On January 17, 2023, the New Jersey Cannabis Regulatory Commission (CRC) published proposed regulations governing the operation of cannabis consumption areas. These regulations implement the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (CREAMM Act) and build off the Act’s consumption area provisions. The proposed regulations are subject to a 60-day public comment period after which the CRC will vote on adopting the regulations.

A “cannabis consumption area” is not a new license type, but rather an endorsement available to medical and personal-use cannabis dispensaries. The proposed regulations allow qualifying medical Alternative Treatment Centers (ATC) and personal-use Class 5 cannabis retailers to add a “cannabis consumption area” on the premises. Consumption areas may be located either in an indoor, structurally enclosed area of the premises that is separate from the retail sales floor, or in an exterior structure on the same premises as the dispensary.

Outdoor cannabis consumption areas may be partially enclosed but must be designed to prevent the public from viewing any consumption of cannabis and must employ sufficient ventilation to prevent the migration of smoke.

The CRC was limited by the text of the CREAMM Act in many notable ways when drafting the proposed regulations, including the restriction on retail food sales and the level of municipal control. The proposed regulations detail the statutory restriction on retail sales of food at a consumption area, but allow patients, caregivers, and/or consumers to bring food or have it delivered to the establishment. This is a particularly frustrating limitation for prospective consumption area proprietors, as they lose the opportunity to earn any revenue from the sales of food or non-alcoholic beverages (which will likely be allowed across the Hudson in New York).

Municipalities retain a similar level of control over cannabis consumption areas as they do generally with ATCs and Class 5 retailers. For example, municipalities may limit the number of permitted consumption area endorsements within their borders, regulate their operation by ordinance, or prohibit consumption areas altogether (even if medical or personal-use retail sales are otherwise allowed). The CRC will not approve a Class 5 application that seeks a consumption area endorsement without municipal approval; rather, the CRC will immediately forward the Class 5 application to the host municipality to ensure the municipality approves of a consumption area at the proposed retail premises. Therefore, personal-use applicants should only include plans for a cannabis consumption area in a conditional conversion application or an annual application for a Class 5 retailer. Additionally, a Class 5 retailer may apply to the CRC for consumption area approval post-licensure.

The proposed regulations are silent on several technical aspects of opening a cannabis consumption area, such as whether consumption area personnel must undertake any additional training (beyond what is otherwise required for retail personnel), and additional ventilation measures required of consumption areas. Municipalities remain free to regulate these areas.

Notable Takeaways from the Proposed Cannabis Consumption Area Regulations

• Consumption area operators must make a “good faith effort” to ensure only regulated products are consumed on site

• Consumers may bring their own products for consumption, provided it is permitted by the operator (and one assumes many will not allow this). However, neither medical nor personal-use consumption area operators may restrict registered patients from bringing medical cannabis items to a consumption area

• Neither the entity operating the cannabis consumption area, nor anyone else present in the consumption area, may distribute free cannabis samples

• ATCs may only operate one cannabis consumption area, regardless of the number of locations they operate

• The proposed application fee is $1,000. Annual licensing fees are $1,000 for microbusinesses or $5,000 for standard Class 5 retailers