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The Intersection of Real Estate and Cannabis Law

On March 3, 2026, the Appellate Division of the Superior Court of New Jerey held that a prospective cannabis retailer is entitled to an explanation by a municipal governing body for denial of an application for a “resolution of support” (ROS), which is a requirement under the NJ Cannabis law to obtain a Retail Cannabis License.

A City Council is required to provide a discernible basis for denying an ROS application to inform the applicant and the public of its reasons, as well as afford meaningful appellate review. A City Council’s failure to do is a reversable error.

In Higher Breed NJ LLC v. The City of Burlington Common Council, 2026 N.J. Super. LEXIS 33 (App. Div. March 3, 2026)(Approved for Publication), the Appellate Court considered whether the City of Burlington Common Council (City Council) was required to provide a reason for denying Higher Breed NJ LLC’s (Higher Breed) application for a ROS, as required under  N.J.A.C. 17:30-7.10(b)(9). A ROS is a requirement to obtain a Cannabis Retailer License (CRL) from the State of New Jersey Cannabis Regulatory Commission (CRC) under the Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (CREAMMA), N.J.S.A. 24:6I-31 to – 56. 

Here, after the City Council held three separate public meetings and after hearing testimony from Higher Breed in support of the ROS, and from an objector (a real estate broker alleging Higher Breed failed to pay him a real estate commission for arranging a commercial lease at the subject property to Higher Breed and referring to Higher Breed as “unprofessional” and alleging they exhibited “ethically questionable behavior”), the City Council announced (without any explanation or reasons) it will not grant  Higher Breed’s application for the ROS. The City Council relied on a recent Appellate Division decision in Big Smoke LLC v. Township of West Milford, 478 N.J. Super. 203 (App. Div. 2024) (municipalities have wide discretion in deciding to grant, deny or reconsider requests for an ROS for cannabis businesses).

CREAMMA specifically directs that a business intending to sell cannabis from a retail establishment must obtain “a Class 5 [CRL]” from the CRC to operate a retail premise. N.J.S.A. 24:6I-42. The CRC has issued regulations identifying the proofs a prospective business must submit in its application, including zoning approvals and “[p]roof of local support.” N.J.A.C. 17:30-7.10(b).

The CRC requires “[p]roof of local support, which shall be demonstrated by resolution adopted by the municipality’s governing body, or where the municipality has no governing body, a written letter of support from the municipality’s executive.” N.J.A.C. 17:30-7.10(b)(9). “‘[P]roof of local support’ [is] embodied in a municipal governing body’s resolution.” Big Smoke LLC, 478 N.J. Super. at 219 (citing N.J.A.C. 17:30-7.10(b)(9)).

The Appellate Court in Higher Breed found:

The City Council’s failure to provide a reason for denying Higher Breed’s ROS application prevents the applicant and public from understanding its action, and meaningful appellate review. We have held that a municipality’s discretionary determination shall be “vested with a presumption of validity[] that will be upheld where any state of facts may reasonably be conceived to justify the action.” Vineland Constr. Co. v. Township of Pennsauken, 395 N.J. Super. 230, 255 (App. Div. 2007) (citing Quick Chek Food Stores v. Township of Springfield, 83 N.J. 438, 447 (1980)). Stated another way, for the City Council’s resolution to be accorded deference, there must be a clearly discernible basis provided to support its decision.

Additionally, a governing body has the responsibility to set forth findings of facts in its decision to facilitate meaningful review. Cf. In re Application for Med. Marijuana Alt. Treatment Ctr. for Pangea Health and Wellness, LLC, 465 N.J. Super. 343, 375 (App. Div. 2020) (providing that “an administrative agency acting quasi-judicially must set forth basic findings of fact, supported by the evidence and supporting” its determination “for the salutary purpose of informing the interested parties and . . . any reviewing tribunal of the basis on which the final decision was reached so that it may be readily determined whether the result is sufficiently and soundly grounded” or is arbitrary, capricious, or unreasonable). Despite the lack of statutory directive, “[t]he requirement of findings is far from a technicality and is a matter of substance.

The Appellate Division affirmed in part and vacated in part the trial court’s decision and remanded the case back to the City Council. The Appellate Division held “the City Council was required to provide a discernible basis for denying Higher Breed’s ROS application to inform the applicant and the public of its reasons, as well as afford meaningful appellate review.” “The City Council on remand is directed to give further consideration to Higher Breed’s application and sufficient reasons for its decision regarding Higher Breed’s ROS. We express no opinion on the outcome of this matter.”

The lesson here is a diligent applicant should protect the record before a City Council in the event of an appeal to the Court. When applying to a City Council for an ROS, the applicant should offer and build a record with sufficient and credible admissible evidence in support of the ROS. Here, the trial court correctly noted “[t]he four members who voted against the ROS did not state a reason for their vote that was related to site suitability or not complying with Burlington City’s local ordinances.” The trial judge also reasoned that “another cannabis applicant, Northern Alternatives, LLC” was issued an ROS at the third meeting and the application was similar to Higher Breed’s application. Additionally, the City Council had approved an ROS for “a medical cannabis establishment for LIFE Compassion Center Dispensary, LLC” at the property in 2021. The trial judge went on to explain that the record did not support the City Council’s decision, noting it was not based on “any substantiated evidence.”

I have successfully obtained ROSs for clients applying for Retail Cannabis Licenses before the CRC. If you require legal assistance with an ROS application, please feel free to contact me at afox@capehart.com.

Notable Win: Retail Cannabis License Granted by Borough of Pennington

Client: Jersey Meds Management LLC

Entities: Borough of Pennington Planning Board and Council for the Borough of Pennington

Representing Attorneys: Alan P. Fox and Sheila M. Mints, Esqs. 

**Results may vary depending on your particular facts and legal circumstances**

On May 2, 2022, the Pennington Borough Council approved our request and granted a Resolution of Support of the Application of Jersey Meds Management LLC submitted to the state for a Class 5 Cannabis Retail license.

On June 10, 2022, we obtained a letter from the Pennington Borough Zoning Officer certifying that the Jersey Med’s proposed location for the retail cannabis business conformed with local zoning requirements allowing the operation of a cannabis retailer as a “conditional use.”

On July 29, 2022 , the New Jersey Cannabis Regulatory Commission (CRC) issued to Jersey Meds a Final Agency Decision- Approval of a Conditional License Application for the proposed retail cannabis operation located in the Borough of Pennington.

On December 14, 2022, the Pennington Planning Board granted Jersey Med’s Application for Conditional Use Approval for the operation of a licensed retail cannabis business, by a vote of 8-0 (unanimous approval).

On April 27, 2023, we filed on behalf of Jersey Meds with the Pennington Council an application for a local retail cannabis license.

On June 5, 2023, the Pennington Council granted our request and adopted a Resolution authorizing the Clerk of the Borough of Pennington to issue a local cannabis license, with conditions, to Jersey Meds.

Since obtaining the Conditional Use Approval from the Pennington Planning Board, Jersey Meds was permitted to and has submitted to the CRC an application to convert the conditional state license to a final state license. The expectation is the CRC will issue to Jersey Meds the final state Class 5 Retail Cannabis license this summer.

Jersey Meds will become the first licensed Retail Cannabis business in the Borough of Pennington.

  • Articles

In a Case That Could Have Broader Implications for the Cannabis Industry, Medmen Argues Federal Courts Cannot Enforce Cannabis Contracts

MedMen, a publicly traded, multi-state cannabis company, is being sued by its former landlord in federal court over allegations of a broken lease of an Illinois-based property. The landlord, 942 Fulton Street, LLC (“Thor”), now claims that MedMen owes at least $950,960.02 in unpaid rent.

In a move that could have outsized effects on interstate cannabis contracts, MedMen filed a motion for summary judgment arguing that the federal court cannot enforce the lease and make MedMen pay back rent because cannabis is federally illegal, making the underlying lease invalid and unenforceable under federal law.

Federal courts do not enforce contracts that involve illegal activities as such contracts are considered to run counter to public policy. For example, one cannot sue an assassin for a broken contract, as enforcing said contract would go against the public policy against murders. Similarly to a contract for murder by an assassin, a federal court will not enforce a contract for the sale and purchase of illegal drugs because doing so would contradict public policy by encouraging illegal activity.

Using this theory rooted in public policy, MedMen’s argument is that the lease with Thor was explicitly for property intended only to be used as a cannabis dispensary because MedMen’s primary business is selling Cannabis. MedMen argues that Thor would then be collecting rent based on selling a federally illegal drug. (While Cannabis is legal in many states, including Illinois and New Jersey, it is still federally illegal. See 21 U.S.C. § 812(c)(10)(listing marijuana/cannabis as a Schedule I controlled substance).) Therefore, if the Court were to enforce the lease and force MedMen to pay back rent, the Court would be endorsing illegal activity; which MedMen asserts the Court cannot do. Thus, MedMen asserts the Court cannot force MedMen to pay back rent.

Even MedMen acknowledges that this is a grey area for federal courts. While federal courts have refused to enforce cannabis related contracts in the past, there are no controlling or appellate decisions squarely addressing this topic. Therefore, the Court’s decision could cause a significant impact on the future operations of cannabis companies.

Should the Court choose to enforce the lease, it would be a strong sign of the federal government loosening its stance on Cannabis and a signal to Cannabis companies that they cannot evade their contractual commitments in federal court.

On the other hand, should the Court choose not to enforce the lease, it would force cannabis companies and those seeking to contract with them to be even more proactive and diligent. Cannabis companies would have to consider the potential downside of entering into a contract with an out-of-state entity that could end up in federal court. Additionally, non-cannabis companies such as real-estate companies or general suppliers would most likely be more reticent to contract with out-of-state companies or cannabis companies in general due to a fear that they could renege on their commitments.

Regardless of the outcome in this case, contracts involving cannabis or cannabis businesses should have a choice of law clause requiring any dispute to be litigated in the Court of a state with legalized Cannabis where the contract would not be considered against public policy. This will prevent the uncertainty of litigating a cannabis involved contract in federal court where enforceability is unclear.

If you have any questions about how you can protect your business, please contact a member of the firm’s Cannabis Law Group.

New Jersey Cannabis Regulatory Commission Issues Guidance on Workplace Impairment

The New Jersey Cannabis Regulatory Commission (“NJ-CRC”) recently released much anticipated workplace guidance for how employers can and should handle workplace impairment.

The guidance released by the NJ-CRC applies to all employers, whether operating in the cannabis industry or otherwise. The guidance first and foremost reiterates that an employee cannot be subject to any adverse employment actions due to a positive drug test for cannabis alone under New Jersey law.   For an employer to take an adverse employment action against an employee, a positive drug test AND “evidence based documentation” that the employee is impaired during working hours is needed.

The long anticipated guidance does not create the scheme for certifying workplace impairment recognition experts as many had hoped. However, it does note that employers can still use reasonable suspicion testing with “evidence based documentation” in order to show an employee is intoxicated on the job and ultimately to take adverse actions against an employee.

The question becomes, what is “evidence based documentation” that an employee is impaired, and who can provide it? The NJ-CRC notes that, employers can use “established protocols” for developing reasonable suspicion that an employee is impaired on the job. This means that employers can designate an interim staff member or third-party contractor to help determine that an employee may be impaired on the job. The interim staff member or third-party contractor would also be responsible for filling out the appropriate documentation.

Signs of employee impairment that can be documented include behavioral indicators such as slurred speech or impaired judgment, physical manifestations which include flushed skin or bloodshot eyes, or other evidence such as odor or diminished performance. The NJ-CRC drafted a sample form that can be used to document impairment which can be found here.

Additionally, if an employer chooses, they can use a cognitive impairment test or eye scans to help determine if an employee is impaired on the job. Once documentation showing reasonable suspicion an employee is impaired on the job is combined with a positive drug screen, an employer can take adverse employment actions against an employee – including firing.

Therefore, the guidance recommends that employers first establish and document reasonable suspicion that an employee is impaired on the job and then drug test the employee to verify that the employee has used the intoxicating substance.

Overall, this guidance, while offering broad protections for employee off-the-clock cannabis usage, empowers employers to fire employees they believe show signs of impairment on the clock. It further gives employers a wide range of tools to document said impairment.

These protections do not apply to everyone, however. If an employer has federal contracts, it still may take adverse employment actions against an employee based on a positive drug test alone.

If you have any questions about this new guidance, please contact a member of the firm’s Cannabis Law Group.

Notable Win: Cannabis Business Resolution of Support Granted After Second Hearing

Client: Jersey Meds Management LLC

Court: Pennington City Counsel

Representing Attorneys: Sheila M. Mints, Esq. and Benjamin P. Ojserkis, Esq.

**Results may vary depending on your particular facts and legal circumstances**

After multiple competitive hearings with multiple applicants our client won a Resolution of Support from the town of Pennington for its Cannabis business.

In order for our client to receive approval from the state to open a dispensary, a resolution of support from the town they want to locate in is necessary.

This was a big win for our client as the resolution of support from the local town is the most difficult part of getting approval to open a cannabis business from the state. Many towns such as Pennington cap the number of cannabis businesses that can open in their town so it becomes a very contested affair.

After our clients were denied at the first council meeting Ms. Mints got the Council to give us a second hearing and ultimately got our client what they needed – a resolution of support.

In June 2023, our client was granted a retail cannabis license.  Click here to read more.

The Green Market in the Garden State: Session #4 – Psilocybin: Science, Medicine, Policy

[vc_row][vc_column][vc_column_text]This installment of the Cannabis Advisory Group’s webinar series includes panelists discussing the science, medicine and policy behind psilocybin. The event is sponsored by Capehart Scatchard’s Cannabis Law Group. David L. Nathan, MD, founder of Doctors for Cannabis Regulation, will moderate the panel.[/vc_column_text][/vc_column][/vc_row][vc_row css=”.vc_custom_1515174133361{padding-bottom: 35px !important;}”][vc_column width=”1/2″][tm-heading h2=”Objectives” txt_align=”center”][vc_column_text]The goal is to connect business professionals in the region or those thinking of making a leap into the cannabis industry.[/vc_column_text][vc_btn title=”Registration” style=”modern” align=”center” i_icon_fontawesome=”fas fa-download” add_icon=”true” css=”.vc_custom_1614961076312{padding-top: 20px !important;padding-right: 20px !important;padding-left: 20px !important;}” link=”url:https%3A%2F%2Fbit.ly%2F2PDBng8|target:_blank”][/vc_column][/vc_row]

Governor Murphy Signs off on New Jersey Cannabis Legalization Bills

It is official, Governor Murphy signed three bills that together legalize cannabis for adults 21 years of age and older, making New Jersey the 13th state to legalize cannabis. On Monday, February 22, 2021, Governor Murphy signed the bills in to law, after both the Senate and Assembly held voting to pass a third bill establishing civil penalties for those under 21 caught with cannabis.

Here are New Jersey’s new cannabis laws, effective immediately:

  1. New Jersey adults 21 years of age and older may legally purchase and possess up to one ounce of cannabis, although cannabis consumers will not have legal means to purchase it yet. Under A21/S21 a New Jersey Cannabis Regulatory Commission will be established to develop regulations to govern the medical and adult-use industries and oversee the applications for licensing of cannabis businesses. The bill directs the CRC to promote diversity and inclusion in business ownership and contains employment protections for people who engage in lawful behavior with respect to cannabis. The Cannabis Regulatory Commission still must be fully seated to oversee the cannabis industry, which has six months to set up its rules and regulations before it seeks new licensees for businesses. The bill provides for the Legislature to reinvest cannabis revenues in designated “impact zones” and all retail sales will be subject to state sales tax and seventy percent of that revenue will be given to these “impact zones.”
  2. The second law signed by Governor Murphy, A1897 reduces criminal and civil penalties for those found with larger quantities of cannabis in their possession (distribution of more than one ounce but less than five pounds), as well as provides remedies for people currently fighting certain cannabis charges, including a pathway to vacate active sentences for particular offenses committed before enactment of the enabling legislation. The bill prevents certain unlawful low-level distribution and possession offenses from being used in pretrial release, probation and parole decisions, and provides certain protections against discrimination in employment, housing and places of public accommodation.
  3. A third law signed by Governor Murphy, A5342/S3454 also refines penalties for cannabis possession and consumption for those under 21 years of age. This bill requires a series of written warnings, rather than criminal penalties or fines, for those under 21 years of age found with cannabis. Third-time offenders can receive community service. The law also restricts police from conducting searches of those under 21 years of age based solely on the odor of cannabis.
  • Firm News

Sheila Mints Presents at New Jersey Cannabis Industry Event

On March 10, 2020, Sheila M. Mints, Chair of the firm’s Cannabis Law Practice, spoke at the NJ Cannabis Insider Live: The Road to Legalization conference.  The conference, co-sponsored by Capehart Scatchard, was held at the New Jersey Convention & Exposition Center in Edison.

Ms. Mints participated in a panel discussion entitled, “Medical Cannabis – The Next Frontier.” The panel discussed the state of medical marijuana in the State of New Jersey as well as cannabis research and the forces shaping it.

Ms. Mints, a resident of Riverton, counsels businesses, public entities, and entrepreneurs interested in entering the multifaceted cannabis market.  Additionally, Ms. Mints Chairs the Healthcare Law Practice where she specializes in healthcare transactional matters, including shareholder and employment agreements, purchases and sales of medical practices, including ACO transactions, and practice mergers.

Hemp in New Jersey – It’s Legal!

Now removed from the 2018 Farm Bill’s federal controlled substances list, beginning this year (2020) hemp can be treated like any other agricultural commodity in New Jersey. The Garden State is one of the first three states to have its hemp program approved by the United States Department of Agriculture (USDA).  Now the New Jersey Department of Agriculture (NJDA) can start accepting applications.

Here is what you need to know:

1) There are two types of licenses:

a) Grower (Producer) = a business or person who is authorized by the NJDA to cultivate hemp

b) Processor/Handler

i) Processor = Includes, but is not limited to, entities acquiring raw hemp materials and processing them into products.

ii) Handler = Those who possess or store a hemp plant on premises owned, operated, or controlled by a hemp producer for any period of time or in a vehicle for any period of time other than during the actual transport of the plant between premises owned, operated, or controlled by hemp producers or persons or entities authorized to produce hemp pursuant to any federal and state law or rule adopted pursuant thereto. Examples of “handlers” include, but are not limited to, seed cleaners, analytical labs, traders, harvesting entities, brokers, and other service providers.

2) Fees:

The Program establishes a schedule of fees to be paid based upon whether the hemp producer will be growing, processing, or handling hemp. Growers will pay an annual $300 plus $15 per acre fee, handlers will pay a $450 annual fee, and processors will pay an annual fee for each type of hemp component they process. For example, a hemp producer who processes grain ($450) and CBD extract ($1,000) will pay a $1,450 annual fee. Growers are permitted to process and handle their own hemp without paying additional fees. However, once a grower processes or handles hemp from at least one (1) separate hemp producer, the grower must pay applicable processor and handler fees.

3) The NJDA has the following restrictions

a) N.J.A.C. 2:25-2.2 – requires a site modification fee any time a growing site is altered or added to an existing license. This is necessary, so that the Department can submit accurate records to the USDA, which must be kept apprised of the status of all hemp producers and have accurate legal descriptions of all land being used to produce hemp.

b) N.J.A.C. 2:25-2.2 – prohibits public access to hemp, such as hemp mazes or any other recreational activity. The Department deems these measures necessary to prevent members of the public from having unauthorized access to plants and seeds that could be used to cultivate hemp in violation of this chapter.

c) N.J.A.C. 2:25-3.2 – allows the Department to prohibit any hemp, seeds, plantlets, or propagules for any reason. If the Department determines that any particular strain or source for hemp is unreliable, it may be prohibited in order to protect the integrity of the program. Hemp farmers will suffer financial losses for every non-compliant field they must destroy, so it is more efficient to prevent non-compliant hemp from being planted to begin with. If non-compliant hemp is processed into foodstuffs, it could result in State or nationwide recalls.

4) The application must provide the geographical land area on which hemp is going to be cultivated, processed, or handled. The application is tied to a particular building for processing and includes buildings used for processing.

5) Unlike cannabis licenses, at this time the NJDA has not limited the number of licenses they will issue. However, make sure your application is done right as incomplete answers will remove your application from consideration.

6) Upon request by law enforcement, any person transporting hemp or hemp materials shall maintain and prove authorization to engage in the commercial sale of hemp under the NJ hemp program, along with a travel manifest that lists the origin, destination, product description, and date of transport. Third-party carriers are not required to be authorized hemp producers in order to transport hemp.

7) Hemp products may be transported across state lines and exported to foreign countries in a manner that is consistent with federal law and the laws of respective foreign countries under the Agriculture Improvement Act of 2018.

8) Provided the distribution is carried out in accordance with federal and state law, distribution of CBD extract outside of New Jersey is not prohibited if it was grown/processed in New Jersey.

If you are interested in learning more about the hemp application process or submitting an application in New Jersey, please contact me at smints@capehart.com or 856.840.4945.

Free Networking Breakfast Event for Cannabis Professionals

[vc_row][vc_column][vc_column_text]Please join us for a free networking breakfast for professionals working in the cannabis space from 8:30 am to 10:00 am on Thursday, November 21st, at the law office of Capehart Scatchard in Mount Laurel.

Shareholder and Chair of the firm’s Cannabis Law, Sheila M. Mints, will address the changes to cannabis laws in the region. Sheila has been practicing in the medical marijuana space for many years and has tremendous perspective about New Jersey’s path to expanding medical marijuana in the region.

Refreshments will be served.[/vc_column_text][/vc_column][/vc_row][vc_row css=”.vc_custom_1515174133361{padding-bottom: 35px !important;}”][vc_column width=”1/2″][tm-heading h2=”Objectives” txt_align=”center”][vc_column_text]The goal is to connect business professionals in the region or those thinking of making a leap into the cannabis industry.[/vc_column_text][vc_btn title=”Registration” style=”modern” align=”center” i_icon_fontawesome=”fa fa-download” add_icon=”true” css=”.vc_custom_1571935938638{padding-top: 20px !important;padding-right: 20px !important;padding-left: 20px !important;}” link=”url:https%3A%2F%2Fwww.eventbrite.com%2Fe%2Ffree-networking-breakfast-event-for-cannabis-professionals-on-nov-21-tickets-77564943835%3Faff%3Deac2||target:%20_blank|”][/vc_column][vc_column width=”1/2″][tm-heading h2=”Panelist” txt_align=”center”][vc_column_text]

Sheila M. Mints, Esq.

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