Curaleaf loses license to sell recreational cannabis in New Jersey

Curaleaf, one of the biggestcompanies operating in the North American cannabis market, saw last Thursday being denied the renewal of the license to sell cannabis for adult/recreational use in the state of New Jersey. The state's Cannabis Regulatory Commission (CRC) voted against renewing Curaleaf's license, citing as its main reasons the  closure of cultivation facilities of the company, in particular  in New Jersey, its confrontation with the unionization of workers and the lack of transparency with the State in some aspects.

Remember that Curaleaf had already been involved in some controversial issues in the past. In August 2022, was forced to withdraw tens of thousands of units bottles of dried cannabis flower off New York dispensary shelves, because he decided to switch to an unauthorized way of labeling THC potency, which led patients to believe that the cannabis they purchased was much stronger than usual. But this isn't the first time that Curaleaf has had problems with its packaging labels. In December 2021, Curaleaf already had switched labels from THC to CBD (and vice versa) in “Select” branded products and ended up facing seven federal lawsuits in the United States, having admitted at the time to an “unintentional human error”.

Last Thursday, April 13th, the New Jersey State CRC voted against renewing Curaleaf's license to sell adult/recreational cannabis in New Jersey. This decision comes just a week before the first anniversary since the opening of the adult/recreational use market in the state and has left many analysts dumbfounded.

Only one committee member voted in favor of renewing Curaleaf's annual license, with two other members voting against, with the remaining two abstaining from voting. Some of the reasons that led the CRC to reject the renewal of Curaleaf's license were the closure of one of its cultivation facilities, the confrontation with the unionization of its workers and the lack of transparency with the State in some aspects.

Without license renewal, permission for Curaleaf to carry out its sales and cultivation of cannabis for adult/recreational use purposes will expire on the 21st of April. The decision also leaves uncertain the future of the company's stores in Edgewater Park and Bordentown, which are intended exclusively for "recreational" sales. With regard to the store in Bellmawr, it will be able to continue its activity, since its license is included in the medicinal use program, thus not being affected by the loss of the license to operate in the “recreational” market. It is not yet clear whether the company can appeal the decision.

Curaleaf contests decision

In a statement published in Twitter, Curaleaf called the commission's action an “outrageous act of political retaliation for our need to concentrate production operations in just one location”. According to Curaleaf's statements, the decision was "arbitrary" and "lacks merit and legal basis". The company also claims that it was in good standing with the CRC and that it met all the necessary requirements for license renewal, and has expressed concern about the decision's impact on its nearly 500 employees and the overall New Jersey cannabis market. The note ends with Curaleaf's intention to maintain operations and efforts to continue working with the CRC to secure renewal of the license for the adult use market using "any means necessary" to do so.

Please see our statement regarding today's decision by the New Jersey CRC. $CURE $CURLF pic.twitter.com/jX3XWeI12W

— Curaleaf (@Curaleaf_Inc) April 14, 2023

CRC President Dianna Houenou stated that the board needs adequate insight and timely notification of major changes to companies' activities. She also noted that there was still a lot of missing information that needed to be provided in a quick and transparent way. The closure of one of Curaleaf's cooking facilities, the company's shock with unionization and its lack of transparency with the state were cited by Curaleaf as reasons for the rejection.

Commissioner Krista Nash noted that the state's legalization law includes a requirement for cannabis companies to maintain a labor peace agreement. This agreement is a condition of licensing and requires collective bargaining within 200 days of first opening a dispensary if a majority of employees vote to form a union. Nash stressed that this was an explicit mandate and not a challenge for companies to find a loophole in the law.

While the reasons behind the decision are still unclear, the requirement of the labor peace agreement is an explicit mandate that companies must comply with, and Curaleaf has run into trouble in other states over disagreements with unions. The denial of Curaleaf's license renewal came as a shock to many in the industry and left the company looking for legal action. The decision also raises questions about the future of the cannabis industry in New Jersey and its regulations.