Introducing Riker Danzig’s Cannabis Law Group

Morristown-based law firm Riker Danzig Scherer Hyland & Perretti LLP announced that it has formed a new Cannabis Law Group to provide counsel to clients regarding federal and state law governing cannabis-related businesses and investments.  The Cannabis Law Group draws on the expertise of the following partners from Riker Danzig’s Corporate, Government Affairs, and White Collar Criminal Defense and Investigations Practice Groups: Jason D. Navarino, Robert G. Frucht, Samuel P. Moulthrop, Zahid N. Quraishi, and Mary Kay Roberts.  The Cannabis Law Group provides advice on the spectrum of issues that may arise for lawful businesses in this area and has already provided counsel to clients on entity and fund formation, domestic and foreign investment activity, permitting, and other legal, tax, and regulatory compliance matters.

Recent Cannabis Developments:

Governor Phil Murphy Issues Executive Order No. 6, Directing the Department of Health and the Board of Medical Examiners to Reform and Expand New Jersey’s Medical Marijuana Program

On January 23, 2018, Governor Phil Murphy took his first step towards fulfilling his campaign promises to legalize marijuana by signing Executive Order No. 6, in which he calls for improving and expanding the medical marijuana program in New Jersey.  New Jersey’s medical marijuana program was established by the 2010 Compassionate Use of Medical Marijuana Act,  N.J.S.A. 24:6I-1, et seq. (CUMMA).  CUMMA provides a limited exception to New Jersey’s controlled substances laws,  decriminalizing possession of marijuana for medical use by qualified, registered individuals.

Executive Order No. 6 identifies a number of issues with the current state of New Jersey’s medical marijuana program under CUMMA, including the limited number of medical marijuana alternative treatment centers in New Jersey (currently only five are operational) and the limited number of qualified participants in New Jersey (15,000 out of nine million residents) as compared to other states which have legalized or decriminalized medical marijuana.  Citing these issues, as well as scientific studies which have found that marijuana has medical uses, the repeated renewal of the Rohrabacher-Blumenauer Amendment (also known as the Rohrabacher-Farr Amendment) by Congress, and the fact that more than half of the states permit the use of medical marijuana, Governor Murphy directed the Department of Health and the Board of Medical Examiners to evaluate New Jersey’s medical marijuana program and “focus on ways to expand access to marijuana for medical purposes” in New Jersey.

Governor Murphy has specifically directed the Department and Board to review the regulations governing cultivation and dispensaries, the dispensary licensing process, participating physicians, the scope of treatable medical conditions, methods for dispensing medical marijuana, and forms in which medical marijuana may be consumed.

The Department and the Board have sixty days in which to perform their review, at which time they are directed to “initiate the rulemaking process” in order to reform the current regulations.

Recent Legislation Introduced to Legalize Cannabis in New Jersey

On January 9, New Jersey Senate Bill 830/Assembly Bill 1348, which seek to legalize small amounts of marijuana for possession and personal use for individuals over the age of 21, were introduced.  The bills propose legalizing the possession, transfer, and consumption of certain amounts of marijuana; decriminalizing marijuana paraphernalia as well as activities related to the cultivation, manufacture, and distribution of marijuana; establishing a Division of Marijuana Enforcement to regulate the permitted and prohibited conduct under the proposed legislation, and to promulgate regulations governing, among other things, licensing of and distribution by marijuana-related establishments; and levying a seven percent tax on sales of marijuana that will escalate on an annual basis.

Attorney General Jeff Sessions Rescinds the Cole Memorandum, Causing More Confusion for Marijuana-Related Businesses Operating Lawfully Under State Laws

On January 4, Attorney General Jeff Sessions issued a Memorandum to all United States Attorneys rescinding all “prior nationwide guidance specific to marijuana enforcement,” causing confusion for marijuana-related businesses that are operating in compliance with state laws.

Under the Controlled Substances Act (CSA), marijuana is categorized as a Schedule I controlled substance, and its manufacture, possession, and distribution of marijuana, whether interstate or intrastate, is criminally prohibited.

Despite the federal prohibition, numerous states have decriminalized cannabis for medical and/or recreational uses.  In response, the Department of Justice under President Barack Obama’s administration issued a series of memoranda providing guidance to federal prosecutors regarding state-level marijuana enforcement under the CSA.  The 2013 Cole Memorandum, authored by Deputy Attorney General James M. Cole, set forth the Justice Department’s marijuana enforcement priorities, which included preventing distribution to minors, large scale drug trafficking, use of violence in conjunction with distribution and cultivation, and use or possession on federal property.  Importantly, the 2013 Cole Memorandum noted the Department’s historic reliance on state and local authorities to address marijuana-related activity through their own narcotic laws, and advised that federal prosecutors continue to do so in states that have enacted laws legalizing marijuana and implemented robust and effective regulatory and enforcement systems.

Pursuant to the 2013 Cole Memorandum, the Justice Department generally declined to enforce the CSA against marijuana-related businesses operating in compliance with state law.

Attorney General Sessions’ rescission of the 2013 Cole Memorandum, as well as other memoranda issued by the Department of Justice under the Obama Administration, now places state-compliant marijuana-related businesses back at risk of prosecution under the CSA.

Despite the move by the Attorney General, there is some respite for medical marijuana-related businesses. Congress renewed the Rohrabacher-Blumenauer Amendment as part of the latest appropriations measure passed on February 9, 2018, at least until March 22, 2018. The  Rohrabacher-Blumenauer Amendment is a bipartisan-supported appropriations rider that prohibits the Justice Department from using federal funds to prevent states from implementing medical marijuana laws.  The Ninth Circuit in United States v. McIntosh dismissed a number of marijuana-related prosecutions under the CSA, holding that the prohibition under the Rohrabacher-Blumenauer Amendment also prevents the Department of Justice from spending federal funds to prosecute individuals who are engaged in conduct that is permitted by, and in compliance with, state medical marijuana laws.

Moreover, there has been significant bipartisan backlash from senators, representatives, and states that have legalized marijuana.  Attorney General Sessions’ decision has not deterred efforts by a number of states, including New Jersey, to proceed with legalizing marijuana.

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