NJ marijuana legalization: How legal weed states get around federal ban on marijuana

It's the problem faced by every single marijuana dispensary in the nine states that already sell marijuana for recreational purposes.

The fact is, "legal weed" isn't entirely legal. And if New Jersey legalizes marijuana, it will come with unique challenges — and solutions — for those looking to find success in cannabis.

The U.S. Department of Justice still considers marijuana a "Schedule 1" drug, a classification that indicates it has no medicinal value, despite 29 states having some kind of medical marijuana program.

Check out High Hopes, a look at how marijuana legalization changed everything in Colorado and California -- and what we can expect if we get legal weed in New Jersey!

“When you're in a federally illegal business, things like banking and accounting that other companies would take for granted and just do in their sleep become an exercise in challenge and creativity and compliance," said Paul Seaborn, who teaches the business of marijuana at the University of Denver.

The federal government has spent much of the last five years taking a hands-off approach to states with legal weed, but the Trump Administration has flip-flopped on the issue: U.S. Attorney General Jeff Sessions rescinded the Cole Memo in January, opening up the possibility of prosecuting states with legal weed.

But in April, U.S. Sen. Cory Gardner, R-Colorado, said President Donald Trump had decided it was a "states' rights" issue. And last week, President Donald Trump indicated that he'd support the bipartisan STATES Act, which would end the federal prohibition of marijuana and leave its regulation up to the states.

HIGH HOPES: New Jersey heading down well-worn path toward legal weed

Here are a few of the unique ways the federal prohibition of cannabis is affecting those intimately involved with the drug in Colorado, the first state in the country to legalize marijuana for recreational purposes.

Get in the van

To a passerby, it looks like a plain, white Dodge Sprinter van decorated with a few decals from the University of Colorado Boulder.

But inside? It's the CannaVan — a mobile laboratory replete with a litany medical equipment, computers and even tape on the floor, where test subjects can perform jumping jacks and push-ups.

Nearly every day, the CannaVan is on the road, collecting data from human test subjects for one of the many tests undertaken by the Center for Health and Addiction: Neuroscience, Genes, and Environment, or CHANGE Lab for short.

It's the CHANGE Lab's solution to one major problem: Because the university gets federal funding, its employees can't touch the drug or bring it on campus — not even to view it under a microscope.

See the CannaVan in action in the video at the top of this page!

CannaVan research is largely a three-step process:

Researchers park the CannaVan outside a subject's home. The person comes to the van and performs a series of tests so researchers can get baseline statistics.

The subject returns home and consumes marijuana — whatever strain they'd like, in whatever form they'd prefer.

After a certain period of time, they return to the CannaVan and perform the tests again, allowing researchers to observe specific physical and mental effects of the drug.

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The drug never enters University of Colorado property, and its employees never even see it.

“The real benefit of what we're doing here is to study the products that are available on the legal market that you or I could walk out to the corner and buy any day of the week because we're over 21," CHANGE Lab co-director Angela Bryan said. “So many people are using these products without knowing what the potential harmful consequences are or what is the best thing to use for what they're after.”

With the CannaVan, researchers are starting to break new ground on cannabis research. Recently, they started making headway into the idea that CBD partially negates the psychoactive effects of THC.

Essentially, a medical marijuana user may be able to consume a strain with both THC and CBD and feel some beneficial effects without feeling high.

"They have fewer recall errors and less effects on their cognition, which suggests that — if we have CBD in the product — that some of the negative consequences of THC might be lessened,” Bryan said.

HIGH HOPES: Medical marijuana was an NJ family's lifesaver. But they had to give it up.

Advertising

Where can you advertise a marijuana business?

Television and radio are a no-go, since the Federal Communications Commission regulates the airwaves.

Social media platforms such as Facebook and YouTube regularly delete advertisements or marijuana-related content, citing the fact that the drug is still illegal on the federal level.

Cable television is too expensive, and online websites don't have the reach. Instead, many legal weed entrepreneurs have turned to roadside advertising.

Not billboards, though. That's also illegal under Colorado law.

In exchange for "adopting" two-mile sections of roadway, picking up litter and paying for graffiti removal, businesses receive free advertising, in the form of a big blue sign: "Clean Colorado, sponsored by..."

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According to the Colorado Department of Transportation, half of the state's 160 adopt-a-highway signs are sponsored by companies involving marijuana, including dispensaries and ancillary businesses, such as mobile apps or accessories.

"Cannabis marketers have to be extra creative and strategic in all of their marketing efforts," said Olivia Mannix, founder of Colorado marijuana marketing agency CannaBrands, told Rooster Magazine.

The highway cleanups are "just another way for the cannabis industry to show their support for the environment and the well-being of the state — as well as getting their brands in front of people," she said.

Going national

In states with legal weed, most dispensaries are "cash only" since credit cards come with a federal charter.

The few businesses with bank accounts are set up through state banks — like the one proposed by Gov. Phil Murphy — and credit unions.

"It takes much more time than a typical business," said Seaborn, the University of Denver professor. "You probably don't even consider banking as a real challenge."

MORE: So you wanna get in the marijuana business? It won't be easy.

And those with grand plans of building the next Chipotle or Jersey Mike's are usually forced to curtail those dreams a bit. A marijuana business can't operate across state lines, with a production facility in Colorado and dispensaries nationwide, for example.

If New Jersey legalizes marijuana, a Colorado-based dispensary owner will have to apply for a license and secure local approval, just like any New Jersey applicant would.

"If you want to leave your state, you have to reinvent your entire company in another place," Seaborn said. "It's just a different playing field and all kinds of challenges that most businesses would never even consider."

But many marijuana business owners who have thrived under the status quo are leery of national legalization. Without a national chain — the "Walmart of weed" — smaller, independent dispensaries have a better shot at success, Seaborn said.

“The day that there's a national federal market, some of those companies may get pushed to the side or find themselves against some pretty tough competition," he said. "I think a lot of people may actually be quite happy just to leave things as they are for a while."

Mike Davis; @byMikeDavis: 732-643-4223; mdavis@gannettnj.com