By Jack Queen

Law360 (September 18, 2020, 8:46 PM EDT ) New Jersey approved a new medical marijuana dispensary as license applications remain on ice amid litigation, while Maine issued its first licenses ahead of a recreational pot debut and Colorado proposed regulations for the state's social equity program. Here, Law360 takes stock of these and other developments in cannabis regulations.

New Jersey Clears New Dispensary Amid Legal Challenges

New Jersey's cannabis regulator has issued its 12th medical marijuana dispensary permit as the Garden State looks to expand its cannabis program despite lawsuits that have stalled the review of nearly 150 license applications. Existing licensees must also get a permit before they can open dispensaries.

The New Jersey Department of Health issued the permit to licensed operator Garden State Dispensary on Sept. 14, clearing the way for Thursday's opening of the first retail store in Monmouth County, which according to the regulator has the fourth-highest patient enrollment in the state.

"Expanding access to our growing patient population continues to be a high priority especially during these unprecedented times," Health Commissioner Judith Persichilli said in a statement.

There are currently 12 licensed operators in New Jersey, though not all of them have opened stores. Each is allowed to open up to two satellite locations if they are awarded permits to do so.

New Jersey has more than 85,000 registered marijuana patients, according to the latest count. The state has sought to expand access in recent years and had once planned to license to an additional 24 marijuana businesses, but that process has been stalled by litigation. In January, a state appellate court ordered the health department to cease all license application reviews amid a lawsuit by several rejected applicants, who claim they were unfairly disqualified because of a technical snafu with an online portal.

An attorney for the rejected applicants, Joshua S. Bauchner of Ansell Grimm & Aaron PC, told Law360 that New Jersey's licensing process has been tainted by corruption and lack of transparency.

"Everyone is frustrated," he said. "People are losing money, patients are not satisfied, demand is exceeding supply. It's a mess."

The lawsuit, along with a second pending appeal of health department licensing decisions, has taken on added weight in light of an upcoming legalization ballot measure, according to Bauchner.

The health department did not respond to a request for comment.

Maine Moves Ahead on Recreational Pot After COVID-19 Delays

Maine's cannabis regulator issued its first batch of recreational pot licenses and adopted new product testing rules as the state prepares to become the first to launch an adult-use marijuana program in the midst of a global pandemic.

The Maine Office of Marijuana Policy on Sept. 8 granted its first six marijuana licenses, consisting of three cultivation facilities, two retail stores and one testing facility. The agency said it will continue to issue licenses on a rolling basis.

"While the current health pandemic delayed our efforts and will likely contribute to a less robust introduction to the market than expected, today's action is a start to the realization of the will of Maine voters," OMP Director Erik Gundersen said in a Sept. 8 statement.

On Sept. 11, the agency adopted amendments to its testing regulations, eliminating unlimited harvest batch sizes and easing documentation requirements by allowing operators to keep records in any format. The new rules also refine testing criteria for particular product types and allow test facilities to pick up batches directly from producers.

The opening of Maine's cannabis market, which languished for several years under former Republican Gov. Paul LePage, was pushed back from its planned June debut amid the coronavirus pandemic. But the OMP has moved forward and now plans to launch retail sales as early as Oct. 9.

Tammie L. Snow, a Portland cannabis attorney, told Law360 that the OMP has grown into a highly effective agency since being established in February 2019 by Gov. Janet Mills, a Democrat who is less hostile to marijuana than her predecessor.

"Overall the process with the state has gone smoothly," she said. "It took them a while to get up and running, but I've seen huge changes at the OMP. They staffed up, became more efficient and seem to know what they're doing, which was not the case a year ago."

Colorado Unveils Proposed Social Equity Regulations

Colorado's Marijuana Enforcement Division has unveiled proposed regulations for the state's social equity program, mandated by a June law designed to increase diversity in the cannabis industry and redress the harms of the war on drugs.

The proposed rules, slated for a public hearing Sept. 22, would codify eligibility requirements for social equity applicants. Those licenses would be open to people who have lived at least 15 years in a low-income census tract between 1980 and 2010; have a family member who was arrested or convicted of a marijuana offense; or have a household income less than 50% of the state's median.

Most of the criteria are drawn from social equity programs in other states including Massachusetts and Illinois, according to Alyson Jaen of Fortis Law Partners LLP. What distinguishes Colorado's program is its so-called accelerator component, which allows social equity licensees to partner with existing marijuana businesses. The idea is to reduce barriers to entry.

"One of biggest hurdles is capital," she told Law360. "With this, you could partner with someone else and not take out as much overhead and have a mentor who's already in the business."

Social equity licensees would be permitted to operate in spaces owned by other licensees, though they would need to own at least 51% of their business and disclose their financial relationships and equity arrangements with other parties. Those licensees would only be able to obtain additional licenses piecemeal after at least 180 days of operations.

The proposed rules also cover the implementation of a 2019 Colorado law removing residency requirements for cannabis workers, one of the state's few remaining rules limiting out-of-state participation in the industry since lawmakers largely scrapped limits on outside ownership and investment.

Cannabis business employees and managers would no longer need to establish residency before receiving work permits, which would allow companies to bring in high-skill workers from other states.

Oregon Makes Curbside Delivery Permanent

Oregon's cannabis regulator has approved permanent rules allowing dispensaries to continue curbside delivery sales, where dispensaries bring products to customers waiting in their cars, saying the policy has helped limit the spread of COVID-19 without posing public safety or youth diversion risks.

The Oregon Liquor Control Commission made the change at its regular meeting Friday, when it also raised medical marijuana purchase limits and approved regulatory violation settlements. The commission said that while the curbside rule is now permanent, it may revisit the issue at a later date.

Under the permanent rule, retailers can continue to take orders and bring products to customers outside their doors and within 150 feet of their stores. The commission declined to extend a component of the rule that increased purchase limits for medical marijuana cardholders, reverting them back to their prepandemic levels.

The commission approved curbside delivery on a temporary basis in March, citing social distancing mandates amid the pandemic. Commissioners warned the rule could be rolled back for the entire industry if it proved disruptive to public health and safety.

Mark Pettinger, spokesman for the commission's marijuana division, told Law360 that some marijuana dispensaries have found curbside delivery to be a safer, more secure way to conduct their business.

"This took some trust on our part but we feel the cannabis industry has earned that trust," Pettinger said. "So far it has worked out, and we have had no complaints from law enforcement, which we've been keeping an eye on since we rolled this out."

--Editing by Breda Lund.

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