COURT HOUSE – As New Jersey prepares for its adult-use cannabis industry, employers are educating themselves on the law, learning about the unique challenges presented due to the contradiction between federal and state laws.
Sixty-five participants joined an April 21 Zoom meeting, hosted by the Cape May County Chamber of Commerce, and moderated by Katie Faldetta, executive director, Cape Assist, a substance abuse prevention and treatment agency, for an overview of federal and state cannabis laws, issues facing the cannabis industry, and how employers can reasonably accommodate drug-free workplace policies.
Brittany Bonetti and Amy Rudley, attorneys with Cooper Levinson, spoke about the permitting process in New Jersey for growers, processors, dispensaries, and ancillary supporting businesses; how cannabis laws affect employment law issues, disability discrimination matters, and issues facing private and public entity employers.
“The cannabis industry faces unique challenges because federal laws and state laws don’t necessarily say the same thing,” Bonetti said. “Cannabis is still a Schedule 1 drug under federal law. The federal government does not accept medical-use cannabis in treatment. Federal law still states there is a high potential for abuse with cannabis.
“Federal law is the supreme law of the land,” she stressed, “and it carries the day. Because states are allowing medical-use and adult-use of cannabis, there is a cause for tension.”
Bonetti said that while no federal action to change its laws was taken, “the federal government has made no disturbance if the person is in compliance with state law.”
Thirty-six states permit medical marijuana use, and 17 states legalized adult use, including New Jersey, which approved adult use Feb. 22.
So far, 16 medical dispensaries are operating in the state, with 1,250 practitioners administering to 106,000 patients. There are about 20,000 pounds of cannabis and cannabis products in inventory, according to Bonetti.
The state Department of Health (DOH) was the regulatory agency over the industry, but that changed with the establishment of the state Cannabis Regulatory Commission (CRC). The DOH, in its biennial reports, said there was “a need for lower prices and better value” in the medical marijuana industry.
In terms of the adult-use recreational industry, the bill signed Feb. 22 established the framework for adult use. No dispensaries exist yet.
Licenses can be granted for cultivators, manufacturers, wholesalers, distributors, retailers and delivery businesses, and the law is specific about requirements, according to Bonetti.
Businesses applying for a cannabis license must show they have municipal approval and certify their supply will not impact the medical cannabis industry.
According to Bonetti, cultivator licenses will be capped at 37 for the first 24 months under the bill. Conditional licenses, given to those with lower incomes who may not immediately meet all the conditions for a license, will account for at least 30% of licenses to encourage more in-state smaller businesses.
Microbusinesses, those with less than 10 employees, will be encouraged, as well, Bonetti said.
“At least 25% of all licenses will be issued to micro businesses. These are micro businesses that have 51% of their owners/directors residing in the municipality or neighboring municipality of their microbusiness, with 100% of the owners living within the state for the prior two years.
Fifteen percent of new licenses will be given, with priority to certified minority-owned, women-owned, and disabled veteran-owned businesses.
Priority consideration will be given to applicants with a “significantly involved person” residing in the state for at least the last five years.
Priority is also being given to “impact zones,” areas with high arrest rates and other specific demographics; however, none meet the criteria in Cape May County, according to Bonetti.
Municipalities have until Aug. 21 to enact ordinances governing the number, location, manner and operation times of cannabis businesses, and many in the county have done so, prohibiting them.
Delivery of cannabis or cannabis products, however, cannot be prohibited. Delivery service times will be governed by the CRC. If no ordinance is enacted by Aug. 21, no ordinance can be enacted for another five years, according to Bonetti.
“However, unique to New Jersey is a municipal license where the municipality can receive taxes from the business,” Bonetti noted, saying this feature is enticing some communities to allow cannabis businesses.
“The municipality can collect up to 2% of receipts by the cultivators, manufacturers and retailers, and 1% of receipts from wholesalers,” she said.
Because of the conflict between state and federal cannabis laws, Bonetti said the industry is facing some issues.
“Banks are not getting involved in cannabis businesses, which means mortgages are not readily available,” she said. “Insurance can be a problem, and cannabis businesses are ineligible for bankruptcy. They are facing unfavorable tax treatment, and issues with zoning and land use.”
Once businesses are established and licensed, Rudley said employers cannot discriminate against employees because they are adult cannabis users.
“They are a new protected class,” she noted. “Hiring policies prohibit employers from refusing to hire, discharge or take adverse action against someone who uses cannabis or cannabis products.”
The law did not change drug-free workplace policies, and employers are not required to allow cannabis use in the workplace, Rudley said.
Employers should treat employees like those found in alcohol situations, she said.
“An employer may require a drug test if the employer is suspicious that cannabis is used while working, or if signs of intoxication have been observed in the workplace, or there is a work-related accident,” she noted.
“Marijuana breaks are not permitted like cigarette breaks,” she added.
The law is also very specific about the drug testing requirements by employers, including a scientifically objective testing method and procedure, such as testing of blood, urine or saliva, and an impairment evaluation by an “impairment expert,” a new role being defined.
If a medical user tests positive, they have three days in which to provide evidence they are a registered user. The state Supreme Court recently held that employers are obligated to accommodate an employee’s lawful use of medical cannabis outside of the workplace.
If an organization receives federal funding, or employees require licensing by federal agencies, federal laws then apply, and the employer can require a drug-free workplace, according to Rudley.
Rudley referred employers to https://bit.ly/32B7KiR for a drug-free workplace toolkit.
To contact Karen Knight, email kknight@cmcherald.com.
