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New Jersey Reforms its Medical Marijuana Program

On July 2, 2019, New Jersey Governor Phil Murphy signed the Jake Honig Compassionate Use Medical Cannabis Act (the “Act”) into law, enacting sweeping reforms to New Jersey’s Medical Marijuana Program, which, until 2018, had only 15,000 patients. The law became effective upon signing.

The Act creates the Cannabis Regulatory Commission (“CRC’), outside of the New Jersey Department of Health, which is charged with developing, expanding, and regulating the medical cannabis industry in the state.1  The Act establishes three distinct permit types (medical cannabis cultivators, manufacturers, and dispensaries), replacing the previous framework which authorized only a single permit for “alternative treatment centers” that covered all three categories. The Act calls for expanding the number of cultivators in the state to 28, including the 12 that already have been approved by the New Jersey Department of Health.2  For a period of 18 months after the effective date, an entity will be permitted to hold one permit of any type; after 18 months, however, an entity will be authorized to concurrently hold different types of permits.3 The Act directs the CRC to ensure the availability of a sufficient number of medical cannabis growers, manufacturers, and dispensaries throughout the State, including at least two each in the northern, central, and southern regions of the State.4

Changes Impacting Employers

The Act contains key protections for qualifying patients in the employment context. The Act prohibits employers from taking any adverse employment action against an employee who is a registered qualifying patient based solely on the employee’s status as a registrant.5  Employers may maintain drug testing policies, but, if an employee or applicant tests positive for cannabis, the employer must offer the employee or applicant an opportunity to present a legitimate medical explanation for the positive test result and provide written notice of the right to explain to the employee or applicant. Within three working days after receiving notice of the right to explain, the employee or applicant must submit information to the employer to explain the positive test result or request a retest at the employee’s own expense.6

The Act does not prohibit an employer from taking an adverse employment action against an employee based on the possession or use of intoxicating substances during work hours or on the premises of the workplace outside of work hours, nor does it require an employer to commit any act that would cause the employer to be in violation of any federal law or result in a loss of a licensing-related benefit pursuant to federal law, or that would result in the loss of a federal contract or federal funding.7

Changes Impacting Health Care Facilities

The Act also contained key changes designed to encourage health care facilities to allow personnel to assist qualifying patients with the administration of medical cannabis. It permits (but does not require) health care facilities8 to designate “institutional caregivers,” who are allowed to assist qualifying patients with the medical use of cannabis, including obtaining medical cannabis from a dispensary, accepting deliveries of medical cannabis on behalf of the qualifying patient, and assisting with administration of medical cannabis to a qualifying patient.9  

Institutional caregiver applicants must submit a certification executed by the director or administrator of the facility attesting that (i) the facility has authorized the applicant to assist registered qualifying patients at the facility with the medical use of cannabis, (ii) the facility has established protocols and procedures and implemented security measures to ensure that medical cannabis is transported and stored in a safe and secure manner, (iii) the facility has established protocols and procedures to review the medications and treatment plans of registered qualifying patients at the facility to ensure that the use of medical cannabis will not result in adverse drug interactions or other complications, (iv) the facility has established protocols and procedures concerning whether, and to what extent, designated caregivers are permitted to assist registered qualifying patients with the medical use of cannabis while at the facility. Facilities are required to notify the CRC if institutional caregivers are no longer authorized to assist qualifying patients, or if an institutional caregiver is convicted of a crime or offense in the State.

The Act also prohibits a health care facility that employs or maintains a professional affiliation with a health care practitioner from taking adverse employment action against the health care practitioner, or otherwise limiting, restricting, or terminating a professional affiliation with the health care practitioner based solely on the health care practitioner’s practice of authorizing patients for the medical use of cannabis or consulting with patients regarding the use of medical cannabis – unless failing to do so would result in the health care facility losing a monetary or licensing related benefit pursuant to federal law.10

Other Reforms

The Act also:

  • Phases out the state’s 6.625% medical marijuana sales tax over three years;11
  • Enables physicians’ assistants and nurse practitioners to recommend medical cannabis, in addition to physicians;12
  • Does not require health care practitioners to register with the CRC or be publicly listed in any CRC registry as a condition of authorizing patients for medical cannabis use;13
  • Permits health care practitioners to authorize up to a one-year supply at a time, subject to staggered dispensing requirements;14
  • Increases the limit that can be dispensed from 2 ounces to 3 ounces for 18 months after the effective date, and authorizes the CRC to establish limits afterwards;15
  • Lowers the threshold from debilitating illnesses to “qualifying” illnesses to make it easier for health care practitioners to authorize medical cannabis use;
  • Grants out of state medical cannabis patients permission to possess and use medical cannabis while visiting New Jersey for no longer than six months, but does not permit them to buy medical cannabis in New Jersey unless a health care practitioner licensed in New Jersey has authorized them to do so;16
  • Permits home delivery of medical cannabis;17 and
  • Sets a goal of awarding 15% of licenses to minority business owners and 15% to women, veterans, and disabled persons.18

Conclusion

The Act promises a major expansion of New Jersey’s medical cannabis program but also creates risks for employers and health care facilities, particularly since the federal prohibition against any marijuana use under the Controlled Substances Act has not changed. As they navigate these significant changes to New Jersey’s medical marijuana scheme, employers and health care providers should seek to ensure that they are complying with the Act and seek legal guidance as needed to reduce exposure to employment and credentialing litigation, as well as other violations of law.

 

1 N.J. Stat. § 24:6I-31 (The Cannabis CRC is in, but not of, the Department of Treasury, and is completely distinct from the Department of Health. All citations are to the bill (A-20) introduced on June 18, 2019.  https://www.njleg.state.nj.us/2018/Bills/A0500/20_I1.HTM.  The law has not yet been codified.

2 N.J. Stat. § 24:6I-7.a(2)(a)(ii).

3 N.J. Stat. § 24:6I-7.a(2)(b).

4 N.J. Stat. § 24:6I-7.a(3).

5 N.J. Stat. § 24:6I-9.a.

6 N.J. Stat. § 24:6I-9.b.

7 N.J. Stat. § 24:6I-9.c. Federal law classifies marijuana as a Schedule 1 controlled substance, meaning it has no medical value and a high potential for abuse. 21 CFR § 1301.11. It is illegal to possess, distribute, or dispense controlled substances without permission from the federal government. 21 U.S.C. § 841. New Jersey’s medical cannabis statutory scheme does not relieve employers of the obligation to comply with federal law. Employers will have to evaluate and decide on a case-by-case basis how best to manage their state and federal obligations.

8 “Health care facilities” under the statute mean a general acute care hospital, nursing home, long term care facility, hospice care facility, group home, facility that provides services to persons with developmental disabilities, behavioral health care facility, or rehabilitation center. N.J. Stat. § 24:6I-3.

9 N.J. Stat. § 24:6I-4.h.

10 N.J. Stat. § 24:6I-6.k. Allowing employed health care providers or medical staff physicians to store, administer or authorize patients to use medical cannabis may jeopardize a health care facility’s Medicare or Medicaid funding, or eligibility for other federal grants, given marijuana’s illegal status under federal law. Health care facilities will need to carefully evaluate what employed or affiliated health care providers may do with respect to medical cannabis in light of the conflict between federal and state law.

11 N.J. Stat. § 24:6I-10.h.

12 N.J. Stat. § 24:6I-10a.

13 N.J. Stat. § 24:6I-5.a.

14 N.J. Stat. § 24:6I-10b.

15 N.J. Stat. § 24:6I-10f.

16 N.J. Stat. § 24:6I-7a.

17 N.J. Stat. § 24:6I-27.i(1).

18 N.J. Stat. § 24:6I-12.g.

About the Authors

Elizabeth M. Hein is a Principal in the Firm’s Health Care Practice Group, providing legal services to the Firm’s health care clients in litigation, regulatory, and compliance matters.

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Andrea M. Kirshenbaum is the Chair of the Firm's Employment and Labor Practice Group and its related Practice Groups, Employment and Collective Class Actions, Employment & Employee Relations, Labor, Trade Secret & Non Compete Law, and Wage and Hour. She is also a member of the Firm's Appellate Department. She defends employers nationally in federal and state court litigation involving all major employment statutes, represents them in related government investigations, and counsels them proactively on compliance with these statutes.

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