In a recent development, two of New Jersey's most prominent cannabis operators find themselves facing substantial fines following a decision by the state's Cannabis Regulatory Commission (CRC). The CRC board members voted to issue penalties far exceeding recommended limits for violations committed by these operators.
During the CRC's board meeting on September 8, commissioners voted 3-1 in favor of imposing a staggering $100,000 civil penalty on TerrAscend, a Toronto-based cannabis company. TerrAscend was found guilty of five infractions related to medical cannabis patient access. Specifically, complaints were received that patients were being directed to purchase products from the adult-use menu, which are not only more expensive but also subjected to higher taxation compared to medicinal products.
Despite the CRC staff recommending a maximum penalty of $5,000 per violation, totaling $25,000, CRC Executive Director Jeff Brown expressed that TerrAscend had taken corrective actions, including the implementation of new standard operating procedures and staff retraining. He noted that the cannabis industry in New Jersey was still relatively new for both businesses and consumers. Consequently, Brown did not recommend exceeding the maximum penalty, urging the board to consider other factors in evaluating the company's compliance.
However, disregarding Brown's counsel, the CRC commissioners imposed a penalty on TerrAscend four times greater than the recommended maximum as outlined in state regulations.
In response, a TerrAscend spokesperson provided a statement: “TerrAscend has a deep history of compliance in New Jersey, as this is the first violation of any type we’ve received in our four years of operating in the state. In June 2023, we were informed that the CRC had received five medical patient complaints related to the fact that certain products were listed only on our adult-use menu. While these patients were still able to purchase these products, it violated a CRC requirement that all products available on our adult-use menu must also be listed on our medical menu. Once informed of this deviation, TerrAscend took immediate action to refine product listing procedures, including IT improvements and further employee training to ensure full compliance with these requirements. We share in the CRC’s focus on ensuring that New Jersey’s medical patients are treated with the priority and care they deserve.”
Subsequently, the board commissioners voted 3-1 to impose a $50,000 penalty on Columbia Care, a New York-based cannabis operator, for allowing a labor peace agreement, mandatory under New Jersey cannabis regulations, to lapse for 13 days in early June, according to CRC.
CRC Executive Director Jeff Brown noted that there was only one violation, and Columbia Care promptly rectified the situation. He stated, “I certainly don’t think I would even recommend going up to the $5,000 [maximum penalty] on this. They have a labor peace agreement in place.”
Yet again, the board commissioners defied Brown's recommendation and imposed a penalty on Columbia Care that was ten times the maximum recommended limit.
Notably, CRC Board Chair Dianna Houenou clarified before the votes that the matrix used for Brown’s recommendations are non-binding, and the board has the authority to issue fines of up to $50,000 for Category V (non-major) violations.