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The New Jersey Cannabis Regulatory Commission (CRC) has submitted proposed updates to their regulations to include rules for cannabis consumption areas. After the public comment period closes on March 18, 2023 (soon!), the CRC will review and respond to the comments. The rules will not be effective until formal adoption by the CRC Board and publication in the New Jersey Register, likely in late spring to early summer.
Highlights of the new proposed regs include establishing qualifications for licensure, the application process, and operational instructions for cannabis retailers that plan to add cannabis consumption areas to their dispensaries. Here are the highlights (and RZA Legal’s comments) of the proposed consumption regs:
Licensed dispensaries wanting to establish cannabis consumption areas must be approved by CRC (N.J.A.C. 17:30-2.1(b)2 and N.J.A.C. 17:30-14.9) and the municipality in which the dispensary is located (N.J.A.C. 17:30-5.1(n) and N.J.A.C.17:30-5.1(o)).
Previously, there was no requirement for the CRC to approve cannabis consumption areas at dispensaries, just approval from the locals. While this could help to establish baseline criteria at the state level for consumption lounge licenses, it creates yet another hoop for cannabis retailers to jump through, in addition to meeting local licensing requirements.
Furthermore, the proposed rules impose a licensing fee for consumption lounges at the state level in addition to the local application fees. For microbusiness retailers wanting to add consumption areas, the fee is proposed at $1000; for standard retailers it is proposed to be $5,000 (N.J.A.C. 17:30-7.17(d)20, 21, 22, and 23).
Thus, we believe creating a state licensing process and collecting an additional fee places a greater financial burden on applicants and is a BAD idea.
A cannabis business can operate only one cannabis consumption area, regardless of the number of Class 5 Retailer licenses the business holds.
At RZA Legal, we think this proposed rule is arbitrarily restrictive. As it stands, local municipalities can decide whether or not to permit consumption areas in their jurisdiction. This effectively imposes a “down-select” that already limits the number of consumption lounges in the state, overall.
If cannabis retailers are able to obtain multiple licenses in NJ, we think the state should support licensees who are able to create a profitable business model for adjacent consumption lounges. We can’t find an argument for restricting this ability at the state level.
Dispensaries may not sell food. Patrons may bring their own food into the cannabis consumption area or have food delivered there (N.J.A.C. 17:30-9.5(b) and N.J.A.C. 17:30-9.5(b)(1).
WTH?! This again seems arbitrary as there is no convincing argument for prohibiting onsite food service but permitting outside food to be brought in. This rule essentially “kneecaps” cannabis retailers with consumption areas from being able to get creative with their business models to increase revenue and provide patrons with a unique hospitality experience.
Medicinal cannabis patients must be allowed to bring in cannabis items from other retailers for their own use into consumption areas.
While the intent behind this rule makes sense, we think it creates a potential nightmare for operators. Allowing a BYO medical model will lead to the need for operators to implement strict procedures for things like verifying patient status and possession limits, checking that products are sealed in their original containers, and asking for proof that the purchase was made from a licensed medical dispensary.
When paired with the proposed rule that “Consumption areas must be connected to a licensed dispensary,” it makes more sense to require customers who want to consume to bring only cannabis/products purchased from the adjacent dispensary.
In summary, our main concern with this proposed rule is its potential to create operational and compliance headaches for operators. On the flip side of the coin, it will be pretty tough for operators to enforce and confirm that the cannabis being consumed was purchased at that dispensary. This seems like an area better left, dare-we-say, UNREGULATED.
There may be no sale of tobacco products and alcohol in consumption areas.
This rule reflects similar language from other states with consumption lounge licensees. We understand the intent behind it as an effort to discourage cannabis consumers from mixing other substances.
Cannabis consumption areas may be indoors or outdoors.
Yay! We whole-heartedly endorse this proposal.
Patrons must be 21 years or older and photo identification must be required for entry into cannabis consumption areas.
Agreed. However, if medical patients are permitted to bring their own cannabis/products to consume, there may be patients who are only 18. This is another reason why, as discussed above, outside medical cannabis should not be permitted at an adult-use consumption lounge, or should not be included in the regulations due to enforcement challenges.
Cannabis consumption area endorsements are valid for year and may be renewed annually.
This rule also reflects similar language in other jurisdictions. However, as Colorado recently established for its Finding of Suitability process, we suggest extending the license period for Priority Applicants (valid for 2 years until renewal).
What do you think about these proposed regulations on cannabis consumption areas in New Jersey? Speak your mind and submit your comments to the state HERE before March 18, 2023. Interested in working with cannabis legal counsel who has successfully represented cannabis consumption businesses? Schedule a consult to see if we are a good fit for your team.
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