A legal battle is heating up in Jersey City, New Jersey after the applicant Local Modiv was denied a cannabis license. Both Local Modiv and Jersey City filed briefs filed last week in Hudson County Superior Court according to Law 360.
Local Modiv had applied for an adult-use license but was denied. In its brief Local Modiv claimed that the CCB (Cannabis Control Board) abused its authority by reviewing Plaintiff’s application for “proof of local support” based on factors that it claimed were completely inapplicable. Jersey City is pushing back saying it isn’t a rubber stamp authority and that it’s in the CCB’s authority to review each application.
The Motion from Local Modiv stated, “Not only did the CCB review Plaintiff’s application for “proof of local support” based on inapplicable factors, it also reached unsupported conclusions with respect to such factors. For example, the CCB concluded that Plaintiff did not present a sufficient “workforce development and job creation plan” when, in fact, Plaintiff submitted a comprehensive 14-page plan that more than meets the requirements of this factor. Further, the CCB incorrectly concluded that Plaintiff misled the CCB to believe that its application was supported by the City Council President (when Plaintiff’s application and testimony is devoid of any such statements). The CCB also erred when it concluded that Plaintiff did not demonstrate sufficient community outreach, while ignoring the entirety of Plaintiff’s comprehensive community outreach objectives and longstanding history of community service within Jersey City. In other words, the CCB blatantly applied the wrong factors in evaluating Plaintiff’s application and then reached conclusions that have no support in the record.”
Local Modiv Problems
Jersey City noted in its brief that the CCB found that LocalModic lacked “site control” over the proposed location of its business especially since it could not produce a lease with the
building owner and there were no records establishing the building owner actually existed. The CCB also claimed that there were too many applicants seeking Class 5 retail locations in the vicinity of Local Modiv, including within 1,000 feet.
Local Modiv though stated that the CCB expressly acknowledged on the record, the number of other applicants in the area is not a factor that the CCB is tasked with considering.
In addition to the proximity of other applicants, the proposed lease for the property submitted to the CCB was signed by Issac Sebbag on behalf of his company Golden Sky Equities, LLC, as landlord on March 9, 2022. Unfortunately, the CCB Board said the New Jersey Division of Revenue & Enterprise Services’ Business Records Service contains no such New Jersey business entity.
When it came to having local support for the dispensary, the CCB said in its brief that Local Modiv misled the board to believe it had support from a member of the City Council, and failed to demonstrate a relationship with community entities and a Special Improvement District. The CCB also said they Local Modiv failed to produce correspondence from the Special Improvement District (SID).
Digging a little further into the support from the SID, The Jersey City Motion said that Local Modiv had claimed to have the support, but then couldn’t produce a letter to back up that claim. Plus, no member of the SID showed up at a June 13 hearing, and when asked why no member was there to support the company, Local Modiv’s CEO suggested that the SID was prioritizing people that made donations to the organization.
The CCB gave Local Modiv another two weeks to get the SID support and scheduled another hearing for June 27. Again Local Modiv was unable to produce support at the hearing but instead noted that the SID has supported an attempt for a medical cannabis license in 2019. However, that business was never established. The CCB has also asked that members of the community speak up in favor of the application aside from the SID. Again, there were “no neighborhood groups, businesses, or residents at the hearing, and no available written support in Plaintiff’s application to confirm whether prior outreach or meetings with local businesses had taken place.”
According to the Jersey City Motion, the CCB was “dismayed” that Local Modiv again suggested the SID was getting paid off for support but had no proof to support the claim.
Local Modiv did claim to have support from the Liberty Humane Society and cited issues with pets consuming cannabis and that it would address this problem – thus meeting the requirement of improving the community. “However, Board member Stacey Flanagan, who is also the City’s Director of the Department of Health and Human Services, noted
that she ‘manage[s] animal control and I’ve never heard of such phone calls about pet accidents and cannabis consumption.'”
Local Modiv also noted in its Motion that “A relationship with the SID is not a requirement under the Ordinance and that it had not required any other applicant to provide proof of a relationship with the SID.” Local Modiv also said that its interpretation of local support means that the applicant is in a municipality whose rules allow a retail cannabis operation – not that it gets the neighbor’s support.
While the CCB liked that Local Modiv was a female-owned company and wanted to hire underserved and minority employees it was also concerned that relationships with several organizations were either outdated or unsupported by documents or testimony that could provide the CCB with confidence that Local Modiv would follow through meaningfully.
Local Modiv said that all it is required to do is present a plan according to the CCB’s ordinance. Local Modiv said its application contained a comprehensive 14-page “Workforce Development and Job Creation Plan.” Local Modiv went on to claim that it had partnered with “#HIREBLACK,” a network of 15,000 people and counting whose goal is to help 10,000 Black women get trained, hired, and promoted in corporate positions. The company also said it planned to host job fairs throughout Jersey City and northern New Jersey to attract “local diverse talents from socio-economically disadvantaged communities, individuals with prior entanglements in the criminal justice or juvenile justice system, and people with disabilities.”
Local Modiv also noted that its CEO Chelsea Duffy had done the following community work as evidence of its community involvement:
Volunteer work with representatives from the United Nations in forming the Women’s History Committee of Jersey City (which collaborates with local governments to advance women’s rights and positions in the workforce through the implementation of sustainable goals), the U.S. Women’s Chamber of Commerce, The New Jersey Association of Women Business Owners (the longest-standing statewide women business owners’ organization in New Jersey), Women Grow (which serves as a catalyst for women to influence and succeed in the cannabis industry), and CannaConvos (a women-focused cannabis education, outreach, and advocacy group started by Ms. Duffy along with another co-founder of Plaintiff, Nicole Colon). Partnering with CannaGather NJ for multiple coat drives (in which Plaintiff donated over 95 coats to less fortunate Jersey City
residents), participating in Jersey City Tech Meetups, participating in meetings of the New Jersey Counseling Association, hosting an open event for Mothers for Marijuana, and sponsoring and donating to the 5th and 6th Annual “Justice of All” Fundraiser (which supports The Waterfront Project, a nonprofit organization that provides pro bono legal representation and information to economically disadvantaged residents of Hudson County
Sales of cannabis in the state have been robust and receiving a license has significant financial implications. It seems the courts will now have to decide who is correct in this situation.