NJ Appellate Court Strikes Down Misguided Attack on Women’s Right to Compete in Emerging Cannabis Industry

Earlier this month, Governor Phil Murphy and Treasurer Elizabeth Maher Muoio announced the release of a “comprehensive statewide disparity study examining public contracting opportunities” for Minority and Women-Owned Business Enterprises (“M/WBEs”).[1] The New Jersey Department of the Treasury, Division of Revenue and Enterprise Services currently runs the State’s M/WBE Certification Program, which is designed to expand opportunities for minority and women entrepreneurs in accessing state and local government contracts and growing their businesses. Unfortunately, the study identified a “statistically significant disparity” in the awarding of public contracts to M/WBEs, and in the value of those contracts awarded.

In a timely example of the obstacles faced by minority and women entrepreneurs, the Stevens & Lee Appellate Practice Group recently represented one of three women-owned businesses whose Treasury-issued WBE Certifications were challenged as part of an appeal of the New Jersey Cannabis Regulatory Commission’s 2019 Request for Applications (“RFA”). Each of the three women-owned businesses were awarded permits to operate Vertically Integrated Alternative Treatment Centers (“ATCs”) in New Jersey’s highly competitive and burgeoning cannabis industry. The appellant did not receive an award.

The New Jersey Superior Court, Appellate Division, rejected the appellant’s challenge, and affirmed the validity of each WBE Certification as supported by adequate evidence and issued in accordance with statutory directives and Treasury’s regulations. In articulating the burden of proof required for such a third-party challenge, the Court signaled to future challengers that it would not tolerate baseless claims, which serve only to undermine the goals of ensuring equitable and inclusive industries in New Jersey. The Court explained, “the purported lack of technical expertise in the cannabis industry possessed by these women as compared to their husbands or male business partners does not necessarily mean the businesses will be controlled by men. To conclude otherwise would be to credit optics and assumptions over evidence.”[2]

Although unpublished, this opinion will serve as an important case for future third-party challenges to M/WBE Certifications, particularly in emerging industries. As the Court noted, no New Jersey cases have interpreted the statutory and regulatory provisions addressing WBE certification.

Maeve E. Cannon argued the case before the Appellate Division and was on the brief, with Michael A. Cedrone.

[1] Murphy Administration Releases Statewide Disparity Study of Contracting Opportunities for Minority and Women-Owned Businesses (MWBE), Press Release (January 23, 2024), available at https://www.nj.gov/treasury/news/2024/01232024.shtml.

[2] Matter of Curio Holdings NJ, LLC, A-0947-21, 2023 WL 5609046, at *12 (N.J. Super. Ct. App. Div. Aug. 30, 2023).