Medical Marijuana Reforms on the Horizon

Governor Phil Murphy and the New Jersey Legislature are taking actions towards expanding the medical marijuana program.

The Governor announced new rules and regulations to reduce barriers to access for medical marijuana. These include expanding the list of debilitating medical conditions eligible for treatment with cannabis, permitting currently licensed Alternative Treatment Centers (ATCs) to dispense at satellite locations, eliminating the physician registry for doctors who prescribe marijuana, and soliciting new applicants for ATC permits. These actions stem from the Administration’s report on ways to expand access to marijuana for medical purposes.

The New Jersey General Assembly Health and Senior Services Committee also recently approved legislation that would vastly expand the State’s existing medical marijuana program. The bill, A-3740, would allow medical marijuana to be prescribed for any condition and give greater flexibility for patients and caregivers to purchase and transport medical marijuana.

Most importantly, and unlike the current medical marijuana distribution system where ATCs both cultivate and dispense medical marijuana, A-3740 creates a separate manufacturing and licensure system. The bill allows for the licensure of 34 medical marijuana dispensaries that would be authorized to dispense marijuana and marijuana products to patients. The legislation would also permit licensure of six medical marijuana cultivator-processors to process marijuana and marijuana infused/derived products, which it may supply to medical marijuana dispensaries. The currently operating ATCs where both cultivating and distribution are allowed would be “grandfathered,” and could therefore operate as both cultivator-processors and dispensaries.

The license system outlined in A-3740 is similar to one of the anticipated regulatory changes outlined in the Murphy Administration’s report to create an “endorsement system” within the licensing process. The Governor’s proposal envisions ATCs engaging in different activities, such as cultivation, manufacturing, or dispensing, based upon their license endorsements.

Governor Murphy included $20 million in additional tax revenues from the sale of medicinal marijuana into his FY 2019 proposed budget. And under the recently enacted federal omnibus spending bill, the federal government is continuing its 2014 policy of prohibiting the U.S. Department of Justice from interfering with any state’s medical marijuana program. This could make an expansion of New Jersey’s medical marijuana program to be viewed as less risky by financial lenders or towns where cultivator-processors or dispensaries may want to locate. That said, the sale and possession of marijuana is still illegal under federal law.

The Governor has also stated that he wants recreational marijuana to be legalized for adults by January 1, 2019, and included $60 million in new tax revenues from recreational marijuana sales in his budget proposal. However, federal law does not prohibit the U.S. Department of Justice from intervening in states with recreational laws in effect, and the Legislature has been hesitant to move forward with legislation to fully legalize marijuana. Therefore, expansion of the medical marijuana program could be viewed as an incremental and necessary policy step before the State decides to leap to full legalization.

Kevin G. Walsh, Co-Chair of the Gibbons Government & Regulatory Affairs Department, and Michael D. DeLoreto, an Associate in the Gibbons Government & Regulatory Affairs Department, authored this post.
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