NJ Takes Steps to Regulate Environmental Impacts of Cannabis

While entrepreneurs and investors rush to set up cannabis businesses throughout the Garden State, how will New Jersey regulate the environmental impacts of the industry? 

As we discussed in our previous post — NJ Cannabis Industry to Focus on Environmental Considerations — most people fail to recognize the environmental impact of cannabis.  In addition to being energy intensive, producing cannabis results in numerous issues related to water, air quality, and waste management. 

While the New Jersey Cannabis Regulatory Commission ("CRC") now has adopted regulations relating to environmental impact and sustainability, many questions remain.  (These regulations will be in effect for up to one year, and will empower the CRC to begin licensing cannabis businesses.)

Applicants and existing businesses alike should consult with appropriate professionals to understand and minimize environmental impacts — especially prospective businesses that will be participating in the competitive licensing process.

Environmental Impact and Sustainability Plans

In order to operate a cannabis business in New Jersey, businesses need to obtain one of the coveted licenses through the competitive licensing process.  As part of the process, prospective cannabis businesses must prepare and submit an environmental impact plan.  The environmental impact plan is evaluated and scored, and can impact whether an applicant receives one of the licenses.

Before the new regulations, there was very little information about the proper components of an environmental impact plan for cannabis businesses in New Jersey, primarily for two reasons:

  1. The adult-use cannabis law does not provide details regarding the components of environmental impact plans; and
  2. Environmental impact plans previously submitted to the New Jersey Department of Health under New Jersey’s Medical Marijuana Program have not been made public. 

Fortunately, the new regulations provide some information regarding the appropriate elements of an environmental impact plan.  Interestingly, the environmental impact plan requirements for a temporary license differ from those relating to standard licenses:

  1. Temporary license — Applicants seeking a temporary cannabis license are only directed to submit “an environmental impact plan, which includes consideration of sustainable alternatives to single-use plastic packaging.”
  2. Standard license — Applicants seeking a standard license are directed to submit “an environmental impact plan, which shall, at a minimum, include consideration of sustainable alternatives to single-use plastic packaging, efforts to minimize water usage, and any other factor required by the [CRC] . . . .”

The focus on single-use plastic packaging is consistent with New Jersey’s overall goal of reducing plastic waste in the Garden State (sustainable packaging alternatives might include reusable or refillable packaging, but this presents additional issues). 

The new regulations also require cannabis businesses to create and implement environmental sustainability plans as a condition of receiving a license, which may include, but are not limited to:

  1. A waste reduction plan;
  2. A water usage reduction plan;
  3. Biodynamic farming;
  4. A sustainable packaging plan which reduces or eliminates the use of single-use plastics and promotes the use of recyclable or green packaging; or
  5. A plan to use some amount of renewable energy to power its operations.

Unfortunately, these provisions omit many relevant considerations, such as air emissions, climate change, and environmental justice. Given the anticipated competitiveness of the cannabis application process, prospective applicants should be as rigorous and comprehensive as possible in addressing environmental impacts.  Further, it may be in the best interests of applicants to consider underlying environmental impacts. For instance, by focusing on soil health rather than biodynamic farming, applicants can show that they are getting to the heart of the problem.

To better understand environmental impacts and concerns, cannabis license applicants should refer to the National Cannabis Industry Association (NCIA), which issued a report in October 2020 titled Environmental Sustainability in the Cannabis Industry: Impacts Best Management Practices and Policy Considerations.

Essentially, cannabis businesses looking to operate in New Jersey should focus on environmental considerations early in the planning process, bringing together architects, engineers, and environmental professionals to identify and minimize environmental impacts.   

Waste Disposal

One of the most important environmental impacts that other states have wrangled with is cannabis waste disposal. In fact according to the NCIA, “The environmental impact from the volume of cannabis byproducts currently estimated to be landfilled is equivalent to the emissions from more than 6,000 passenger vehicles’ or more per year.”

As discussed in detail in our prior post referenced above, the New Jersey Department of Health prescribed certain disposal and composting practices, and specifically allowed certain marijuana waste to be composted.  However, much more needs to be done to reduce the environmental impact of cannabis waste.  Unfortunately, the new regulations do not provide any additional information on acceptable cannabis waste disposal or recycling practices.  As a result, it is unclear whether the prior policies will remain in place, or whether the CRC will issue further guidelines regarding the disposal of cannabis waste.

Hopefully, moving forward the CRC will embrace more environmentally friendly regulatory alternatives, including by increasing the types of wastes that can be composted and eliminating or reducing the requirement to mix cannabis refuse with other wastes. 

 Conclusion

The Garden State is about to get a lot greener. While many see lucrative business opportunities on the horizon, few entrepreneurs are aware of the environmental impacts. Left unconsidered, these impacts can impede an applicant’s ability to obtain a cannabis license in New Jersey. Our attorneys continue to follow these issues closely, and businesses should prepare to address environmental impacts early in the business development process.

See also Riker Danzig’s recent Alert, “Main Street Gets the Green Light,” which provides insights on the Cannabis Regulatory Commission’s first set of rules to regulate adult-use cannabis in the Garden State.  

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