Tracking Local Ordinances Is Critical for Applicants

Under New Jersey’s recently enacted adult-use marijuana law, every municipality in the State has until August 21, 2021 to adopt local ordinances regulating marijuana businesses within their jurisdiction.  Local ordinances adopted prior to February 21, 2021 have been invalidated by state law.  If a municipality fails to adopt local ordinances by August 21, 2021, all classes of licensed marijuana operations will be permitted in that municipality.

Bayonne’s recent introduction of a proposed ordinance is a prime example of why potential applicants for licenses in New Jersey’s forthcoming adult-use marketplace absolutely must  keep track of municipal activity as each town’s ordinances may present distinct requirements, fee structures and limits on the number of licenses.

Under the proposed Bayonne ordinance, cannabis establishments (defined as cannabis cultivators, manufacturers and retailers, medical marijuana alternative treatment centers and clinical registrants)  must obtain both a state issued license and a local permit.  The proposal then sets forth what appear to be common sense local regulations.  For example, no cannabis establishment shall be permitted to be operated out of a residential home; steps must be taken to mitigate odor and noise; retailers can only be open 8 A.M. to 10 P.M.; and security personnel must be on sight during operating hours and video surveillance is required 24/7.  The proposed ordinance then identifies various areas of town in which cannabis establishments will be permitted uses: retailers will be permitted uses in the neighborhood commercial district, the Central Business District (Broadway Corridor); Uptown Business District (Broadway Corridor), Office Retail Service District (Broadway Corridor); and all cannabis establishments are permitted uses in the Highway Commercial / Selected Light Industrial District, IL-A and IL-B Light Industrial Districts.

While those regulations appear favorable to the cannabis industry, the town then proposes to create its own competitive municipal license process, with hefty fees, and significantly limits the number of licenses that will be authorized by the town.  Under the proposed ordinance, only four total licenses are authorized within Bayonne – 1 for cultivation, 1 for manufacturing and 2 for retail dispensaries.  No provision is made for the authorization of wholesale, distribution or delivery licenses to be established within the confines of Bayonne.

As part of a competitive local process, the proposed ordinance then requires non-refundable application fees to be submitted: Class I: $10,000 Cannabis supplier license (grower) Class II: $10,000 Cannabis supplier license (processor) Class III: $5,000 Cannabis retailer license .   Applicants also are required to pay an annual registration fee of: Class I: $40,000 per year Cannabis supplier license (grower) Class II: $20,000 per year Cannabis supplier license (processor) Class III: $10,000 per year Cannabis retailer license.  If the applicant is not successful, the registration fee (but not the application fee) will be refunded.

If there are multiple applicants, the applications will be scored by the Bayonne town Administrator, who will independently judge many of the same criteria that the State likely will evaluate, and will give consideration to among other things whether the applicant: has lived or operated a business within Bayonne for 5 years or more (5 points), has had a collective bargaining agreement in the cannabis industry for 1 year or more (20 points), and is certified as a minority/women/veteran-owned business (20 points for 2 or more certifications).  The winners of the town competitive license process will then be permitted up to 12 months (which can be extended for 6 months) to obtain a state license.  The proposed ordinance makes clear that under no circumstances shall a local license for a cannabis establishment issued by the Administrator be effective until or unless the State has issued the requisite permits or licenses to operate such a facility.

If the proposed ordinance is adopted in Bayonne, applicants interested in applying to the State for a license to operate in Bayonne would need to quickly submit an application to the Bayonne Administrator so that they can obtain the required local approval before the state application window opens later this year.   That type of additional competitive application process will certainly change the timing and planning for any applicant, and so it is imperative that applicants interested in this market be well informed about local developments.