A Moving Target: Recent New Jersey Case Shows Changing Laws Complicate Cannabis Business
In October 2021, West Milford Council approved the application of SoulFlora, a cannabis business, by supporting its application for a state license but simultaneously passed a law restricting the township to 10 cannabis retail licenses. By December 2021, Big Smoke LLC, another cannabis business, secured a zoning permit in West Milford for its cannabis store, but in April 2022, the council introduced a rule mandating a 2,500-foot distance between cannabis retailers.
In October 2022, when Big Smoke sought the council's approval for its store, it was denied for failure to meet this distance requirement, being only 500 feet away from SoulFlora's location, violating the township's 2,500-foot rule. The denial occurred even though Big Smoke had obtained a zoning permit back in December 2021.
In December 2022, Big Smoke sued, challenging the township's refusal to consider its application and seeking to prevent SoulFlora from using its own prior approval.
During a hearing on Jan. 6, 2023, the trial court declined Big Smoke's request to prevent the issuance of licenses to competitors like SoulFlora and dismissed Big Smoke's lawsuit. Without explaining its reasoning, the court dismissed the complaint with prejudice.
On March 18, 2024, the New Jersey Superior Court’s Appellate Division affirmed the trial court’s decision. The Court held that New Jersey municipalities have wide discretion to regulate cannabis retailer licensing based on local zoning laws, provided the decision is not arbitrary or capricious. Big Smoke had made that claim, believing their zoning permit ranked higher than SoulFlora’s, but (the decision was based on existing law at that time it was made.
The Appellate Court found West Milford's refusal to support Big Smoke's license application to be justified based on the township's law. However, it sent the case back to the trial court because it had not clarified why it dismissed Big Smoke's complaint permanently.
This situation underscores the crucial need for cannabis businesses to meticulously monitor local municipal laws and regulations, as well as to stay vigilant about any pending legislation that might affect their operations during the planning process. Changes in local ordinances, such as distance requirements between stores or limitations on the number of licenses, can significantly impact a business's ability to secure necessary approvals. This is something that heavily affects regulated businesses like cannabis and alcohol. By staying informed and adaptable, cannabis entrepreneurs can better navigate the complex regulatory landscape and make informed decisions to safeguard their interests and ensure compliance.
For information about national and state cannabis law matters and regulatory compliance, please contact our Cannabis Law Practice Group attorneys: William J. Beneduce, Esquire (wjbeneduce@norris-law.com) for New Jersey Cannabis matters or contact our offices at (908)722-0700.