New Cannabis License Categories Will Become Available in New Jersey

Beginning September 27, 2023, the New Jersey Cannabis Regulatory Committee (“CRC”) will open three new adult-use cannabis license categories- Wholesaler, Delivery, and Distribution- in the Garden State. Ansell Law remains prepared to assist clients seeking to secure one of these new license types as opportunities in this exciting industry develop.

  • Wholesale-Class Three License: A marijuana wholesaler license, also called a Class 3 license in New Jersey, allows the holder to purchase or obtain, store, sell or transfer, and transport marijuana products for resale or to other cannabis wholesalers or retailers.
  • Distribution-Class Four License: A cannabis distributor, also a Class 4 license, enables distributors to transport marijuana items in bulk intrastate from one licensed marijuana establishment to another and store the marijuana or marijuana products briefly, if necessary, to fulfill their duties in transporting the goods.
  • Delivery- Class Six License: A delivery license or Class 6 license offer a cost-effective gateway for many aspiring entrepreneurs to enter the cannabis industry. Similar to food delivery services such as GrubHub or DoorDash, these licenses empower businesses to Transport a consumer’s purchases of recreational use cannabis and related supplies from the retailer to that consumer from cannabis retailers.

With 9 million residents, millions of annual visitors, a higher-than-average national income, and an estimated adult-use market that is projected to generate $850 million-$950 million in annual retail sales by 2024, the CRC’s rollout of Class Three, Four, and Six licenses represents a significant advance in the already lucrative and flourishing State cannabis market.

Starting September 27, social equity applicants—including those with previous marijuana-related convictions and individuals from economically disadvantaged regions seeking wholesale, distributor, and delivery licenses get priority for three months. Then for the next three months, diversely owned cannabis businesses—owned by women, minorities, or disabled veterans—receive priority.

Our Controlled Substances and Regulatory Practice attorneys understand the complex laws related to the production, sale, use, regulation, and legalization of controlled substances, including hemp, cannabis, and psychedelics. A multifaceted area of the law with conflicting regulations from different governing bodies, we help our clients navigate all aspects of this emerging field. We are committed to helping our clients understand their rights and opportunities in this evolving area of law.

New Coalition Ups the Pressure on Biden Administration to Finally Deschedule – or at Least Reschedule — Cannabis From List of Controlled Substances

By Joshua S. Bauchner

With most Americans now living in states that have legalized adult-use cannabis, the federal foot-dragging on the removal of cannabis from the list of Schedule I controlled substances is more unsupportable, unsustainable, and illogical than ever. This classification means cannabis is considered to have no accepted medical use, a high potential for abuse, and no accepted safety standards even under medical supervision – all criteria which are unsupported and contradicted by the evidence. But even though grouping marijuana with such drugs as cocaine, heroin, and methamphetamines under the federal Controlled Substances Act (CSA) never made much scientific or societal sense, efforts to correct this long-standing error were consistently met with opposition, inertia, and inaction.

Now, a new coalition of cannabis lawyers, researchers, activists, and businesses is ramping up pressure on the Biden administration to finally address the issue and either remove cannabis from the CSA’s list of controlled substances or reschedule it to a lower tier. On June 26, 2023, the recently formed Coalition for Cannabis Scheduling Reform submitted a comprehensive report to the administration that methodically and persuasively makes a case for the multidimensional benefits of descheduling or rescheduling.

The report comes at a cautiously optimistic time for descheduling advocates, as President Biden has expressed more openness to changing marijuana’s classification than any of his predecessors. But he does not have the power to do so with the stroke of a pen. Accordingly, in October 2022, the president asked the Department of Justice (DOJ) and the Department of Health and Human Services (HHS) to initiate an administrative process to review the propriety of marijuana’s classification under the CSA. 

Before initiating proceedings to schedule, reschedule, or deschedule a drug, the U.S. Drug Enforcement Administration (DEA) must gather necessary data, request a scientific and medical evaluation from HHS, and request a scheduling recommendation from HHS. This process also includes a review by the Food and Drug Administration (FDA) as to appropriately regulating cannabis. 

In its report, the CCSR said that “Descheduling is the optimal outcome and the one that would mark the greatest improvement over the status quo possible without congressional intervention,” It argued that “Descheduling marijuana is sound public policy, supported by both the science and the law, as recent and compelling medical and public health data clearly demonstrate that marijuana simply does not belong in the CSA at all.”

However, the authors continued, if the FDA “determines that it cannot find its way to recommending marijuana descheduling, the Agency should instead recommend rescheduling to schedule III, IV, or V.”

HHS Secretary Xavier Becerra recently said that he hopes his agency will be able to present the president with a scheduling decision by the end of this year. While most observers believe that the FDA is more likely to reschedule cannabis than deschedule it entirely, any progress on the federal front would be better than the current state of affairs.

Ansell’s dedicated Controlled Substances & Regulatory Law Practice Group has an in-depth understanding of the laws related to the production, sale, use, regulation, and legalization of controlled substances, including hemp, cannabis, and psychedelics. Controlled substances law remains a multifaceted and complex field with, at times, conflicting regulations from different governing bodies. Our attorneys are prepared to assist in all aspects of this emerging field. They are committed to helping our clients understand their rights and the opportunities in this complex and evolving area of law. For additional information, please contact Joshua S. Bauchner at (973) 247-9000 or jb@ansellgrimm.com.

SEC Approves Sweeping FINRA Rule Changes That Will Make Expungement More Difficult for Broker-Dealers and Associated Persons

By Seth M. Rosenstein

It is the rare FINRA-registered professional who does not face a customer complaint at some point in their career, and it is rarer still to find one who would not prefer to have customer dispute information expunged from the Central Registration Depository (“CRD”). But on April 12, 2023, the SEC approved changes to the FINRA rules regarding expungements and expungement hearings that will significantly alter how and when negative marks on professionals’ records are removed from the CRD and BrokerCheck.

The substantive and procedural changes were largely due to pressure put on FINRA by customer advocates and state securities regulators to make it more difficult to obtain an expungement. A 2021 PIABA study, for example, revealed that FINRA arbitrators approved 90% of the expungement requests they received.

Concerns About Straight-in-Requests in Particular

While some updates relate to all requests for expungement of customer dispute information, others only apply to each of the two types of hearings through which expungements can be obtained. This includes specific procedural changes to “straight-in-request” arbitration hearings, which are commenced by an associated person separate from a customer-initiated arbitration (as opposed to “on-behalf-of-requests” that are filed at the conclusion of an investment-related customer-initiated arbitration).

FINRA was particularly concerned about issues with straight-in-request arbitration proceedings, which often involve complaints brought and resolved many years before the expungement request. As FINRA expressed in an April 2022 discussion paper, the rule changes sought to address four shortcomings it identified with such hearings:

  • The unavailability of documents or information relating to disputes that occurred years prior. FINRA noted that two-thirds of straight-in-requests filed between 2016-2021 were filed more than six years after the customer dispute was initially reported.
  • The lack of customer participation in straight-in-requests leading to only one side presenting evidence and testimony.
  • The firm named in a straight-in request may have no relevant documents pertaining to the customer dispute because the event occurred while the associated person was employed at a different firm.
  • “Arbitrator shopping” by associated persons who make repeated attempts to seek expungement of the same customer dispute.

Changes That Apply to All Expungement Arbitration Hearings

These updates apply to both straight-in-request (FINRA Rule 13805) and on-behalf-of-request (FINRA Rule 12805) expungement hearings:

  • Arbitration panels can only issue expungement relief if they unanimously find that:
    • the claim or allegation is factually impossible or clearly erroneous;
    • the associated person was not involved in the alleged conduct; or
    • the claim or allegation is false.
  • FINRA must notify state securities regulators of all expungement requests.
  • The associated person requesting expungement must appear at the hearing in person or by video conference.
  • FINRA must notify involved customers of the time, date, and place of any prehearing conferences and the expungement hearing, advise them that they may attend and participate in those proceedings, and provide access to all relevant documents filed in the matter.
  • Panels are authorized to request any evidence the panel members consider relevant from the broker-dealer firm or associated person.
  • Panels must explain their rationale in sufficient detail when granting expungement relief.
  • Associated persons may not request expungement if a panel previously considered the merits of, or a court previously denied, an expungement request involving the same customer dispute information.
  • An associated person who withdraws an expungement request cannot subsequently re-file the request.

Changes to Straight-In-Request Hearings Under FINRA Rule 13805

To address the concerns above about straight-in-request hearings, FINRA made the following rule changes for such proceedings:

  • FINRA will not consider expungement requests filed:
    • more than three years after the date the customer complaint was initially reported in the CRD; or
    • more than two years after the customer-initiated arbitration or litigation involving the customer dispute information is fully adjudicated.
  • Straight-in requests must be filed against the broker-dealer firm at which the associated person was associated at the time of the events underlying the dispute.
  • An authorized representative of a state securities regulator may attend and participate as a non-party in the proceedings to the same extent that a customer could.
  • All straight-in requests must be decided by a three-person panel composed of randomly selected arbitrators pulled from a roster of experienced public arbitrators with enhanced expungement training and no significant ties to the industry. Parties cannot:
    • agree to fewer than three arbitrators;
    • strike any of the selected arbitrators;
    • agree to an arbitrator’s removal; or
    • agree to use arbitrators they pre-select.

Conclusion

The SEC’s 158-page notice approving FINRAs proposed rule changes contains several other modifications that impact an associated person’s ability to obtain an expungement, and FINRA has not yet announced an effective date for these changes. We will provide an update when they do. But given that the additional modifications generally make expungement more challenging, industry professionals contemplating an expungement request may wish to proceed sooner than later.

If you have questions about these updates, please contact Seth Rosenstein at Ansell, Grimm & Aaron.

Joshua Bauchner and Kelsey Barber Present on New Jersey Marijuana Business Operations

Shareholder Joshua S. Bauchner and associate Kelsey M. Barber will present during the National Business Institute’s Marijuana Operations in New Jersey seminar. They will address critical human resources, labor, and employment issues affecting marijuana and cannabis businesses operating in New Jersey. Their session includes key considerations for hiring and training employees, navigating 401k issues specific to the industry, and understanding corporate governance. Bauchner and Barber also will provide an ethics presentation exploring rules of professional conduct, the duty to pursue justice, attorney use of cannabis, and attorney ownership of cannabis businesses.

The full-day seminar will be offered live online on August 21, 2023, and available to view on demand. Learn more and register for this information-packed program presented by cannabis industry leaders.

As one of the most rapidly evolving industries today, lawyers in the cannabis space must be educated on licensing, operations, and employment issues such as drug testing. Contact an attorney in our Controlled Substances and Regulatory Law Practice Group with any questions about this emerging area of law.

In Major Advancement, FDA Issues First-Ever Draft Guidance on Clinical Trials for Psychedelic Drugs

By Josh Bauchner

Maligned, stigmatized, and marginalized for decades, psychedelic drugs have long been off-limits for researchers and others who wanted to explore the potential therapeutic uses of these substances for various conditions, including PTSD, depression, substance abuse, and anxiety. Now, in a significant step that offers the promise of new medical treatments and advancements, the U.S. Food and Drug Administration (FDA) issued its first-ever guidance for those wishing to study and test psychedelics for medicinal use.

Released on June 23, 2023, the FDA’s draft guidance contains non-binding recommendations for designing clinical trials for psychedelic drugs. According to the FDA, the draft guidance aims to “advise researchers on study design and other considerations as they develop medications that contain psychedelics.” As used within the guidance, the term “psychedelics” refers to “‘classic psychedelics,’ typically understood to be drugs such as psilocybin and lysergic acid diethylamide (LSD) that act on the brain’s serotonin system, as well as ‘entactogens’ or ’empathogens’ such as methylenedioxymethamphetamine (MDMA).”

The guidance discusses basic considerations throughout the drug development lifecycle, including trial conduct, data collection, participant safety, and new drug application requirements. Emphasizing psychedelics’ potential for abuse and psychoactive effects such as hallucinations and mood and cognitive changes, the FDA notes that this creates “a drug safety issue that requires careful consideration and putting sufficient safety measures in place for preventing misuse throughout clinical development.” This includes addressing potential interactions with drugs like antidepressants or lithium and “the role of psychotherapy in psychedelic drug development, considerations for safety monitoring and the importance of characterizing dose-response and the durability of any treatment effect.”

Outlining the needed steps for psychedelic drug testing and study, the FDA provides recommendations for nonclinical safety and toxicology studies, with examples of when extensive previous trial data could substitute typical animal toxicology testing in trials under an Investigational New Drug Application (INDA). The guidance notes that since psychedelics are Schedule I controlled substances, activities associated with investigations under an INDA must comply with applicable Drug Enforcement Administration regulations.

The FDA released its guidance days after legislation was introduced in Congress with bipartisan support directing the agency to do so. While it is unclear what the guidance will look like in its final form after the 60-day public comment period, the legislative and regulatory movement to allow for more research and testing of psychedelics for therapeutic use is a positive development for individuals seeking relief from a wide range of debilitating conditions.

If you have questions or concerns about the FDA’s draft guidance, please contact an attorney in Ansell.Law’s Controlled Substances and Regulatory Law Practice Group.

Ansell.Law Welcomes New Attorney

Ansell.Law is pleased to announce that Nicole Benis has joined the firm’s Ocean office as an associate attorney. Her practice encompasses a range of complex commercial and civil litigation matters.

While earning her law degree from Seton Hall University School of Law, Benis served the Seton Hall Law community as a Student Mentor and a Student Bar Association member. She also served as a member of Seton Hall Law’s Center for Social Justice, Health Justice Clinic, representing clients in various matters. 

About Ansell.Law 

Ansell Grimm & Aaron, PC was founded in 1929 and has a long history of delivering for clients who come to us to resolve legal matters that are often urgent, stressful, and of great importance. A general practice law firm, we are powered by experienced attorneys who understand that the best outcome is the one that serves the needs of each client.

Ansell.Law Attorneys Secured Numerous Successful Client Outcomes in Q2 2023

Ansell.Law attorneys are laser-focused on achieving our clients’ goals. We listen to our clients and craft compelling legal strategies to preserve their business interests. A sampling of our recent successes follows. 

Commercial Real Estate

Jonathan Sherman, in collaboration with Melanie Scroble, successfully negotiated multiple commercial leases for cannabis retail in various cities, including Verona and East Orange, New Jersey. In a separate matter, Jonathan successfully completed a corporate restructure for his clients, enabling each LLC member to effectively execute a 1031 Exchange and achieve their desired financial goals.

Jonathan presented to over 100 realtors, providing valuable insights into using the 1031 Exchange process and Delaware Statutory Trust. Jonathan and Melanie Scroble partnered to deliver an informative Commercial Zoom series to more than 100 realtors, covering the acquisition, sale, and leasing of commercial real estate. 

Jonathan also shared his expertise at a Coldwell Banker roundtable. Engaging with over 50 residential and commercial brokers, the discussion revolved around the intricacies of buying multi-family properties in New Jersey. 

Litigation 

Joshua Bauchner, Layne Feldman, and Anthony Sango obtained dismissal of a counterclaim on behalf of our client, a well-known real estate development firm, in the Superior Court of New Jersey, Mercer County. The counterclaim alleged breach of contract, fraud, and negligent misrepresentation. AGA successfully argued that subsequent amendments to the parties’ original agreement defeated the defendants’ counterclaims as a matter of law, securing a dismissal with a prejudice precluding amendment.

Gabriel Blum and Seth Rosenstein secured summary judgment in favor of a firm client in a complex design and construction defect case. The firm convinced the Court that our client only provided job site materials and did not engage in construction work, contrary to the allegations in the Complaint. As New Jersey trial courts often disfavor granting summary judgment, this was a significant win for our client and saved them ongoing defense costs.

Anthony D’Artiglio and Joshua Bauchner successfully represented the purchaser of a substantial portion of an ice cream company’s assets with numerous locations throughout New York and New Jersey. The ice cream company entered into an assignment for the benefit of creditors proceeding where our client won the bid to purchase its IP and equipment while assuming multiple lease locations. We guided the purchaser through the sale’s confirmation, including addressing multiple issues related to liens, transfer of the IP, and landlord disputes.

Joshua Bauchner, Anthony D’Artiglio, and Brian Ashnault are representing a large property management company in a condemnation case in which a New York state agency is acquiring two permanent easements from a Bronx warehouse owned by the client. AGA is guiding its client through the pre-litigation stages of the condemnation process and seeks to secure a multi-million-dollar fair market value award in New York Supreme Court.

Joshua Bauchner, Layne Feldman, and Brian Ashnault obtained dismissal of a counterclaim filed against our client, a retail brokerage firm, in the Superior Court of New Jersey, Bergen County. The counterclaim sought a declaratory judgment regarding a brokerage listing agreement, deeming it unenforceable. AGA successfully argued that the counterclaim did not state sufficient facts and that the legal arguments failed as a matter of law, securing a dismissal with a prejudice precluding amendment.

Other litigation victories include:

  • Secured possession of a luxury home in Westchester County after years of litigation and compelled a highly favorable settlement, resulting in a windfall for clients and strong profit after selling the property to a third-party purchaser.
  • Obtained a highly favorable settlement for a contractor client after the homeowner sued, alleging breach of contract and consumer fraud in connection with constructing a pool deck. The firm’s efforts minimized the out-of-pocket costs for the contractor, with its insurance carrier paying most of the limited settlement sum.
  • Successfully prosecuted action on behalf of an automobile repair shop against a vehicle owner who refused to pay for charges after his insurance carrier failed to extend coverage. The settlement reached was significant and avoided the costs related to protracted litigation.
  • Initiated litigation against a multinational financial consultancy firm under the Fair Credit Reporting Act following the dissemination of inaccurate information concerning a client. The action was settled pre-litigation on favorable terms to the client.
  • Filed action on behalf of local businesses after a nationwide energy supplier substantially overbilled for provided electricity. After limited discovery, the firm’s efforts resulted in a substantial monetary payment to the local businesses.
  • Represented a local property developer in securing declaratory relief pertaining to a shopping center and certain master deed restrictions, permitting the construction and operation of a well-known gas station and convenience store at the subject property.

The Content, Notice, and Disclosure Requirements for New Jersey Home Improvement Contracts Protect Homeowners and Contractors in Equal Measure

By Seth M. Rosenstein

For New Jersey homeowners, few endeavors are more impactful, exciting, and nerve-wracking than hiring a contractor to work on a major home improvement project. When all goes well, the result is a house that increases in value and improves the homeowner’s and their family’s quality of life. But if things go south, if the contractor fails to complete the agreed-upon work, doesn’t show up for days or weeks at a time, or botches the job through incompetence or corner-cutting, the experience can be frustrating and costly.

For contractors, that same combination of promise and peril also accompanies large projects. That is why it is so critical at the start of their relationship for the homeowner and contractor to have a clear, written understanding of the scope of work and their respective rights and obligations. It is also why New Jersey law imposes strict and detailed requirements for most home improvement contracts.

These requirements, found in Section 56:8-151 of the Home Improvement Contractors Registration Act (the Act), are primarily designed to protect homeowners, as befits the state’s robust consumer protection laws. But the notices, disclosures, and other terms of home improvement contracts mandated by the Act also shield contractors from spurious claims by homeowners or attempts to expand the scope of work beyond what was agreed upon. 

Requirements Apply to All Home Improvement Contracts Above $500

The Act’s contract requirements apply to all home improvement contracts “for a purchase price in excess of $500.” Almost any physical work on a home, no matter how minor or superficial it may seem, constitutes a “home improvement” that triggers the Act’s contract provisions if above that price. This includes: 

The remodeling, altering, renovating, repairing, restoring, modernizing, moving, demolishing, or otherwise improving or modifying of the whole or any part of any residential or non-commercial property. Home improvement shall also include insulation installation, home elevation, and the conversion of existing commercial structures into residential or noncommercial property.

Required Contents of New Jersey Home Improvement Contracts

All home improvement contracts for more than $500, and any amendments or changes to the terms and conditions of the agreement, must be in writing and signed by the homeowner and the contractor. The contract must “clearly and accurately set forth in legible form and in understandable language all terms and conditions of the contract,” including but not limited to:

  • The legal name, business address, contractor’s registration number, and the sales representative’s legal name and business address.
  • A copy of the certificate of commercial general liability insurance for $500,000 per occurrence and the telephone number of the insurance agency issuing the certificate.
  • A description of the work to be performed and principal products and materials to be used or installed.
  • A statement of any guarantee or warranty concerning any product, material, labor, or service made by the home improvement seller.
  • A description of any mortgage or security interest to be taken in connection with the financing or sale of the home improvement.
  • The total price, including any finance charges.

The contract must also contain a notice advising the homeowner they have the right to cancel the contract and receive a full refund of any money paid if they cancel it by midnight of the third business day after receiving a copy of the agreement. The Act specifies that the notice must be in 10-point boldface type and read as follows:

YOU MAY CANCEL THIS CONTRACT AT ANY TIME BEFORE MIDNIGHT OF THE THIRD BUSINESS DAY AFTER RECEIVING A COPY OF THIS CONTRACT. IF YOU WISH TO CANCEL THIS CONTRACT, YOU MUST EITHER: 

  1. SEND A SIGNED AND DATED WRITTEN NOTICE OF CANCELLATION BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED; OR 
  2. PERSONALLY DELIVER A SIGNED AND DATED WRITTEN NOTICE OF CANCELLATION TO: (Name, Address, and phone number of contractor)

If you cancel this contract within the three-day period, you are entitled to a full refund of your money. Refunds must be made within 30 days of the contractor’s receipt of the cancellation notice.

A contractor who tenders a home improvement contract that does not comply with the Act’s requirements, or fails to tender a home improvement contract, may be subjected to a claim under the New Jersey Consumer Fraud Act. A non-compliant contract also threatens the contractor’s ability to be paid for their work. Any attempts to collect those amounts afford the homeowner an opportunity to bring a counterclaim under the CFA, which, if successful, can lead to an award of threefold the damages sustained by the homeowner as well as reasonable attorneys’ fees, filing fees, and reasonable costs of the suit.

Whether you are a New Jersey homeowner or contractor, understanding your legal rights and obligations can establish a solid foundation for a successful project. If you have any questions or concerns about home improvement contracts in New Jersey, please contact Seth Rosenstein or one of the residential real estate attorneys at Ansell, Grimm & Aaron.

Arbitration of Business Ownership Disputes: Is It Really a Better Alternative Than Litigation?

By Lawrence H. Shapiro

Just as you are unlikely to find a married couple who doesn’t argue from time to time, you’d be hard-pressed to find a business where the co-owners or partners never disagree on matters relating to their company’s direction. While all business owners share the same goal of charting a course for success, they often have different visions of how to get there. And when a consequential dispute between business owners devolves into an intractable and heated conflict, the fate of their interests in the business and the company’s continued viability hang in the balance. That is why it is so important for business owners at loggerheads to find the most effective, efficient way to resolve their stalemate. 

In a previous post, we discussed a variety of dispute resolution mechanisms that business owners can include in their operating agreements and bylaws to help address and resolve deadlocks. One of those options is arbitration. 

Many businesses include arbitration provisions in their organizing documents because they believe arbitration is preferable to litigation. Most business owners recognize that taking matters to court, while sometimes necessary to advance or protect a party’s or the business’ interests, is usually something to avoid. While both processes involve a neutral third party who decides the outcome of the dispute, arbitration is generally perceived as a more efficient, cheaper, and less destructive way to resolve a deadlock.

While arbitration offers many benefits in business ownership disputes, it is not without its faults or potential downsides. If you are considering including an arbitration provision in your governing documents or want to submit a pending dispute to an arbitrator, here are some things to consider. 

What Is Arbitration?

Arbitration is an agreed-upon process in which a third-party neutral selected by the parties considers evidence and testimony submitted by the parties and makes a decision regarding the resolution of the dispute. In this sense, arbitration is similar to traditional litigation before a judge. But there are significant distinctions in both procedure and outcome. While court proceedings are governed by rules of procedure and evidence established by the law and the judge, parties to an arbitration have much more leeway when setting the ground rules for the proceedings. 

And while a judge’s ruling is definitive and conclusive, an arbitrator’s decision can be binding or non-binding. If the parties agree to the former, the arbitrator’s decision is final and can usually be enforced by a court, if necessary. In non-binding arbitration, the parties can abide by the arbitrator’s decision if they so choose but are free to ignore it as well.  

Why Arbitration Is Preferable to Litigation – And Why It Isn’t

As noted above, arbitration and litigation share many characteristics but also have important distinctions. So what makes arbitration a supposedly attractive alternative to fighting things out in litigation, and what potential risks hide behind these presumed benefits? 

More Control Over the Process

Civil lawsuits are governed by strict rules of evidence and procedure, as well as the judge’s rulings, which the litigants must abide by whether or not they like them. In arbitration, the parties have much more power to set their own rules. For example, litigation could involve scores of depositions, expansive document requests, and other intrusive, costly, and lengthy discovery that drain bank accounts and draw out the process for months or years longer than either party would want. In arbitration, however, the parties can agree to limit the extent of discovery, such as setting a maximum number of depositions or placing a tight deadline on when discovery must be completed. 

While this ability to govern the process can benefit both sides, it may ultimately put one party at a significant disadvantage. A party may be unable to obtain the evidence and information that could be crucial to their claim or defense due to agreed-upon discovery limits. And if the parties agree to binding arbitration, the losing side forfeits the ability to challenge or change the outcome as they could in an appeal of a trial judge’s ruling. 

Speedier Resolution

Protracted discovery, ongoing motion practice, and overcrowded court dockets all contribute to why lawsuits may take years before they get to trial or a judge’s dispositive ruling. None of these impediments to a speedy resolution are present in arbitration. The parties can agree that a final hearing must be held by a set deadline, such as 60 or 90 days from the date of the first meeting with the arbitrator. A limit can also be set for the length of the hearing itself.

Lower Costs

The parties’ ability to exert greater control over and place limits on the arbitration process can result in far lower costs than litigation. By restricting discovery and other aspects of the process, the parties can keep legal fees and expenses from spiraling out of control, as often happens in the endless trench warfare that litigation can devolve into. Of course, if the parties give each other as wide a berth in the agreed-upon ground rules of their arbitration as they would have in a lawsuit, any potential savings can go out the window.

For a party with greater resources or bargaining power, arbitration may cause them to inadvertently squander that advantage by leveling the playing field. With expenses limited in arbitration because of a more streamlined and restrictive process, the party with fewer resources can better afford to stay in the fight. 

Keeping the Dispute Out of the Public Eye

Feuding owners are a bad look for any business, especially in the eyes of investors, other shareholders, customers, and suppliers. Since court proceedings are almost always a matter of public record, all of those critical constituencies – as well as the media – will be privy to the dispute’s ugly details. Owners can prevent their dirty laundry from being aired publicly by agreeing to keep the process and outcome of the arbitration confidential.

Sometimes, however, the threat of negative publicity for an owner or the business can give the other side leverage they would lose if they agree to confidential arbitration. This is another way arbitration can be more appealing in theory than practice.

If you have questions about arbitration or how to address disputes between business owners, please contact one of the litigation attorneys at Ansell, Grimm & Aaron.

Congratulations to Joshua S. Bauchner on His Achievements as the New Jersey State Bar Association’s Cannabis Law Committee Co-Chair

Ansell Grimm & Aaron, PC congratulates shareholder Joshua S. Bauchner on his many achievements as co-chair of the New Jersey State Bar Association’s Cannabis Law Committee. Along with co-chair Lisa A. Gora, a partner at Epstein Becker & Green, Joshua led the Committee in making significant advancements, including:

  • Hosting eight CLEs at the Law Center on a range of cannabis-related topics.
  • Hosting three CLE panels at the State Bar Convention.
  • Expanding the Committee to include psychedelics.
  • Preparing two Reports and Recommendations to the New Jersey Cannabis Regulatory Commission on its initial Rules and Regulations.

The Committee also laid the groundwork for new initiatives in the 2023-2024 term, including promoting expungements of cannabis-related convictions and developing guidelines for Workplace Impairment Recognition Experts (WIREs).

We commend Joshua Bauchner and Lisa Gora, and all of their colleagues on the Committee, and thank them for their leadership and commitment to the practice of controlled substance and regulatory law. You can read their letter to the Committee here.

The New Jersey State Bar Association’s Cannabis Law Committee was formed to bring together attorneys to examine the many legal issues that stem from the medicinal and adult-use access to cannabis.

As one of the most rapidly evolving industries today, lawyers in the cannabis space must be educated on licensing, operations, and employment issues such as drug testing. Contact an attorney in our Controlled Substances and Regulatory Law Practice Group with any questions about this emerging area of law.