The New Jersey Cannabis Regulatory Commission (CRC) recently started actively pursuing enforcement actions against licensed cannabis businesses. This marks a change from the CRC’s previous posture and signals that cannabis businesses must emphasize compliance in all aspects of their operations to avoid scrutiny and fines.
As of October 2024, the CRC has issued thousands of dollars of fines against multiple operators—both large and small. These include:
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A $10,000 fine against an Alternative Treatment Center for failure to properly store cannabis, to properly provide video surveillance access and access to the physical premises, and to establish proper inventory controls
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A $10,000 fine against a testing laboratory for failure to test cannabis and cannabis items for the pesticide ethephon
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A $7,000 fine against an Alternative Treatment Center for failure to process cannabis free of foreign matter
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A $5,000 fine against an Alternative Treatment Center for violations related to inventory tracking and recordkeeping
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A $5,000 fine against a Class 5 Retailer for violations related to the consumption of cannabis items or tobacco or nicotine products on the licensed premises
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A $5,000 fine against a Class 5 Retailer for gifting samples of cannabis items at events and gifting expired cannabis and cannabis items to employees
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A $3,000 fine against a Class 5 Retailer for a violation related to a change of ownership that was not approved by the CRC
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A $250 fine against a Class 1 Cultivator for a violation related to a failure to maintain status as a diversely owned business
For a business in a lucrative market such as regulated cannabis, a few thousand dollars may appear to be just the cost of doing business. However, a laid-back approach towards potential civil penalties is misguided and risky. There are many possible consequences of running afoul of the CRC—including harming the reputation of the business and facing further scrutiny from the CRC and local authorities. Beyond that, enforcement action has residual consequences on plans to expand to other states and may require disclosure in states where the business is currently licensed.
A cannabis business facing sanctions has options and obligations with respect to addressing the situation. Any cannabis business that receives a notice of violation from the CRC must correct the violation and supply a corrective action plan to the CRC within 20 days of receipt of the notice. Supplying a thorough corrective action plan may reduce the likelihood of CRC enforcement in connection with the notice of violation. Should the CRC impose a penalty on the business, it will have a 14-day period to request an adjudicatory hearing.
As a cannabis business owner, being proactive about compliance is critical. As we have seen with enforcement to date, a comprehensive understanding of inventory requirements, including the proper use of Metrc, inventory storage, tracking and recordkeeping, is pertinent. Ensuring a top-down and bottom-up approach is crucial to avoid any operational inefficiencies that may ultimately result in fines.
