With the passage of the Marijuana Legalization Amendment in November, legislative and regulatory focus has been diverted from New Jersey’s existing medical cannabis market, and to the promise of what is to come. There is, of course, much reason to be excited. But, in our collective euphoria, policymakers must not forget that the 2019 Request for Applications for additional medical licenses remains outstanding. Nearly 200 applications were submitted in August 2019. Eighteen months later, not only have no winners been announced by the Department of Health, but there is no timeframe in which winners are likely to be announced because the 2019 process remains tied up in the courts.
The 2019 RFA process does not need to remain stalled. The courts only became involved because the DOH refused to score certain applications due to technical violations, including electronic applications that were timely submitted, but unreadable on the DOH’s end. That could have been the department’s failing. But the DOH has been steadfast, and rather than simply score all of the applications submitted, has decided to contest the cases in court. The result is that the whole 2019 RFA process remains frozen, with real impact on real people, real businesses and real patients.
The entire point of the 2019 RFA was to increase the supply of medical cannabis to patients in need. New licensees bring geographic diversity, product diversity and lower prices. Patients have been denied those benefits. But the DOH’s decision to fight in the courts rather than simply score all applications is not just bad medicine, it is also bad business.
Many highly-qualified applicants — applicants that New Jersey would happily welcome to its market as licensees — are second-guessing whether to continue to invest in New Jersey at all. Their reluctance is understandable. Some invested hundreds of thousands of dollars to build the strongest applications possible — to secure suitably zoned land, leases, employees and legal counsel — only to see those applications go unscored. Indeed, many applicants continue to hold property (at a cost of tens of thousands of dollars or more each month) so that, if they are awarded a provisional license by the DOH, they are not later disqualified for not still holding the property they identified and applied with in their August 2019 applications.
Now is the time for the DOH to act. With the recreational legislation being finalized, and allowances in that legislation for existing medical licensees and applicants to convert their licenses into recreational licenses and be exempted from the temporary bar on vertical integration, clarity is needed now. If an application period is opened for recreational licenses before the 2019 RFA is decided, the 2019 applicants will be forced to make very consequential business decisions with partial information. Take but one example: Should a 2019 RFA applicant for a retail medical license compete for a retail recreational license or, instead, a grower or processor license? It is hard to say. If the 2019 applicant applies for another retail license, only to, post-submission, win the 2019 RFA, the applicant will have potentially squandered a coveted opportunity to be vertically integrated.
Applicants who have already invested so much in New Jersey should not be forced to make these impossible choices. Here is hoping that 2021 sees a rapid expansion in the number of New Jersey’s cannabis licensees, beginning with licenses awarded to the most deserving 2019 RFA applicants.
Lee Vartan is co-chair of the Cannabis Law Group at the West Orange-based law firm Chiesa Shahinian & Giantomasi P.C. Prior to joining the firm, he served as executive assistant attorney general for the state of New Jersey. In this role, he was responsible for helping to author the regulations for New Jersey’s Compassionate Use Medical Marijuana Act and vetting and approving applicants for licensure.