NJ Cannabis Industry To Focus On Environmental Considerations

Most people don’t think of the environmental impact of cannabis, but producing cannabis products can be energy intensive and involve issues relating to water, air quality, and waste management.  In New Jersey, where the recently legalized adult-use cannabis industry has been estimated to be worth more than $2 billion annually, cannabis operations will be required to consider and address environmental impacts.  In fact, both the new law regulating the adult-use cannabis industry in the Garden State, as well as the prior laws regulating the Medical Marijuana Program, obligate prospective cannabis businesses to prepare and submit an environmental impact plan as part of the competitive licensing process.  Cannabis businesses looking to operate in New Jersey should prepare early in the planning process to focus on environmental considerations, bringing together architects, engineers, and environmental professionals to do so.  Put simply, minimizing environmental impacts will improve a prospective cannabis business’s chances of securing a license. 

Governor Phil Murphy signed legislation on Feb. 22, 2021 to legalize and regulate adult-use cannabis in New Jersey.  As under New Jersey’s Medical Marijuana Program, the law requires businesses seeking to engage in the cannabis industry to obtain licenses, at least some of which will be limited in number, and awarded through a competitive process that is scored based on different aspects of the licensing application.  As part of the competitive application process, prospective cannabis businesses will need to prepare and submit an environmental impact plan, which will be scored as part of the overall application. 

To date, New Jersey has provided little guidance on the proper components of environmental impact, odor mitigation, and waste disposal plans for cannabis businesses.  Additionally, although the New Jersey Department of Health (“DOH”) has published information about licensing applications submitted under the Medical Marijuana Program, we are not aware of any environmental impact plans from these prior applications that have been made public. 

However, the DOH previously promulgated regulations and issued guidance regarding management of cannabis waste.  The DOH defines appropriate waste management alternatives based on whether the waste is “usable marijuana” (i.e., the dried leaves and flowers of the female marijuana plant, and any mixture or preparation thereof), “unusable marijuana” (i.e., marijuana seedlings, seeds, stems, stalks, roots, and large fan leaves), and any marijuana waste that is considered hazardous. 

  • Usable marijuana must be stored in a locked area until it can be escorted by DOH staff to a permitted incinerator and destroyed. 
  • Marijuana waste that is hazardous must be stored in a locked area as well and disposed of in a manner appropriate for hazardous waste pursuant to the Resource Conservation and Recovery Act. 
  • Unusable marijuana may be disposed of as solid waste or by composting, provided that the marijuana is finely shred or ground, and mixed with at least 50% non-marijuana waste by volume.

While the ability to compost cannabis waste reduces the environmental impact of cannabis operations, other states, including Colorado, have improved on the foregoing requirements to further reduce the impact associated with managing cannabis waste (e.g., by relaxing the 50% mixing rule).  It is important to note that the New Jersey Cannabis Regulatory Commission will promulgate regulations to govern the adult-use cannabis industry, and the Commission may promulgate regulations that differ from the foregoing DOH regulations and guidance. 

Prospective cannabis businesses also may look for guidance on environmental impacts to the National Cannabis Industry Association, which issued a report in October 2020 titled “Environmental Sustainability in the Cannabis Industry: Impacts Best Management Practices and Policy Considerations.”  This comprehensive document details the potential environmental impacts of the cannabis industry and presents best practices to mitigate these impacts.  As is summarized in the “key takeaways” of the guidance: “Optimizing all resource usage in the cannabis industry will simultaneously reduce environmental impacts and increase profit margins while maintaining product quality.”  Obviously, growing and manufacturing operations will have the greatest potential for environmental impact, and, therefore, for reducing such impact, but retail and other operations still have an opportunity to develop business plans that further sustainability and climate change efforts.  For instance, retail operations should focus on properly managing packaging and paper waste to the maximum extent practicable.

In any event, cannabis businesses in New Jersey will be required to comply with applicable environmental laws and legal requirements relating to air quality, water usage and quality, and waste management.  As noted above, minimizing environmental impacts also will improve a prospective cannabis business’s chances of securing a license.  Consequently, prospective businesses are encouraged early in the planning process to consult with appropriate professionals to evaluate and minimize environmental impacts.

For more information, please contact the author Matthew Karmel at mkarmel@riker.com or any attorney in our Environmental Practice Group.