The feds make a move
Feds #Feds
Hi everyone
Today was a busy week with rescheduling news. In this issue we break down how people weighed in with their pros and cons from a variety of activists, trade organizations and the political side.
Additionally I break down a court case about a challenged WBE certification that could make its way up to the state Supreme Court and have industry wide ramifications.
Our cannabis life reporter Gabby Warren also has a cool article on the latest store opening.
Our event in Newark grows ever nearer by the way, so remember to cop those tickets. All in all, it’s always a pleasure. Enjoy your Labor Day weekend. Until next time …
— Jelani Gibson
Rescheduling a move forward, but with caveats and criticisms
Multiple trade groups and advocates throughout New Jersey and the country hailed the decision to reschedule cannabis while some also pointed out it fell short of what was needed.
“The idea that cannabis would remain a Schedule I drug despite all the information and knowledge we currently possess would be pure insanity,” said the New Jersey Cannabusiness Assoication in a press release. “Still, by keeping cannabis on the schedule at all we are leaving room for bad faith actors to manipulate and utilize the cannabis market to their benefit. Our ultimate goal should remain descheduling, full legalization and a thriving cannabis market that allows individuals to flourish without unnecessary intrusion.”
The New Jersey Cannabis Trade Association supported the measure for its medical merits.
“The Department of Health and Human Services formal recommendation to ease the federal restrictions on cannabis marks a pivotal moment for our industry,” they said in a press release this week. “This validation underscores the numerous health benefits that cannabis provides.”
Senate Majority Leader Chuck Schumer (D-NY) voiced support for the measure, but also indicated more comprehensive reform was needed.
“HHS has done the right thing and DEA should now quickly follow through on this important step to greatly reduce the harm caused by draconian marijuana laws,” he said. “While this is a step forward, there is still much more that needs to be done legislatively to end the federal prohibition on cannabis and roll back the War on Drugs. I am committed to continuing to work in Congress to pass important marijuana legislation and criminal justice reform.”
National Cannabis Industry Association CEO Aaron Smith echoed a similar sentiment.
“Moving cannabis to schedule III could have some limited benefit but does nothing to align federal law with the 38 U.S. states which have already effectively regulated cannabis for medical or adult use,” he said. “The only way to fully resolve the myriad of issues stemming from the federal conflict with state law is to remove cannabis from the Controlled Substances Act and regulate the product in a manner similar to alcohol.”
A cannabis industry modeled after the alcohol industry however has been among long running criticisms from high profile advocates, including former Massachusetts Cannabis Regulator Shaleen Title.
“Pretty much everyone who attempts to influence cannabis policy these days talks a big game about addressing the disparities caused by the war on drugs, and the newly alcohol and tobacco funded activists are no exception,” Title said last year in a Marijuana Moment op-ed. “But even a quick review of the history of those industries in this country reveals decades of exploitation of the very same communities that have been harmed by our drug war.”
Others also voiced fears that it would expose the market to more tension between state and federal licensing schemes that would allow pharmaceutical giants to come in and dominate the market with the Federal Drug Administration (FDA) imposing more stringent laws that weren’t to the favor of social equity in the industry.
New Jersey is home to many of the countries largest pharmaceutical giants including Johnson & Johnson, Merck and Bayer.
“Would it lead to existing state licensed cannabis operators being treated like all other lawful businesses in the United States?,” said NCIA Chair Emeritus Khurshid Khoja in a policy paper three months ago. “Or would it foreclose their access to certain markets, introduce well capitalized competitors from the pharmaceutical space, and continue to block their access to banking? Could it also spur the pharmaceutical industry to leverage its resources to oppose the scheduling cannabis, once they’ve been granted an effective monopoly over federally lawful cannabis products regulated under schedule III.”
Cannabis law firm Foley Hoag said this week that any situation regarding the FDA was more than likely going to include a piecemeal approach by the agency and that it always could have got into cannabis regulation without rescheduling.
“First, FDA has authority today to regulate cannabis and assert jurisdiction … Regulation of nationwide state-legal cannabis just doesn’t fit FDA’s drug regulation model. FDA will likely be methodical in asserting its jurisdiction, and if it does, it would probably do so through rulemaking,” the law firm stated in its newsletter alert.
The more likely scenario (as we’ve seen with CBD and hemp-derived cannabinoids) is that FDA determines it needs additional authorization and funding from Congress, such as for a cannabis “Center” similar to its “Center for Tobacco Products,” before it engages in any comprehensive regulation. Third, FDA preemption is a complex area of law.”
The Drug Policy Alliance called for decriminalization and pointed out locking people up for cannabis prohibition still had detrimental effects.
“We need legislation that fully ends federal marijuana criminalization and repairs harms caused by decades of prohibition,” the organization said in a statement.
— Jelani Gibson
Appellate court makes ruling in lawsuit accusing MSO of using shell company for diversity certification
The Appellate Division made a ruling upholding the license of Holistic NJ, an RFA 2019 applicant accused in a lawsuit of being a shell company for MSO Holistic Industries.
The lawsuit alleged that Holistic Industries’ white male CEO, Josh Genderson, used women in his family, among others, to establish Holistic NJ as a woman owned business in the form of a separate company to gain more points in the scoring process for the 2019 medical applications.
Holistic NJ was represented by former New Jersey attorney general Chris Porrino. Porrino was also the one who was tapped to represent Curaleaf when they got their license denial reversed.
“CR Commission correctly relied on the WBE certifications issued by Treasury,” the court opinion said. “We discern nothing arbitrary, capricious, or unreasonable in Treasury’s denial of Curio’s challenges to the WBE certifications issued to Altus, Holistic, or CHM. In making that ruling, we note that Altus and Holistic are subject to continued monitoring by Treasury to ensure that they are, in fact, operating as WBEs.”
The court laid out three factors.
“We will not “disturb an administrative agency’s determinations or findings unless there is a clear showing that (1) the agency did not follow the law; (2) the decision was arbitrary, capricious, or unreasonable; or (3) the decision was not supported by substantial evidence.”
By that notion, the court afforded deference to agency decisions.
“Critically, Treasury acknowledges its obligation to continue to monitor and review the WBE status of Holistic and Altus … Moreover, the CR Commission’s post-award accountability measures state that maintaining WBE certification is an “ongoing material condition of the [permit] award.” When it comes time for Altus and Holistic to renew their permits, they will need to inform the CR Commission of whether their WBE certification has been revoked by Treasury.”
The Duane Morris law firm, which argued for Curio, offered the following comment:
“The Appellate Division’s decision centered on the idea that the CRC’s reliance on the Department of Treasury’s certification was justifiable. Treasury’s certification, however, relied on privately developed corporate organizational documents — not on reality, not on the applications submitted to the CRC describing who is actually in charge, and not on any genuine investigation into the actual chain of command at these companies.
The court ignored the overwhelming evidence Curio provided and instead opted for the path of least resistance by deferring to Treasury’s judgment, ignoring Mr. Genderson’s public admissions that Holistic will control this license, and ignoring Treasury’s about face after committing to hold a hearing with cross examination that would get to the truth of the matter.
The court also let the CRC off the hook, allowing it to ignore its own obligation to verify the information presented by applicants — even though its Chair conceded the CRC knows applicants are gaming the system with sham women and minority fronts. We fear this decision will embolden even more to game the system and siphon opportunities intended for women and minorities.
Because, as the Appellate Division recognized, the New Jersey courts have never interpreted the provisions addressing WBE certification, this case presents a matter of great public importance with implications well beyond cannabis licensing. Curio is carefully considering its options to seek review by the Supreme Court.”
— Jelani Gibson
Jersey Shore store opens up
Brute’s Roots, a locally-and-woman-owned weed shop that opened for medical patients in May recently began recreational weed sales. Their grand opening celebration is Friday.
Located at 6206 Black Horse Pike in Egg Harbor Township, just off the Atlantic City Expressway and the Garden State Parkway, the storefront is in a small strip mall.
“As a vertically integrated company, we look forward to bringing our very own Brute’s Roots flower to the New Jersey market this fall and other quality products later this year,” said company president Kelly Gatto, a licensed registered nurse with 18 years of real estate experience.
Gatto and her partner Jimmy DiNatale, a commercial developer and owner of a demolition company, were both born and raised and currently live in Atlantic County. Brute’s Roots also owns a cultivation facility in Winslow Township.
“We are in the process of our first big greenhouse harvest this week,” Gatto said.
For now, this shop offers products from a variety of brands such as Tyson, Verano, Savvy Travelers, Find, Ozone, Airo, Kind Tree, Cookies and Anthologie.
“Brute’s Roots is committed to offering a variety of products to our customers at a competitive price,” she said.
The Sept 1. grand opening celebration begins with a ribbon cutting at 11 a.m., followed by live music from Goodman Fiske from noon-3 p.m. The event will feature food from Vagabond food truck, giveaways and a chance to win Phillies tickets.
Their hours of operation are Wednesday-Sunday 10 a.m.-6 p.m. For more information, call (609) 867-6112.
— Gabby Warren | NJ.com This article showed up on NJ.com as a paywalled exclusive. NJCI newsletter subscribers get it for free.
A Q&A with a Jersey resident who operates a safe injection site, what’s going on in NY, stock prices surging after rescheduling and more
N.J.’s premier cannabis business conference touches down in Newark
On Oct. 12, the state’s premier B2B cannabis business conference and networking event will return to the DoubleTree by Hilton Hotel Newark Airport — just as the state opens to receive applications for new category licenses.
Doors open at 9 a.m. with the keynote speaker opening the all-day event at 10 a.m. The conference ends at 5 p.m. Tickets ($295) are on sale now for the conference. A select number (10%) of discounted tickets also are available for social equity applicants.
Topics covered will revolve around the current state of New Jersey’s marketplace, focusing on the new category licenses, which will offer more business opportunities for aspiring cannabis companies entering the space. They are:
Other key areas of discussion include:
We’ll also delve into funding and raising capital, compliance and best practices as well as how your business can stand out in a competitive and expanding market.
As with March, NJ Cannabis Insider will also bring back its Discovery Areas for Women-owned Businesses, Social Equity Businesses and Education & The Future Workforce.
For cannabis recruitment solutions please contact Deneen Wright, dwright@njadvancemedia.com or call 201-324-5092.
Jelani Gibson is the lead reporter for Cannabis Insider. He previously covered gun violence for the Kansas City Star.
Susan K. Livio is a Statehouse reporter for The Star-Ledger and NJ.com who covers health, social policy and politics