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16 NOVEMBER 2020
ROUNDTABLE
HOW CAN THE NEW JERSEY REAL ESTATE SECTOR PREPARE FOR THE LAUNCH OF LEGAL RECREATIONAL MARIJUANA?
companies were left high and dry when their permit applications were delayed by litigation. They also need to be
mindful of new
requirements
that are sure to
be imposed by
municipalities,
including
potential “host
community”
fees levied as a condition of local approval. Companies interested in pursuing recreational opportunities will need the help of competent counsel with experience in not just cannabis law, but in zoning and real estate law as well.
JENNIFER MAZAWEY
PARTNER
CHARLES MESSINA
PARTNER
GENOVA BURNS LLC (NEWARK)
Only weeks have passed since New Jersey voters decided by a large margin
that the State
Constitution
should be
amended to
permit adult use
of marijuana,
but with the
state moving
quickly to make adult use a reality, the commercial real estate industry must act quickly to be ready for it. Here are a few things the industry
must consider.
Location, location, location: The new, 206-page regulating legislation (S21/A21) had not passed as of early November but expected to before the end of the year. It will likely provide municipalities the opportunity to zone to permit or prohibit cultivating, distribution and retail facilities. Get to know the municipalities where your building or preferred location is and understand their philosophies
about adult recreational use. Then take advantage of opportunities to engage those communities
to discuss the
benefits of allowing those facilities.
Words matter: Check your lease documents and any mortgage covenants. It is important to remember that under the federal Controlled Substances Act, marijuana is still classified as a Schedule I drug. So, there remains
a conflict between federal and state laws which could cause a would-be developer to inadvertently default on either mortgage covenants or lease documents.
In the end, it is important to communicate with your legal team to determine the best strategies for pursuing cannabis-related development. RE
DARREN M. LIZZACK
ASSOCIATE VICE PRESIDENT
NAI JAMES E. HANSON (TETERBORO)
Using Maine as an example, and all the red tape to get through, New Jersey is probably looking at a couple
years from the time recreational marijuana is signed into law to when the
first dispensary opens. Having worked with clients on the
medicinal side, site selection can
be limited since landlords with federally insured banks cannot allow this usage, making it imperative
that tenants understand both state and federal rules and regulations when selecting a site. While there
is no shortage of retail spaces available given the sector’s less than favorable outlook, which has only been compounded by the COVID-19 pandemic, users will still face hurdles identifying towns in favor of dispensaries, despite the benefits to the state as a whole. I recommend
enlisting the help of a broker that understands the market as well as an attorney, who can both help guide operators through the process.
MATTHEW J. PLATKIN
PARTNER
PETER SLOCUM
PARTNER
LOWENSTEIN SANDLER LLP (ROSELAND)
Based on our years of experience representing many medical cannabis clients in New Jersey, we know that the market for real estate will be fierce when recreational use comes online. This will be particularly
true in urban communities, where drug-free school zones greatly limit
the options
for dispensary locations. While landlords and
tenants might be anxious to sign contingent leases very quickly, they would do well to learn from lessons in the medical space, where many