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Enforcing uniform standards for legal weed similar to alcohol regulations, using municipal land-use law, and creating oversight authority are among the solutions offered by New Jersey’s cannabis industry insiders to address corruption and politicking in the local cannabis licensing process.
The suggestions come in reaction to a sweeping, year-long NJ Advance Media investigation into alleged wrongdoing by local towns and their officials. The article, which explored allegations of intimidation, corruption and extortion, put a spotlight on why the Garden State’s legal market expansion has been hampered — and how it hurts small-business owners the most.
Many of those solutions involve calls for additional legislation and resources.
Using provisions from liquor licensing
Within the state cannabis law, the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (abbreviated as CREEAMA), there is a specific provision that refers to regulating cannabis like alcohol.
“It is the intent of the people of New Jersey to adopt a new approach to our marijuana policies by controlling and legalizing a form of marijuana, to be referred to as cannabis, in a similar fashion to the regulation of alcohol for adults,” states one of the earliest lines of the legislation.
There is precedent for the state setting statutory limits on what municipalities can and cannot do — and the example comes from the regulation of alcohol. The state Division of Alcoholic Beverage Control, under the Attorney General’s Office, issued a “Handbook for Municipal Issuing Authorities.”
As the law currently stands, there is no minimum or maximum amount New Jersey municipalities can charge. Whereas, state liquor licensing puts a uniform cap on those fees that range from $31 to $2,500, depending on the type of license, according to the official handbook.
For cannabis, municipalities may charge above $2,500 into the five-digit range.
‘Conflict Licenses’
The ABC handbook also delineates how to monitor conflicts of interest that may arise if a “licensing authority,” such as a town official, has a business interest with the license application.
“No municipal issuing authority may person-to-person or place-to-place transfer a license if any of its members are interested directly or indirectly in the license,” the handbook states.
“If you read the preamble of CREEAMA there’s significant reference to the alcohol regulations,” said cannabis attorney Mollie Hartman Lustig, who’s also brought a lawsuit against Hopewell Borough, alleging its mayor played a personal role in getting a cannabis application approved. “The cannabis regulations are supposed to be modeled after the ABC regulations to an extent and they’re not. They’re not at all.”
However, without explicit legislation giving the state Cannabis Regulatory Commission permission to interpret the law in such a manner, the agency could be subject to a robust legal challenge, said ACLU Policy Counsel Joe Johnson in an interview with NJ Cannabis Insider.
Oversight authority
There were also calls to create oversight authority to adjudicate concerns on what an ethical process looks like. Observers said the authority should be given to the Cannabis Regulatory Commission, which currently wields limited power in this area.
“If the CRC is given the ability to do something that helps, as well, because it keeps everything within the cannabis space,” said Johnson. “We don’t need the AG [New Jersey Attorney General] or specific courts, or folks who are not necessarily attuned to what’s going on in the cannabis space dealing with it if we can have one central body that has the ability to control all of this.”
Whatever shape that oversight takes, it has to be public, said Assemblyman Benjie Wimberly in a NJ Cannabis Insider interview about ethical oversight in the cannabis space.
“That’s the only way it will work, if the public has access to it,” he said.
Municipal land-use law
Cannabis attorney Beau Huch commented on social media that business owners require more land-use legal protections.
“We desperately need to integrate the protections of the Municipal Land-Use Law into CREAMMA,” he said.
“The MLUL was created in part to prevent corruption and streamline bringing a business to fruition. Every state has some version,” Huch said. “The fact that there’s no tie into CREAMMA, causing all applicants to be subject to land-use obligations but without any of those protections, is simply absurd.”
Matching funds and local equity programs
A primary criticism of local municipalities is that while the majority of the towns opted into the War on Drugs, a majority opted out to participating in an industry billed as “making it right.”
Municipalities in other states have made incubators and local programs to help disadvantaged applicants.
Newark, which in some cases has faced criticism for an opaque application process, said through a spokesperson last year, “Cannabis establishments of considerable size shall contribute to a business development fund assisting small businesses owners with obtaining a microbusiness license.”
Former New Jersey CannaBusiness Association President Edmund DeVeaux and the ACLU’s Johnson have proposed that state agencies offer matching funds to municipalities that implement local equity programs.
“This would really demonstrate to the CRC and Legislature they are invested in making these local equity programs work and making sure that local entrepreneurs have the opportunity to access the industry,” Johnson said.
Localized solutions
In his speech at the American Dream mall on April 21, the one-year anniversary of the legal market opening, Cannabis Regulatory Commissioner Charles Barker called for localized solutions, as well.
“New Jerseyans overwhelmingly voted to legalize cannabis. Yet after two years, more than 300 municipalities opted out of having cannabis businesses within their borders,” he said.
During his speech, Barker called for solutions to real estate shortages that locally affected applicants.
“I urge our state agencies to make government-owned property available at distressed rates for cannabis businesses,” he said. “There is so much state, county and municipal old property throughout New Jersey that can be revitalized.”
Assemblyman Wimberly noted that local programs could be paved with good or bad outcomes for minority businesses depending on how ethical those programs were and how strong the oversight was.
“You’re going to deal with the politics,” he said of the factors surrounding potential for abuse. He went on to say if towns have good intent, that would work. “But, if the intent is that the city will buy it and it’s still going to be controlled by lobbyists and folks who have funds, we’re going to be left out again.”
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Jelani Gibson is content lead for NJ Cannabis Insider. He may be reached at jgibson@njadvancemedia.com. Follow him on Twitter @jelanigibson1 and on LinkedIn.