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A Delicate Balance: NJ Cannabis Businesses Seek to Comply with Conflicting Laws

WEINER LAWInsightsCannabis LawA Delicate Balance: NJ Cannabis Businesses Seek to Comply with Conflicting Laws

There’s a domino effect of sorts happening within the U.S.: the legalization of recreational marijuana. As of February 2021, New Jersey was the latest state to follow suit, passing legislation which allows for the production, distribution and use of recreational cannabis.  

The economic impact of this legislation is enormous as it presents an opportunity for entrepreneurs across many business sectors to get in on the ground floor of what promises to be a booming market. Marijuana Business Daily estimates that recreational use by adults in New Jersey will generate $850-$950 million by 2024.  

But it’s not all clear sailing ahead. Although states are adopting increasingly liberal attitudes toward marijuana, federal marijuana laws remain strict. The Controlled Substances Act (CSA) establishes a system dividing controlled substances into groups depending on their potential for abuse, for harm to users, and potential use in medical treatments. Marijuana is classified as a Class I drug, meaning that the federal government views marijuana as having a high potential for abuse with no acceptable medical uses.  

This conflict between state and federal laws puts cannabis-related business owners in a quandary. Cultivators and distributors that are fully compliant with state regulations are still open to liability since they are in direct contact with a product that is considered contraband under federal law. 

Pending federal law changes with the MORE act 

As additional states begin to legalize marijuana for both medicinal and recreational purposes, the Drug Enforcement Administration (DEA) has softened its hardline stance on cannabis industry businesses. This past May, federal lawmakers re-introduced legislation (originally introduced in December) that leaves it up to the states to determine whether to legalize marijuana. The Marijuana Opportunity Reinvestment and Expungement Act, or MORE Act, would remove cannabis’ classification as a Class 1 drug along and thus end the conflict between federal and state law. 

The House of Representatives passed the measure last December, with legislation that includes significant changes that would affect cannabis business owners and individuals by: 

  • facilitating the process for banks to provide financial services to legal marijuana businesses
  • making cannabis operations eligible for Small Business Administration loans 
  • requiring federal courts to expunge prior marijuana convictions 
  • imposing a 5% federal tax on marijuana and marijuana products with the revenue allocated to community reinvestment programs
  • providing loans to small cannabis businesses owned by socially and economically disadvantaged individuals
  • developing programs to assist those hardest hit by the war on drugs to enter the marijuana industry

If approved by both chambers and signed by President Biden, the marijuana industry could expand greatly in New Jersey and throughout the country in the coming years. Until then, current federal law means continuing uncertainty for marijuana business owners and customers looking for legal marijuana use.  

Weiner Law Group: Working to help your cannabis business…grow! 

If you’ve got a cannabis-related business in New Jersey, careful compliance with state and federal laws is essential. That’s where the cannabis law attorneys at Weiner Law Group can help. We make it our business to stay up-to-date on the changing legislation that can affect your business, and will guide you on best practices.

To arrange for a consultation, email Weiner Law Group at [email protected] or visit weiner.law/practice-areas/new-jersey-cannabis-law