New Jersey’s cannabis program is likely to take shape this month. In November 2020, New Jersey voters overwhelmingly approved a state constitutional amendment legalizing cannabis for adult use. Now the legislature is in the final stages of creating the parameters of the program.

The New Jersey legislature passed the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act in December, 2020 (NJ A21) that would establish a licensing system with six classes of licenses to cultivate and distribute cannabis. While the bill would prioritize licenses in “impact zones,” meaning zones with high unemployment and a history of cannabis-related offenses, the bill was criticized for limiting the availability of licenses to 37 licenses total over the next two years for both medical and recreational cultivators. Some of these licenses have already been claimed by medical cultivators who were previously growing cannabis for medical use in the state, meaning the total number of licenses available to the marketplace will be scarce. Licenses that have not already been awarded will be distributed by the state’s Cannabis Regulatory Commission. The process for distributing licenses has still not been finalized and legislators expect that it will take at least six months to award the licenses. The bill was also criticized for failing to create strict protections for employers if their employees test positive for cannabis, as the legislation does not curtail the ability of employees in certain industries to use cannabis.

AJ 21 would also distribute at least 70 percent of tax revenues from retail sales of cannabis products to investments in impact zones, which are largely in minority communities in New Jersey that have been adversely affected by the criminalization of cannabis. Legislators believe investment towards impact zones will create a more diverse and equitable marketplace.

Governor Murphy declined to sign NJ A21 into law, citing the need for civil penalties for individuals under 21 caught with cannabis. A new “clean-up” bill, A5211 and S3320, was proposed to address his concerns. Under this bill, people between the ages of 18 and 20 would incur a fine for illegally possessing cannabis: up to $250 civil fine for possession of up to an ounce of marijuana, and a $500 fine for possession of between one and six ounces. The fines would be imposed regardless of whether the cannabis was obtained through a licensed store or an illegal dealer. Individuals who are under 18 years old caught illegally possessing cannabis would face penalties in a juvenile justice court, instead of incurring civil penalties.

Governor Murphy declined to sign the clean-up bill, after the monetary penalty provisions were harshly criticized for disproportionately impacting racial minorities if they are underage and caught with cannabis. While new legislation is still forthcoming, is clear that, the bills will likely leave a number of issues facing employers and members of the New Jersey community.

New Jersey is set to become one of the largest legal cannabis marketplaces in the country.

Once legislation is finalized, the remaining regulations will be enacted by the Cannabis Regulatory Commission over the course of 2021 with the expectation that New Jersey’s recreational cannabis marketplace will be up and running by 2022.