IN NEW JERSEY, WHILE CANNABIS will soon be a growing industry, it will be complicated because the drug is still classified as a Schedule I controlled substance. This makes bank financing difficult to find, and expen-sive as well. Local ordinances banning cannabis facilities add an additional roadblock when it comes to locating real estate for these businesses. As sage legal counsel is essential when assessing the challenges and opportunities for this new industry, COMMERCE asked many of the state’s top law firms to weigh in on the prospects for cannabis-related companies in the Garden State.
Archer By William J. Caruso, Esq., Of Counsel, Cannabis Practice
The recent and rapid changes to cannabis law here in New Jersey, nationally and internationally have affected almost every practice area in the firm. Archer has seen steady increases in work in obvious areas such as corporate transactions, land use and real estate. However, practice areas relating to family and labor law have also been impacted by these changes. The ever-shifting legal landscape and conflict between state and federal laws provide complexities and a lack of clear direction for businesses that are seeking to enter into the cannabis industry, as well as traditional companies that are not involved in cannabis. However, this challenge provides a unique opportunity to develop good policy from the ground up. Archer lawyers have been working to craft new cannabis policy in Trenton through both regulatory and statutory changes to arm businesses with the certainty they need to function effectively in this new, exciting market.
Brach Eichler LLC By Charles X. Gormally, Esq., Co-Chair, Cannabis Law Practice
When counseling clients interested in the cannabis space, we emphasize the importance of forming relationships with reliable support team members. A successful cannabis business participant must create strong professional relationships across a broad range of specialties—accounting, taxation, real estate, land use, banking, environmental law, administrative law, municipal government, food handling, packaging, horticulture, medical research, security—and have access to the expertise necessary to produce and process cannabis products. The Cannabis Practice Group works as a team to equip the client with a broad range of required legal services, while assisting the client in formalizing its professional relationships with partners, vendors and suppliers. The overarching goal of the Group is to position clients for success by assuring that the client will be compliant with all of the requirements of state law, while keeping the client cognizant that conducting a business in this area currently remains a violation of federal law.
Capehart Scatchard By Sheila M. Mints, Esq., Cannabis Group Leader
Since the business is still in its infancy in New Jersey, and the regulatory structure has not yet been developed, there are a lot of uncertainties. We attempt to help the clients understand that this is a real business that requires significant upfront investment not only of money, but of time and expertise. There are stringent policies which must be followed—in cultivation, manufacture of edibles and dispensing of medical marijuana. There are issues of local government approvals, land use and zoning requirements for the location of facilities. Especially with cultivation, there will be a significant time lag between obtaining a license (if indeed a license is awarded) and harvesting. Our strong recommendation to clients is that they prepare early if they want to apply in the next round of licenses and have their team of consultants and experts prepared so that they are ready for the pending application process.
Chiesa Shahinian & Giantomasi PC By Lee Vartan, Esq., Member, Chair, Cannabis Law Group
The biggest universal challenge for clients (and the firm) is preparing for all-but-certain legalization in a form that is still very uncertain. There are competing bills in the New Jersey Legislature, and no one knows whether oversight will ultimately be housed in an independent commission or somewhere else, what the tax rate will be, or innumerable other details. But what we do know is that, regardless of the final form of any bill, the state licensing body is going to be focused on applicant diversity, as well as evidence of support from the local community and a location that is appropriately zoned. At CSG, we have been working with clients to shore up those pieces now, so that when the legislation is passed, and an application period is open, our clients can move without delay. Our advice is simple: legalization is coming, and the time to prepare is now.
Cole Schotz P.C. By Robert M. Dipisa, Esq., Member, Cannabis Law Group
With New Jersey’s impending adult-use market, our Cannabis Law Group is seeing expediential growth in the number of pre-license plant-touching clients. We’re currently assisting clients with identifying shortfalls within applications, raising capital, obtaining municipal support and securing real property. There are substantial opportunities within the non-plant touching, ancillary side of the business. We are preparing clients to transition their existing products and services in non-cannabis industries to address one of the many facets within the nuanced cannabis industry. The ability of these clients to sell products and services across state lines, and avoid exposure to various regulatory compliance obstacles, puts them in a unique position to capitalize on the industry. The most significant challenges stem from cannabis’s federal status. Of particular concern are issues associated with insuring and financing the acquisition of real property—insuring against casualties, the acceleration of existing financing and non-cash payment methods, to mention a few.
Connell Foley LLP By George Garcia, Esq., Partner, Cannabis Law Group
Connell Foley’s Cannabis Law Group consults on a wide range of issues regarding medicinal and adult-use cannabis matters in New Jersey. We assist clients with business and legal matters related to cannabis business formation, licensing, real estate acquisitions and land use approvals. The Cannabis Law Group also advises clients on pending legislation, business plan development, regulatory matters, distribution agreements, and labor and employment matters pertaining to cannabis entities. Given the complexity of this new industry, businesses are often misguided by the recent amendments to existing cannabis law. In 2018, the New Jersey Legislature continued to amend the existing medicinal legislation and the proposed adult-use legislation; further amendments are likely forthcoming in 2019. Using cost-effective methods, Connell Foley continues to thoroughly analyze these recent amendments to effectively counsel clients on the potential financial and legal impacts the legislation may have on cannabis-related entities.
Dunn Lambert, LLC By Peter E. Lembesis, Esq., Cannabis Practice Leader
New Jersey’s burgeoning cannabis industry presents an exciting opportunity for entrepreneurs. The anticipated legalization of recreational cannabis should benefit the state by generating tax revenue and creating jobs, including in ancillary service businesses (i.e., information technology and security). However, due to societal misconceptions and current federal law, cannabis businesses still face many political, logistical and regulatory challenges. Our firm has been helping clients surmount these challenges by bringing to bear its substantial experience in numerous fields. We regularly assist companies in navigating various evolving compliance frameworks and have deep experience in corporate and financing work, tax, real estate, intellectual property, commercial litigation and employment law. In addition to utilizing this significant experience to effectively advise cannabis clients in several sectors, we have been closely monitoring legislative developments to insure our clients are ready to hit the ground running once recreational cannabis is legalized.
Genova Burns By Michael C. McQueeny, Esq., Co-Chair, Cannabis Law Group
Although the current adult-use developments seem to be moving at a monotonous pace, the likelihood of passage is a foregone conclusion and the time to begin preparing is now. For example, the last round of requests for applicants to apply for licenses to operate a medical cannabis dispensary was first announced in late July; the actual application was released for the first time on August 1 and is due by August 31. Thus, the opening of this last round for applications resulted in a common refrain from virtually every applicant—they wished they had more time to prepare. Indeed, the time to prepare is right now and retaining the right legal and non-legal team is critical to navigate the complex legal and policy issues of this highly regulated and nuanced industry. We’ve advised and represented clients not only in connection with applications for licensure, but in all aspects of the formation and operation of cannabis companies.
Greenbaum, Rowe, Smith & Davis LLP By Jack Fersko, Esq., Chair, Cannabis Industry Practice Group
After launching an interdisciplinary Cannabis Industry Practice Group in 2018, our firm has focused on guiding clients with an interest in the cannabis space based on our deep knowledge of New Jersey’s statutory laws and regulations. We provide guidance as to where the industry currently stands and where it is likely to go from both legal and business perspectives and advise on the key components of acquiring a cannabis license (e.g. real estate, corporate formations, financing and insurance). It is critical to consider the economic and social justice opportunities related to a legalized cannabis industry and their potential to spur economic development and job creation—especially given New Jersey’s population and geographic location. Moving forward, and given the inevitable growing pains still ahead, proper planning and risk mitigation strategies should be of paramount importance to both the state and industry participants.
Harwood Lloyd LLC By John W. McDermott, Esq., Partner, 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. Harwood Lloyd’s 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 Patrick Harrity, Esq., Cannabis Practice Founder
Our advantage over most law firms stems from our representation of medical and recreational cannabis clients out west and our experience in a number of emerging growth sectors. That experience allows us to identify cannabis companies’ immediate and future needs and measure where that overlaps with our capabilities. For cannabis clients, we have done company formation, capital-raising, licensing applications, government relations and regulatory work. Our attorneys have provided commentary on New Jersey’s pending legislation, preparing us for the concerns of prospective cannabis clients, which, when the sector matures, will need guidance on tax, patent, brand protection, real estate and land use, insurance coverage, bankruptcy, employment, products liability and electrical energy work. The challenges will include compliance with regulations—particularly those that will supplement the law—and meshing what’s allowed in New Jersey with what federal law prohibits. The opportunity appears endless, based on what has happened in western states that allow recreational use.
Norris McLaughlin, P.A. By Keya C. Denner, Esq., Chair, Cannabis Law Group
Shortly after Governor Murphy took office, we identified that it was not a question of “if”, but “when” we would have an adult-use market in New Jersey. In response, we created our Cannabis Law Group from a diverse group of lawyers spanning virtually every practice area at our firm. The attorneys in our Cannabis Law Group are constantly attending industry events and sharing our knowledge with each other so that we can better prepare our clients for entering this space. The cannabis industry is rife with challenges, from obtaining site control of suitable property in a town that is welcoming, to securing funding in a mainly closed financial market, to mastering a web of extremely tight regulatory controls. For those clients who are committed and willing to persevere, there will be opportunities to get in on the ground floor of a new micro-economy in our state.
Riker Danzig Scherer Hyland & Perretti LLP By Zahid N. Quraishi, Esq., Partner, Cannabis Law Group
The attorneys in our Cannabis Law Group emphasize the importance of being prepared and making early progress. Securing financing, finding a location, and obtaining municipal support are among the many tasks that can be completed before cannabis becomes legal. Our goal is to walk clients through those steps in a way that positions their business to enter the industry early and efficiently. Also, due to the New Jersey Legislature’s stated emphasis on social equity and community involvement, our local communities have the most to gain from legalized cannabis; the state’s cannabis industry is unlikely to be dominated by out-of-state conglomerates. Rather, expect to see a cannabis industry comprised of small and mid-sized businesses with local roots that can achieve the state’s objective in engaging local communities. As a regional law firm, we strongly identify with those goals and will work diligently to help our clients succeed in this space.
Scarinci Hollenbeck By Daniel T. McKillop, Esq., Chair, Cannabis Law Group
One of the most significant impacts of legalized cannabis in New Jersey will be with respect to labor and employment issues. To address this, we are counsel-ing clients regarding the language of the proposed legislation pertaining to New Jersey’s coming adult-use cannabis program and the separate legislation designed to expand the current medical cannabis program. We are then assisting clients with reviews of their existing employee policies and handbooks and providing insight regarding necessary revisions. Beyond labor concerns, we are also counseling clients in understanding the business opportunities, risks, and best practices pertaining to participation in the legal cannabis industry. This effort includes review of the legislation or existing law at issue, strate-gizing as to the best path forward for each individual client and then immediately executing on each client’s plans to the greatest extent possible so that the client is ahead of developments in Trenton.
Sills Cummis & Gross P.C. By Robert E. Schiappacasse, Esq., Co-Chair, Cannabis Industry Practice Group
Rather than pursue a course of action based on what might be, we think clients are better served by a wait-and-see approach giving them and us the ability to immediately pivot in the right direction when and if legalization becomes a reality. That said, we know from the medical cannabis landscape in New Jersey that locating real estate to support a cannabis line of business can be a challenge—one we expect to continue. So, we do re-commend that clients begin the process of locating potential sites for review in anticipation of legalization. We also know from our experience with the medical cannabis license applications that having a quality consultant on board to assist in the application process is critical. We suggest that clients begin the process now of interviewing possible consulting teams so there is no delay in moving for- ward if legalization occurs.
Wilentz, Goldman & Spitzer, P.A. By Angelo Cifaldi, Esq., Shareholder, Co-Chair, Cannabis Group
We advise clients in all aspects of cannabis law. Recently, we represented clients in connection with Alternative Treatment Center applications for a license under New Jersey’s expanded medical marijuana program. This work was extensive and involved significant research and preparation. The challenges and opportunities here are likely to mirror those of California, Washington, Colorado and other states that have legalized cannabis. We also anticipate opportunities and challenges specific to New Jersey, such as unique energy law issues.