Curaleaf’s Adult-Use License Renewals Rejected in New Jersey

The robust cannabis sales Curaleaf has capitalized on in New Jersey since the state’s adult-use program commenced last April will soon be on halt after state regulators voted April 13 against renewing the company’s licenses.

Curaleaf had its vertically integrated permitting come under scrutiny Thursday for modifications announced March 23 to phase out its cultivation operations in Bellmawr. The multistate operator has a second cultivation facility in Winslow—also in South Jersey—that became fully operational in 2021.

With the Winslow facility having the capacity to support Curaleaf’s current demand in New Jersey, company officials made the decision to streamline their operations, according to a company statement provided to Cannabis Business Times last month. Roughly 40 workers were affected by that decision, but it was unclear how many were laid off or reassigned at that time.

RELATED: Curaleaf Shutting Down Cultivation Facility in New Jersey

This action—specifically as it relates to layoffs and information provided to the state on Curaleaf’s renewal certification paperwork—raised red flags for New Jersey regulators during their monthly Cannabis Regulatory Commission (CRC) meeting Thursday in Trenton. Two commissioners voted against renewing Curaleaf’s licenses, one voted in favor of renewal, and two others abstained from voting until the CRC is provided more information.

As a result, two of Curaleaf’s three dispensaries in the state will likely have to cease serving adult-use customers as soon as April 21—the one-year anniversary of New Jersey’s expanded retail launch. The company’s Bordentown dispensary, which didn’t begin adult-use sales until November 2022, will remain active. And Curaleaf's medical cannabis licenses are not impacted. 

Making matters more complex for possible reinstatement of the Curaleaf adult-use licenses in question, the CRC canceled its meeting for May 4 and is not scheduled to reconvene until June 1.

An official company statement released April 13 by Curaleaf founder and Executive Chairman Boris Jordan called the CRC action unprecedented and “an outrageous act of political retaliation” against the company’s decision to consolidate production.

Please see our statement regarding today's decision by the New Jersey CRC. $CURA $CURLF pic.twitter.com/1AHyF0vPwn

— Boris Jordan (@Boris_Jordan) April 14, 2023

Curaleaf’s adult-use cultivation and manufacturing licenses in Winslow, cultivation and retail licenses in Bellmawr, and retail license in Edgewater were up for annual renewals at Thursday’s CRC meeting. Six other multistate operators that joined Curaleaf in being first to serve New Jersey’s adult-use market last April also had their permits up for review.

“There have been some concerns raised about the certification, the accuracy of the certification materials, that were provided by Curaleaf,” CRC Chair Dianna Houenou, who abstained from voting, said during the public meeting about the company’s renewal paperwork.

The chairwoman went on to ask if Curaleaf had laid off employees from any of its licensed facilities in the state.

Curaleaf’s chief compliance officer, James Shorris, and director of corporate social responsibility, Raheem Uqdah, were in Trenton to represent the company.

“Yes,” said Shorris, who indicated that at least five employees from the Bellmawr cultivation facility were no longer employed by Curaleaf.

“In Bellmawr, every employee who was impacted or would be impacted by that reduction was offered another position, if they were eligible for that,” he said. “So, all employees, less five who were not eligible because of their job performance and other issues, were given those offers and have taken them where they saw fit to do so.”

Curaleaf’s workforce reduction was news to Houenou, who followed up to ask if the reduction was already made. The chairwoman then asked when the Bellmawr employees were notified of the reduction.

“Last month,” Shorris said.

Also during Curaleaf’s licensing review, Commissioner Maria Del Cid-Kosso, who also abstained from voting, mentioned New Jersey Administrative Code Section 17:30-9.2, which in part requires cannabis businesses to submit an application for an amended license for a “modification of capacity, physical plant, or premises,” among other changes.

Del Cid-Kosso said that Curaleaf officials answered “yes” on their adult-use license renewal paperwork to a question pertaining to facility modifications. It wasn’t until later on that the CRC received notification from a senior manager at Curaleaf that the company was in the process of winding down its cultivation operation in Bellmawr, she said.

“When you signed a certification, were you contemplating these changes?” Del Cid-Kosso asked.

Shorris said he wasn’t sure of the exact timing, but he said the reason behind the decision was multifaceted—notably including changes to the market and the efficiency of Curaleaf’s state-of-the-art facility in Winslow.

New Jersey’s cultivation canopy capacity was 418,000 square feet in February, or roughly 4,500 square feet per 100,000 people—below the average of other states with legal cannabis. By comparison, California’s cultivation capacity was estimated at more than 200,000 square feet per 100,000 people during peak saturation in mid-2022.

But during the CRC’s February meeting, the commissioners voted in favor of allowing a statutory cap of 37 cultivation licenses to sunset that month, paving way for greater supply.

Earlier in the April 13 meeting, while CRC commissioners were reviewing Acreage Holdings’ adult-use license renewal certification, Commissioner Krista Nash made a statement about New Jersey’s Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization (CREAMM) Act—adult-use legislation Gov. Phil Murphy signed in 2021.

New Jersey has a long history of protecting workers’ rights, Nash said.

“The CREAMM Act requires cannabis businesses to maintain a labor peace agreement as a condition of licensure,” she said. “It goes even further to mandate a collective bargaining agreement within 200 days of opening if the majority of employees vote to authorize a union. These requirements are not optional.”

While more than 120 workers at Curaleaf’s dispensary in Bellmawr unionized with the United Food and Commercial Workers Local 360 on March 5, the company’s cultivation workers in Bellmawr were not part of that agreement.

Houenou referenced collective bargaining agreements as part of her reasoning for abstaining from voting.

“I am concerned about the layoffs—the layoff announcement—that apparently was made a month ago, or last month, before any information was provided to the commission about any changes that the entity, that Curaleaf, was going to make,” the chairwoman said. “And I think it’s important for the board, and the staff at large, to have proper insight and timely notice of major changes to a facility operations.”

According to Curaleaf’s statement released by Jordan, the CRC’s halt on renewing the company’s adult-use licenses will only “undermine” New Jersey’s nascent cannabis industry.

Curaleaf executives claim they have invested upward of $75 million to support the New Jersey market and that the company’s sales have contributed more than $5 million in state tax revenue and roughly $1.8 million in local tax revenue.

“The CRC board’s action today is as arbitrary as it is lacking in merit and legal basis,” according to the company statement. “Most alarmingly, it will adversely impact our employees—nearly 500 New Jersey residents and Curaleaf team members—as much as it will harm the broader New Jersey cannabis market.”

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