[HISTORY: Adopted by the City Council of the City of Paterson 6-28-2022 by Ord. No. 22-047. Amendments noted where applicable.]
As used in this chapter, the following terms shall have the meanings indicated:
CLASS 1 – CANNABIS CULTIVATOR
Any licensed person or entity that grows, cultivates, or produces cannabis in this state, and sells, and may transport, this cannabis to other cannabis cultivators, or usable cannabis to cannabis manufacturers, cannabis wholesalers, or cannabis retailers, but not to consumers.
CLASS 2 – CANNABIS MANUFACTURER
Any licensed person or entity that processes cannabis items in this state by purchasing or otherwise obtaining usable cannabis, manufacturing, preparing, and packaging cannabis items, and selling, and optionally transporting, these items to other cannabis manufacturers, cannabis wholesalers, or cannabis retailers, but not to consumers.
CLASS 3 – CANNABIS WHOLESALER
Any licensed person or entity that purchases or otherwise obtains, stores, sells or otherwise transfers, and may transport, cannabis items for the purpose of resale or other transfer to either to another cannabis wholesaler or to a cannabis retailer, but not to consumers.
CLASS 4 – CANNABIS DISTRIBUTOR
Any licensed person or entity that transports cannabis in bulk intrastate from one licensed cannabis cultivator to another licensed cannabis cultivator, or transports cannabis items in bulk intrastate from any one class of licensed cannabis establishment to another class of licensed cannabis establishment, and may engage in the temporary storage of cannabis or cannabis items as necessary to carry out transportation activities.
CLASS 5 – CANNABIS RETAILER
Any licensed person or entity that purchases or otherwise obtains usable cannabis from cannabis cultivators and cannabis items from cannabis manufacturers or cannabis wholesalers, and sells these to consumers from a retail store, and may use a cannabis delivery service or a certified cannabis handler for the off-premises delivery of cannabis items and related supplies to consumers. A cannabis retailer shall also accept consumer purchases to be fulfilled from its retail store that are presented by a cannabis delivery service which will be delivered by the cannabis delivery service to that consumer.
CLASS 6 – CANNABIS DELIVERY SERVICE
Any licensed person or entity that provides courier services for consumer purchases of cannabis items and related supplies fulfilled by a cannabis retailer in order to make deliveries of the cannabis items and related supplies to that consumer, and which services include the ability of a consumer to purchase the cannabis items directly through the cannabis delivery service, which after presenting the purchase order to the cannabis retailer for fulfillment, is delivered to that consumer.
LEGAL RESIDENCE
A structure in which one or more persons actually reside in conformance with state and local law, or which has a certificate of occupancy permitting residency. The structure may be exclusively or partially residential.
LEGAL WALKING DISTANCE
To be measured in the normal way that a pedestrian would properly walk from the nearest entrance of the cannabis licensee to the nearest entrance of the site whose proximity from the licensee is being measured. The said method of measurement, which is also found in N.J.S.A. 33:1-76, shall be interpreted consistent with administrative and other case law addressing the issue of measurement under the said statute.
A. 
Generally. The City hereby establishes that the following cannabis license classes, as defined above, are permissible in the City subject to the licensing requirements, rules, and regulations established herein and by state law:
(1) 
Class 1 cannabis cultivator.
(2) 
Class 2 cannabis manufacturer.
(3) 
Class 3 cannabis wholesaler.
(4) 
Class 4 cannabis distributor.
(5) 
Class 5 cannabis retailer.
(6) 
Class 6 cannabis delivery.
B. 
Certain class-related requirements.
(1) 
The maximum number of licenses available for each Class is as follows:
(a) 
Class 1-cultivator-up to six licenses.
[Amended 4-25-2023 by Ord. No. 23-029]
(b) 
Class 2-manufacturer- up to three licenses.
(c) 
Class 3-wholesaler- up to three licenses.
(d) 
Class 4-distributor- up to three licenses.
(e) 
Class 5-retailer- up to three licenses.
(f) 
Class 6-delivery- up to three licenses.
(2) 
Nothing herein obligates the local licensing authority to issue all licenses available in any class.
(3) 
The amount of licenses available may be subject to change.
(4) 
Licensure in all classes may be, but are not required to be, held by the same entity or individual, but an entity may not hold more than one cannabis retailer license. Any license conditionally issued by the City is contingent upon the locally licensed entity's or individual's subsequent recipient of a state permit or license of the same class or type of regulated cannabis activity.
A. 
Transfer tax imposed.
(1) 
There is hereby imposed a transfer tax of the maximum authorized by N.J.S.A. 40:48I-1 and any successor statute, namely:
(a) 
Two percent of the receipts from each sale by a cannabis cultivator;
(b) 
Two percent of the receipts from each sale by a cannabis manufacturer;
(c) 
One percent of the receipts from each sale by a cannabis wholesaler; and
(d) 
Two percent of the receipts from each sale by a cannabis retailer.
(2) 
Such tax shall be collected or paid, and remitted to the municipality by the cannabis establishment from the cannabis establishment purchasing or receiving the cannabis or cannabis item, or from the consumer at the point of sale, on behalf of the municipality by the cannabis retailer selling the cannabis item to that consumer. The transfer tax shall be stated, charged, and shown separately on any sales slip, invoice, receipt, or other statement or memorandum of the price paid or payable, or equivalent value of the transfer, for the cannabis or cannabis item. No cannabis establishment required to collect a transfer tax imposed hereunder shall advertise or hold out to any person or to the public in general, in any manner, directly or indirectly, that the transfer tax or user tax will not be separately charged and stated to another cannabis establishment or the consumer, or that the transfer tax will be refunded to the cannabis establishment or the consumer.
B. 
Tax liability. Every cannabis establishment required to collect a transfer tax imposed by ordinance pursuant to this section shall be personally liable for the transfer tax or user tax imposed, collected, or required to be collected under this section. Any cannabis establishment shall have the same right with respect to collecting the transfer tax from another cannabis establishment or the consumer as if the transfer tax was a part of the sale and payable at the same time, or with respect to nonpayment of the transfer tax or user tax by the cannabis establishment or consumer, as if the transfer tax was a part of the purchase price of the cannabis or cannabis item, or equivalent value of the transfer of the cannabis or cannabis item, and payable at the same time; provided, however, that the chief fiscal officer of the municipality shall be joined as a party in any action or proceeding brought to collect the transfer tax or user tax.
C. 
Collection of taxes, and liens. All revenues collected from a transfer tax imposed by ordinance pursuant to this section shall be remitted to the chief financial officer in the manner prescribed herein. The chief financial officer shall collect and administer any transfer tax imposed by ordinance pursuant to this chapter. The municipality may enforce the payment of delinquent taxes or transfer fees imposed by ordinance pursuant to this section in the same manner as provided for municipal real property taxes. In the event that the transfer tax imposed by ordinance pursuant to this section is not paid as and when due by a cannabis establishment, the unpaid balance, and any interest accruing thereon, shall be a lien on the parcel of real property comprising the cannabis establishment's premises in the same manner as all other unpaid municipal taxes, fees, or other charges. The lien shall be superior and paramount to the interest in the parcel of any owner, lessee, tenant, mortgagee, or other person, except the lien of municipal taxes, and shall be on a parity with and deemed equal to the municipal lien on the parcel for unpaid property taxes due and owing in the same year. The municipality shall file in the office of its tax collector a statement showing the amount and due date of the unpaid balance and identifying the lot and block number of the parcel of real property that comprises the delinquent cannabis establishment's premises. The lien shall be enforced as a municipal lien in the same manner as all other municipal liens are enforced.
D. 
Certain powers and duties of Chief Financial Officer.
(1) 
General powers and duties. The chief financial officer is charged with the administration and enforcement of the provisions of this chapter, and is empowered to prescribe, adopt, promulgate and enforce rules and regulations relating to any matter pertaining to the administration and enforcement of this chapter, including provisions for the reexamination and corrections of declarations and returns, and of payments alleged or found to be incorrect, or as to which an overpayment is claimed or found to have occurred, and to prescribe forms necessary for the administration of this chapter. Should a cannabis establishment fail or refuse to provide adequate information to the chief financial officer to determine the amount of tax due, the chief financial officer may use information provided to the chief financial officer from other sources (i.e., the Commission or Department of Treasury) to determine the amount of tax liability.
(2) 
Other powers and duties. It shall be the duty of the chief financial officer to collect and receive the taxes, fines, and penalties imposed by this chapter. It shall also be the duty of the chief financial officer to keep a record showing the date of such receipt. The chief financial officer is authorized to enter into agreements with the State of New Jersey to obtain information to facilitate administration of the tax. The chief financial officer is authorized to issue a ruling upon written request of a taxpayer or upon its own volition.
(3) 
Examination of taxpayer records. The chief financial officer is hereby authorized to examine the books, papers and records of any taxpayer to verify the accuracy of any declaration or return, or if no declaration or return was filed, to ascertain the tax due. Every taxpayer is hereby directed and required to give to the chief financial officer, or to any agent designated by him/her, the means, facilities and opportunity for such examinations and investigations, as are hereby authorized.
E. 
Taxpayer records, returns, and audits.
(1) 
Taxpayer recordkeeping. Taxpayers liable for the transfer tax are required to keep such records as will enable the filing of true and accurate returns or the tax and such records shall be preserved for a period of not less than three years from the filing date or due date, whichever is later, in order to enable the chief financial officer or any agent designated by him to verify the correctness of the declarations or returns filed. If records are not available in the municipality to support the returns which were filed or which should have been filed, the taxpayer will be required to make them available to the chief financial officer either by producing them at a location in the municipality or by paying for the expenses incurred by the chief financial officer or his agent in traveling to the place where the records are regularly kept.
(2) 
Returns. All cannabis establishments operating in the municipality are required to file a transfer tax return with the chief financial officer to report their sales during each calendar quarter and the amount of tax in accordance with the provisions of this chapter. Returns shall be filed and payments of tax imposed for the preceding calendar quarter shall be made on or before the last day of April, July, October, and January, respectively. A taxpayer who has overpaid the transfer tax, or who believes it is not liable for the tax, may file a written request on an amended tax return with the chief financial officer for a refund or a credit of the tax. For amounts paid as a result of a notice asserting or informing a taxpayer of an underpayment, a written request for a refund shall be filed with the chief financial officer within two years of the date of the payment.
(3) 
Audit and assessment. The chief financial officer may initiate an audit by means of an audit notice. If, as a result of an examination conducted by the chief financial officer, a return has not been filed by a taxpayer or a return is found to be incorrect and transfer taxes are owed, the chief financial officer is authorized to assess and collect any tax due. If no return has been filed and tax is found to be due, the tax actually due may be assessed and collected with or without the formality of obtaining a return from the taxpayer. Deficiency assessments (i.e., where a taxpayer has filed a return but is found to owe additional tax) shall include taxes for up to three years to the date when the deficiency is assessed. Where no return was filed, there shall be no limit to the period of assessment.
(4) 
Notice; hearing. Upon proposing an assessment, the chief financial officer shall send the taxpayer an interim notice which advises the taxpayer of additional taxes that are due. Should the taxpayer wish to dispute the assessment administratively by requesting a hearing with the chief financial officer, it must do so within 30 days of the date of such interim notice. If, after the chief financial officer sends an interim notice, a taxpayer fails to timely request a hearing with the chief financial officer or requests a hearing and after conducting a hearing, the chief financial officer determines that the taxes are due, the chief financial officer shall send the taxpayer a final notice.
A. 
Distance from places of worship, schools, or legal residences. No Class of License or cannabis business shall operate within 300 feet legal walking distance as defined above from any place of worship or a school providing education for grades kindergarten through 12, or of any legal residence as defined above. However, if there were no such places of worship, schools, or legal residences with the said distance at the time of licensure, then subsequent construction or conversion shall not affect the licensee's right to operate.
B. 
Zoning. The default statutory standards for zoning of cannabis licensees — which would ordinarily authorize nonretailers in industrial zones, and retailers in commercial zones — shall under the authority of N.J.S.A. 24:6I-45 be superseded by the following standard: cannabis licensees of any kind shall be permitted uses only in I-1, I-2 and M-U Zones.
A. 
No mobile sites. No cannabis establishment shall be housed in a vehicle or any movable or mobile structure.
B. 
Odor. cannabis establishments shall have equipment to mitigate odor. The building shall be equipped with a ventilation system with carbon filters sufficient in type and capacity to mitigate cannabis odors emanating from the interior of the premises.
C. 
Noise. Outside generators and other mechanical equipment used for any kind of power supply, cooling, or ventilation shall be enclosed and have appropriate baffles, mufflers, and/or other noise reduction systems to mitigate noise pollution.
D. 
Security. All classes of cannabis licensees shall be secured in accordance with State of New Jersey statutes and regulations; shall have an around-the-clock video surveillance system, 365 days a year; and shall have trained security personnel on site at all times during operating hours.
E. 
Hours. No cannabis retailer may open to customers for business before 8:00 a.m. or remain open to customers for business after 10:00 p.m.
F. 
No sale or use of alcohol or tobacco. There shall be no on-site sales of alcohol or tobacco products, and no on-site consumption of alcohol or tobacco.
G. 
Cameras. All sites must be equipped with security cameras covering all exterior parking and loading areas, points of entry, and interior spaces which are either open to the public or used for the storage or processing of cannabis products. Footage must be maintained for the duration required under state law. All licensed facilities must provide the City of Paterson Police with access to security footage immediately upon request.
H. 
Signage promoting excessive consumption. No cannabis business shall display signage containing text and/or images intended to promote excessive consumption of legal cannabis products.
A. 
Local licensing authority. The Economic Development Director or his designee (hereinafter referred to as "Director," also referencing such designee in each instance) is hereby designated to act as the local licensing authority for the City for all cannabis classes of licenses. Under all circumstances in which state law requires communication to the City by the cannabis Regulatory Commission or any other state agency with regard to the licensing of cannabis establishments by the state, or in which state law requires any review or approval by the City of any action taken by the state licensing authority or for the grant of any class of license by the City, the exclusive authority for receiving such communications and granting such approvals for any class of license shall be exercised by and through the Director. Under no circumstances shall a local license for a cannabis establishment issued by the City be effective until or unless the state has issued the requisite permits or licenses to operate such a facility. It is the intent of this chapter that no cannabis establishment may lawfully operate in the City without the issuance of a state permit or license and full regulatory oversight of the cannabis establishment by the cannabis Regulatory Commission or other state licensing authority as well as oversight and issuance of a license by the City.
B. 
Application. Persons wishing to obtain any classification of cannabis license shall first file a license application with the Director, on a standardized form established by the Department of Economic Development and available in the Economic Development office. Department of Economic Development shall establish an application period and deadline for all applications. An application shall be deemed incomplete, and shall not be processed by Department of Economic Development, until all documents are submitted and fees paid. The Department of Economic Development may in it is discretion deny any application, or may approve any application subject to final approval by the Council. To be deemed complete, all applications shall be accompanied by the following:
(1) 
Completion of form. The Applicant has submitted a completed application.
(2) 
Proof of rights to location. The applicant shall submit proof that the applicant has or will have lawful possession of the premises proposed for the cannabis establishment with the permitted locations as established herein, which proof may consist of: a deed, a lease, a real estate contract contingent upon successful licensing, or a binding letter of intent by the owner of the premises indicating an intent to lease the premises to the entrant contingent upon successful licensing.
(3) 
Affidavit of compliance with laws. The applicant shall submit an affidavit and documentary proof of compliance with all state and local laws regarding affirmative action, antidiscrimination and fair employment practices. The applicant shall also certify under oath that they will not and shall not discriminate based on race, color, religion (creed), gender, gender expression, age, national origin (ancestry), disability, marital status, sexual orientation, or military status, in any of its activities or operations.
(4) 
Location in compliance with zoning and location restrictions. The location proposed for licensing by the applicant shall comply with all applicable municipal zoning laws and the location restrictions set forth in this chapter.
(5) 
Proof of financial ability to operate. The applicant shall submit, to the satisfaction of the Director, proof of financial capability to open and operate the cannabis establishment for which the applicant is seeking a license. Standards for proof of financial capability shall be determined by the Department of Economic Development.
(6) 
Application and license fees.
[Amended 4-25-2023 by Ord. No. 23-029]
(a) 
The applicant shall submit all required fees for the application and license, conditioned upon state issuance of license/authority to operate, in accordance with the following fee schedule:
[1] 
$30,000 for a Paterson resident, who resides in Paterson at least one year prior; and
[2] 
$60,000 for a nonresident.
(b) 
If final approval of the application is denied by the City of Paterson, then the application fee that the applicant has paid shall be refunded.
(7) 
First year registration fee (subject to reduction). Within 30 days of final approval by the City of Paterson, the applicant shall submit all annual registration fees required, in accordance with the following fee schedule:
(a) 
Annual registration fees:
[1] 
Classes 1, 2, 3, 4, and 6: $60,000.
[2] 
Class 5: $20,000.
(b) 
Reduction of fees.
[1] 
Minority businesses. Any business that can provide a Minority Business Enterprise Certification from the State of New Jersey shall be entitled to a 25% reduction of the licensure fee or annual registration fee, or remaining fee if a reduction has already been applied under this section.
[2] 
Women's businesses. Any business that can provide a Women's Business Enterprise Certification from the State of New Jersey shall be entitled to a 25% reduction of the licensure fee or annual registration fee, or remaining fee if a reduction has already been applied under this section.
[3] 
Businesses employing Paterson residents. Any business that can provide proof that at least 75% of its employees are residents of the City of Paterson shall be entitled to a 50% reduction of the licensure fee and annual registration fee, or remaining fee if a reduction has already been applied under this section. In order to receive a reduction under this section, the business entity must provide adequate proof of employment and residency, in the form of payroll history (amounts redacted) and proof of residency demonstrating at least nine months of both residency and active employment. The City reserves the right and the applicant agrees to permit the City to contact any employees referenced in order to verify employment and residency.
[4] 
Businesses contracting with other Paterson businesses. Any business that can provide proof that it relies on local goods and services, in the form of at least two ancillary service contracts the business has awarded to other businesses located within the City of Paterson, shall be entitled to a 25% reduction of the licensure fee and annual registration fee, or remaining fee if a reduction has already been applied under this section. In order to receive a reduction under this section, the licensed business entity must provide proof of an ancillary service contract with other local businesses valued over $5,000 for goods or services provided to the business the previous year, and proof of payment. The City of Paterson shall confirm that each ancillary service company is a business entity located within the City of Paterson, and possesses a valid business license in good standing. Ancillary services shall include, but shall not be limited to, mechanical services, auto repair services, custodial services, office furniture and/or supplies, labor, food, advertisement, IT services, and construction and/or repair services.
[5] 
Any business that utilizes a post-release re-entry employment program (i.e., providing gainful employment opportunities for recently released individuals on parole or probation) shall be entitled to a 25% reduction of the licensure fee or annual registration fee, or remaining fee if a reduction has already been applied under this section.
[6] 
Businesses in multiple categories. If any state licensed cannabis business is able to satisfy three of the above four categories (i.e., minority business, women's business, local business, and ancillary service), their annual licensing fee shall be waived for that year.
(8) 
Criminal background check; prior cannabis license suspensions. In addition to complying with any state requirement related to good character and criminal background, any person proposed to have an ownership interest in the license shall not have had any cannabis license or permit revoked for a violation affecting public safety in the State of New Jersey or a subdivision thereof within the preceding five years. The applicant and the application shall otherwise comply with any, and all qualification standards set forth in the state and City laws or regulations.
(9) 
Preferences for award of licenses. The Director shall consider and give preference to the following criteria in awarding any class of license:
(a) 
Hiring of minorities, women and/or veterans. The applicant's demonstrated commitment to diversity in its ownership composition and hiring practices, including a plan to hire residents of Paterson, and whether the applicant entity or its parent company holds any certifications as a NJ minority-owned, women-owned, or veteran-owned business.
(b) 
Current or future Paterson business interests. The applicant's ties to the City of Paterson, demonstrated by at least one individual applicant or shareholder's proof of residency in Paterson or at least one shareholder's or individual's continuous ownership of a business based in Paterson, or the intent to relocate and reside in Paterson, or an intent to relocate or establish a business in Paterson.
(10) 
Coordination of state approval and local approval. Notwithstanding the foregoing application process, a notification of award and conditional municipal license shall entitle the recipient applicant to pursue a state permit or license in the appropriate classification for up to three months, which may be extended in the Director of Law's discretion for an additional time period. No license to operate shall issue until the applicant has received a state permit and satisfied other prerequisites of municipal licensure. If the recipient of a notice of award and conditional license has not received a state permit or license within six months from issuance, unless extended, the preliminary approval may be revoked.
(11) 
Modification of requirements. The Director of Economic Development may waive or amend any requirement or implement any requirement, extend any time period, and otherwise modify the application process.
(12) 
Council approval by resolution required for all new cannabis licenses. Notwithstanding any other provision herein to the contrary, no new cannabis license shall be issued unless and until the Director of Economic Development in his or her discretion evaluates the application, and thereafter submits his or her conditional approval, if any, for confirmation by the Municipal Council, after which the Municipal Council may in its discretion grant approval by resolution.
C. 
Term of license, license renewals, transfer, and expansion.
(1) 
Three-year term. Any local license issued pursuant to this chapter shall be valid for a period of three years from the date of issuance and shall be renewed in accordance with the provisions of this chapter.
(2) 
Requirements and criteria for approval of renewal. The Director shall establish criteria for evaluating renewal applications. Any renewal application meeting those criteria shall be forwarded to the City Council for a final decision as to whether to renew the license.
(3) 
Coordination of state term and local term. The Director, may, at his/her discretion, adjust the renewal date of the local license to correlate with an applicant's state licensing and renewal schedule.
(4) 
Subsequently enacted laws. Renewal of any license shall be governed by any code amendments, additional restrictions or changes in regulations adopted since the previous license was issued or renewed.
(5) 
Person-to-person transfer, place-to-place transfer, and expansion. Transfer of ownership of any local license or change of location of any license or modification to expand a licensed premise shall be submitted to the Department of Economic Development's review and approval, which may be conditioned or denied.
(6) 
No continued operation without renewal. Except where the Department of Economic Development has received a complete renewal application along with the paid nonrefundable requisite fees, and has issued a license renewal, it shall be unlawful for any person to manufacture, sell, distribute, transfer, transport, or otherwise remove cannabis or cannabis products from the premises of any license after the expiration date recorded on the face of the license.
A. 
Nuisance. With respect to the operation any cannabis license, the following is hereby declared to be an unlawful public nuisance:
(1) 
Odors or noise which are disturbing to people of reasonable sensitivity who may be residing near or present on nearby property, including areas open to the public.
(2) 
Repeated dispatches to the property by law enforcement.
(3) 
Disruption to and/or obstruction of the free passage of persons and/or vehicles in the immediate vicinity of the property.
(4) 
Any other condition or act which may be deemed a violation of this chapter.
B. 
Disciplinary actions. Procedures for investigation of license violations and for suspension, revocation, or other licensing sanctions as a result of any such violation shall be as follows, subject to any applicable limitations under state law:
(1) 
First offense: Up to $500 per violation per day;
(2) 
Second offense: Up to $1,000 per violation per day;
(3) 
Third violation shall result in summary suspension.
C. 
Summary suspension. Notwithstanding the foregoing section, when the City Law Department has grounds to believe that a licensee has engaged in a violation of any applicable law or regulation, created a nuisance, dangerous, or unsanitary condition, or that the public health, safety, and/or general welfare has been jeopardized, the Law Department may enter a summary suspension order for the immediate suspension of such license pending further investigation. License holder consents to jurisdiction of the Law Department and to suspension of same as decided by the Law Director.
(1) 
Enforcement, review, and investigations related to any cannabis license shall be within the jurisdiction and purview of the Police Department. The Police Department shall cooperate and provide any materials, information and investigations requested by the Law Director pertaining to any cannabis licenses.
(2) 
The summary suspension order shall be in writing and shall state the reasons therefor. The licensee shall be afforded an opportunity for a hearing as outlined herein.
(3) 
The Director of Law shall convene a review panel consisting of a member of the City Law Department, two Council Members consisting of the Council president and an at-large Councilmember, an individual designated by the Mayor, and the Chief of Police. The hearing shall be scheduled within 30 days of the date of the order, unless extended by the Law Director.
(4) 
The review panel is authorized to impose any fines, conditions, restrictions, suspensions, or combination thereof authorized by the State of New Jersey. In the absence of state-specified penalties, the City may issue fines up to, but not to exceed, $2,000 per offense and/or suspension of license for a period not to exceed six months or revocation of any license.
D. 
Inactive licenses. Following the commencement of sales of cannabis or cannabis products, the Director of Law may suspend or revoke any license if the licensed premises have been inactive or unoccupied by the licensee for at least six months.
E. 
State license. The Director of Law may suspend or revoke any license if the corresponding state license or permit for the subject location is expired, surrendered, suspended, or revoked.