New Jersey Attorney General Gurbir Grewal issued warning letters to gifting entrepreneurs that claim to offer gifts of cannabis after buying something else.
The letters said the State of New Jersey will enforce the limits of the adult-use cannabis law to protect the regulated market from competition by unlicensed businesses.
In letters warning Sky High Munchies, Slumped Kitchen LLC, NJGreenDirect.com LLC, and West Winds Wellness they were ordered to cease and desist unauthorized business practices. In addition, they are under investigation for violation of the Consumer Fraud Act.
None of these businesses sought to hide the nature of their business. Sky High Munchies ran ads during a Philadelphia Phillies baseball game.
The letters note the “gifts” they offer consumers seem central to sales transaction and, thus, not a gift.
“In legalizing adult-use cannabis in New Jersey, the Legislature made it clear they were creating a regulated market with restrictions on how that market operates,” said Attorney General Grewal. “We’re making it clear that we will not permit these entities to undermine the regulated cannabis marketplace the Legislature created or to compete unfairly with properly licensed cannabis businesses.”
Making Business Difficult for Gifting Entrepreneurs
“The CRC is committed to establishing a safe marketplace of cannabis products,” said CRC Chair Dianna Houenou. “Those trying to preempt the rules and transfer unregulated and untested marijuana items jeopardize public health and undermine confidence in the forthcoming regulated cannabis industry.”
The CRC has not yet adopted rules for the licensing of adult-use cannabis retailers nor issued any licenses to such businesses.
Under the Consumer Fraud Act, misrepresentation in the sale or advertising of merchandise constitutes a separate violation, and violators may be subject to a penalty of $10,000 for the first violation and $20,000 for each subsequent violation.
“We will not allow vendors to misrepresent what they’re selling,” said Kaitlin Caruso, Acting Director of the Division of Consumer Affairs. “Under our consumer protection laws, vendors are subject to fines and penalties for making false or misleading statements about what they’re selling. We have warned these companies about our concerns, and to stop conduct that could violate our laws.”