues with banks accepting canna- bis-related money, the biggest challenge will be compliance—regulations regard­ing growing, per-person purchase limits, and precise labeling and packaging requirements. Some states that have legalized recreational marijuana have seen 100,000 jobs created so far, from seed harvesters to growers, warehouse workers to security services, and delivery and transportation services to whole-sale distributors and shop ownership. Where legal, cannabis is heavily taxed, with some states seeing annual revenue increases of hundreds of millions of dollars. Depending on the scope of New Jersey’s legislation and the result­ing size of the recreational industry, we could experience similar increases, but it’s too early to give even a rough estimate. That’s all a direct benefit from the cannabis sector. We also expect to see cottage industries spring up, multi­plying the beneficial effects.

Norris McLaughlin & Marcus, P.A.

By Keya C. Denner, Esq., Chair, Marijuana Law Group

This is an exciting, but uncertain time for New Jersey’s cannabis industry. The state’s previously stagnant medical program has been growing exponentially since Governor Murphy signed an executive order expanding the list of qualifying medical conditions and removing other barriers. The main challenge currently facing the industry is whether there is enough support among Trenton lawmakers to not only continue to expand the medical pro­gram, but to also legalize cannabis for adult recreational use. If a bill for recreational use gets through the legislature and onto Governor Murphy’s desk, there is great potential for the creation of new jobs and for the sharing of tax revenue among municipalities that allow the sale of cannabis.

NPZ Law Group, P.C.

By David H. Nachman, Esq., U.S. Managing Attorney

NPZ Law Group, P.C., an immigration and nation­ality law firm, predicts that New Jersey’s emerging, dare we say “budding” cannabis industry will make major contribu­tions to future tax revenues and create jobs for U.S. workers. EB-5 Investor Visa, an immigrant visa leading to a Green Card, and the E-2 Visa, a temporary non-immigrant visa, enable foreign nationals to purchase real estate, invest in dispen­saries and hire U.S. workers to run the new operations. Chemists and research professionals on H-1B and O-1 visas will create new initiatives in medical marijua­na, while foreign nationals on J-1 and H-3 non-immigrant visas will implement training programs which, in turn, create new jobs. Although legalization of cannabis is a controversial topic, it would bring jobs, economic wealth, and sub­stantial tax revenues to New Jersey.

Riker Danzig Scherer Hyland & Perretti LLP

By Jason D. Navarino, Esq., Partner, Cannabis Law Group Leader

For those seeking to break into New Jersey’s cannabis industry, the time is now. The medical marijuana market here is being opened to more partici­pants, and legalization of recreational use may be coming soon. Businesses that get in early may be best positioned to secure market share and become leaders in this emerging industry. As long as cannabis remains illegal at the federal level, however, industry participants face numerous challenges relating to bank­ing, raising capital, taxation, enforcing their rights in court and avoiding feder­al investigations. If Colorado is any indi­cator, New Jersey does stand to substan­tially increase its tax revenues and cre­ate jobs in both the cannabis industry and in ancillary industries through the expansion of medical marijuana and the legalization of recreational marijuana.

Scarinci Hollenbeck

By Daniel T. McKillop, Esq., Chair, Cannabis Law Group

The development and expansion of the legal cannabis industry in New Jersey will create a host of economic and societal opportunities. For example, the industry will create new jobs, generate tax rev­enues, put underutilized properties to use, foster investment in New Jersey, and enable the state to address inequitable cannabis-related prosecution of minority populations and to provide needed medical care to an increased number of New Jerseyans. Realizing these opportunities requires navigation of complex but necessary legislative and political processes and attention to legit­imate concerns regarding the industry, all of which takes time and effort. But if done thoughtfully, and if the market is right-sized and regulated in a manner that will support continued develop­ment, the legal cannabis industry will succeed and significantly benefit New Jersey and its citizens.

Sills Cummis & Gross P.C.

By Robert E. Schiappacasse, Esq., Co-Chair, Cannabis Industry Practice Group

The cannabis industry will boost the state’s economy by creat­ing an array of well-paying jobs and a growing stream of state sales and income tax revenue as businesses com­pete for a virtually untapped consumer market. Moreover, the product will offer pain relief to thousands and is likely to decrease prescription drug overdose and opioid abuse. On the other hand, federal law still considers marijuana an addictive drug with no medicinal value and deems its production and sale crimi­nal. Were it not for a flexible federal enforcement policy, the industry would be at serious risk. Moreover, as a mood-altering recreational substance, like alcohol, cannabis requires complex state regulation. In sum, though growth of the industry seems inevitable, challenges abound, and each step forward must be taken carefully.

Wilentz, Goldman & Spitzer P.A.

By Michael F. Schaff, Esq., Shareholder, Co-Chair, Cannabis Group; Chair, Health Law and Corporate Groups

Recent projections have estimated a $34 billion cannabis industry nationally and a $110 million market in New Jersey by 2021. Naturally, the revenue opportu­nities for those conducting business across the market’s supply chain, from suppliers to healthcare professionals, should fall within and perhaps even exceed these projections. The state stands to benefit from a taxable, bur­geoning, commercial cannabis industry. However, care should be taken to not overburden the state’s infrastructure and to address potential health and safety risks, such as adolescent usage and driving while impaired.

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