New Jersey Municipalities Face Tough Choices Ahead With Recreational Marijuana

If Governor Elect Philip Murphy keeps his campaign promise, he will be signing a bill legalizing the use, production and sale of recreational marijuana within the first 100 days of his administration.  The passage of this law will force municipalities throughout New Jersey to make some tough decisions.  Do they embrace the tax and other economic benefits of this multi-million dollar industry by allowing the sale of cannabis in their town?  Or do they enact zoning ordinances forbidding the operation of marijuana businesses and possibly avoid unknown negative impacts that this new industry could have?

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The recreational marijuana bill, introduced by New Jersey Sen. Nicholas Scutari, D-Linden, would legalize the manufacture, sale, possession and use of recreational marijuana across the state subject to certain restrictions.  Under Section 11 of the bill, towns are required to enact an ordinance or regulation specifying the entity within the town that is responsible for processing applications submitted for a license to operate a marijuana establishment within the town and for issuance of such licenses should the issuance by the designated entity become necessary because of the Division of Marijuana Enforcement’s failure to adopt regulations or because of a failure by the Division to process and issue licenses.   For example a town may enact ordinances or regulations: (1) governing the time, place, manner, and number of marijuana establishment operations; (2) establishing procedures for the issuance, suspension, and revocation of a license issued by the local governmental entity; (3) establishing a schedule of annual operating, licensing, and application fees for marijuana establishments, provided, the application fee shall only be due if an application is submitted to a local governmental entity and a licensing fee shall only be due if a license is issued by the town; and (4) establishing civil penalties for violation of an ordinance or regulation governing the time, place, and manner of a marijuana establishment that may operate in the town.

Under the bill, municipalities also have the option to prohibit the operation of marijuana cultivation facilities, marijuana product manufacturing facilities, marijuana testing facilities, or marijuana retailers through the enactment of an ordinance.   By passing such an ordinance, the municipality will not receive any tax dollars paid to the State for the sale of marijuana.  Marijuana businesses will be permitted to operate for a period of five years in towns that fail to enact ordinances prohibiting the operation of marijuana establishments within one year following the effective date the recreational marijuana bill.   At the expiration of the five year period, and each subsequent five year period thereafter, the town will again be permitted to prohibit the operation of a marijuana establishment by ordinance.

As one can imagine, there will be numerous land use and zoning issues on the horizon for cannabis businesses once the recreational marijuana bill is signed into law and towns begin enacting ordinances regulating the operation of marijuana establishments.   Therefore, it is critical that marijuana business operators in New Jersey retain legal counsel with experience in land use and zoning law as part of their business formation plan.

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Author:
Eric’s varied litigation and transactional experience includes complex commercial/ chancery/federal matters, preliminary injunctions, partnership/corporate shareholder actions, will & probate litigation, guardianships, bankruptcy, bankruptcy court litigation and corporate dissolutions, business transactions & corporate law, asset recovery/repo, debt collection & judgment enforcement, receiverships, foreclosure, fraudulent transfer litigation, attorney & professional ethics, entertainment and intellectual property, internet and website development law, real estate disputes and restrictive covenants, trial & appellate practice in state and federal courts. Eric has also been appointed by the court to serve as counsel to an alleged incapacitated person in a guardianship matter and is a candidate for judicial appointments in complex commercial litigation matters as a special fiscal agent, receiver and provisional director.

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