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Despite the rapid growth of the cannabis industry, banks have been reluctant to provide financial services to cannabis-related businesses. Banks and other financial institutions fear that providing financial services to those in the cannabis industry could violate federal criminal laws and financial regulations such as “The Bank Secrecy Act” (“BSA”) and the “Money Laundering Control Act” codified under both sections 1956 and 1957 of title 18, of the United States Code.

In an attempt to create protections for banks that wish to provide financial services to cannabis-related legitimate businesses and service providers, the House Financial Services Committee voted on March 28, 2019 in favor of H.R. 1595, commonly known as the “Secure and Fair Enforcement Banking Act of 2019” or “SAFE Banking Act”. The revised version of the bill will now advance to the full House of Representatives for a vote.

The SAFE Banking Act would provide a “safe harbor” for banks that provide financial services to legitimate cannabis-related businesses, specifically: (1) prohibiting federal banking regulators from terminating or limiting deposit insurance of the bank; (2) prohibiting or discouraging banks from providing financial services to such a business; (3) recommending, incentivizing, or encouraging a bank to not offer financial services to such a business; or (4) taking adverse or corrective supervisory action on a loan made to a person solely because the person owns such a business or owns real estate or equipment leased or sold to such a business.

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On March 18, 2019, New Jersey Governor Murphy signed and enacted Senate Bill Number 2773 , which clarifies the definitions of Health Care Service Firms and Homemaker-Home Health Aides. The bill was primarily sponsored by Senator Nellie Pou and was unanimously passed by the New Jersey Senate and Assembly. According to Senator Pou, “[t]his bill will ensure that all firms acting as health care agencies for our elderly, including the ones using the Internet to arrange and provide companions or health care services are properly registered. We need to ensure that adequate care is provided with registered and qualified caregivers at all times.” Health Care Service Firms are closely regulated by the New Jersey Division of Consumer Affairs. Part of the regulation provides that these firms are required to provide comprehensive training, supervision and oversight to their caregivers who must be directly employed by the firm. In May 21, 2018 New Jersey passed legislation requiring Health Care Service Firms to become accredited by an accrediting body recognized by the New Jersey Department of Human Services and to submit to an audit conducted by a certified public accountant.

The recently enacted bill revises the previous law to clarify that any firm, company, business, agency or other entity that is not licensed by New Jersey as a Home Health Care Agency or Hospice which employs, places or arranges for the placement of or in any way refers an individual to provide companion, personal or health care services in the personal residence of a person with a disability or who is 60 years old or older, must register with the New Jersey Division of Consumer Affairs as a Health Care Service Firm. The bill further stipulates that the Division of Consumer Affairs is authorized to take enforcement measures upon any person who operates a firm that is subject to this Health Care Service Firm registration requirement, whether the operations include the direct employment of individuals, the use of an Internet website or application, or any other process or business model.

In addition, the bill imposes a penalty of $500 per day, for each day that the person continues to operate a firm without registering as a health care service firm as required.

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UPDATE: “The much-anticipated vote, tentatively scheduled for Monday afternoon in both the General Assembly and the state Senate, was called off when it became clear there were not enough votes in the Senate to pass it.”  Read full coverage at ROI-NJ.com

Governor Phil Murphy, Senate President Steve Sweeney, Assembly Speaker Craig Coughlin, Senator Scutari, and Assemblywoman Quijano announced last week that they have reached an agreement concerning the legislation to legalize adult-use marijuana in New Jersey.

While the proposed legislation will likely be released in the coming days, this is what we know so far based on pending Senate Bill S2703.

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Steven L. Fox’s article To Be Exempt or Not Exempt…That is the Question was recently published in the New Jersey Law Journal’s Employment Law Special Section.  Steven addresses the issues employers face when classifying newly hired employees.

When hiring, many employers do not give proper consideration to whether newly hired employees should be classified as “exempt” employees who by law are not entitled to overtime pay for hours worked in excess of 40 hours in any workweek, or “nonexempt” employees who are entitled to overtime pay. A failure to properly apply the legal criteria for employee classification can be a costly oversight for employers.

The federal Fair Labor Standards Act (“FLSA”) mandates that employees be paid on an hourly basis of at least the federal minimum wage, currently $7.25. States and municipalities are free to enact higher minimum wage rates. New Jersey recently passed legislation that will progressively increase the current $8.85 per hour minimum wage to $15.00.

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Two questions often asked by clients at their initial interview are “Do I need to be separated from my spouse for any length of time before I can file for divorce? and Can I obtain a legal separation from my spouse?” The short answer to both questions is no.

In New Jersey, there is no required term of separation necessary to file for divorce. In fact, spouses are often still residing together at the time one of them chooses to file for divorce, or retain an attorney, and they remain so throughout the process. While a physical separation remains a valid cause of action (reason) to file for divorce, it is not required. The majority of individuals who file for divorce do so with their reason being irreconcilable differences.

In New Jersey, there are nine causes of action or reasons which would entitle an individual to obtain a judgment of divorce from their spouse. Seven of these are fault-based and two are not. They are:

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As yet another consequence of the #metoo movement, the New Jersey Legislature has passed legislation aimed at prohibiting employers from including certain waiver provisions and non-disclosure clauses routinely found in employment agreements. Senate Bill No. 121 (“the Bill”) , which is expected to be signed by signed by the Governor, will bring about a sea change for employers on several fronts.

The Ban on Waiver of Rights Under the LAD: Until now, employers were free to enter into agreements with employees to waive rights to jury trial and arbitrate all employment-related claims, including claims under the New Jersey Law Against Discrimination (“LAD”). In recent years New Jersey courts have declined to enforce individual arbitration agreements unless the employer agrees to preserve certain procedural and substantive rights, such as statutory rights to punitive damages and attorney fees, the full benefit of the statute of limitations period, and the absorption of the costs of arbitration by the employer. Nevertheless, properly crafted waivers and arbitration agreements were enforced by the courts despite the employee’s surrender the right to a jury trial in a judicial or arbitral forum.

Under the Bill, a provision “in any employment contract that waives any substantive or procedural right or remedy relating to a claim of discrimination, retaliation or harassment shall be deemed against public policy and unenforceable.” Moreover, the Bill bars any prospective waiver of any right or remedy under the LAD or any other state statute. Whereas the rights conferred by the LAD include a jury trial, the Bill effectively prohibits an employer from entering into any agreement i) to waive a trial by jury of LAD claims in a judicial forum, or ii) to arbitrate LAD claims which necessarily dispenses with a jury. At the very least, employers may be required to exclude claims for discrimination, retaliation and harassment from arbitration agreements. No surprisingly, these mandates do not apply to collective bargaining agreements.

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Marijuana comes from plants that have hundreds of chemicals known as cannabinoids. The two most notable cannabinoids are the psychoactive Tetrahydrocannabinol (“THC”) and the non-psychoactive Cannabidiol (“CBD”). Hemp, while also derived from the cannabis family, has virtually no THC present thereby causing no psychoactive effect.

The Controlled Substances Act (“CSA”) is the statute under federal law regulating drug policies in the United States. It regulates everything from the manufacturing, possession, use and distribution of certain substances. Under the CSA, Marijuana is considered a Schedule I controlled substance while CBD is considered a Schedule V controlled substance, the least restrictive under the Act. Hemp is no longer treated as a controlled substance pursuant to the Agricultural Improvement Act of 2018 (“Farm Bill”).

Given the extremely small level of THC present in CBD, many people have been asking: is CBD legal in New Jersey? While this is arguably unchartered territory for New Jersey, both the New Jersey State Assembly Bill 1330 and Farm Bill offer some guidance.

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Increased exemptions for 2019. The IRS has announced that the gift and estate exemption has increased to $11.4 million per person in 2019. The exemption amount in 2018 was $11.18 million. This means that in 2019, an individual can make gifts during life or at death totaling $11.4 million without incurring gift or estate tax. In addition, a married couple can now transfer $22.8 million worth of assets during life or at death tax-free. The annual gift tax exclusion amount remains at $15,000 per recipient ($30,000 if spouses elect gift-splitting).

IRS addresses estate and gift tax exemption “clawback.” The Tax Cuts and Jobs Act (“TCJA”), which was signed into law in December 2017, increased the gift and estate tax exemption from $5 million to $10 million, indexed for inflation (see current rates above). The TCJA also provides that the exemption amount will revert to $5 million in 2026. This led many practitioners to wonder: what happens if an individual makes a gift in excess of $5 million now, and dies in or after 2026 when the exemption amount is only $5 million? Because the gift and estate tax exemption is unified, this could mean that estate tax would be due since the individual’s gross estate, which includes the prior gift made, would exceed the applicable exemption at the time of death.

However, in November 2018, the Treasury issued proposed Regulations addressing this “clawback” of the exemption amount (Prop. Reg. Sec. 20.2010-1(c)). The Regulations provide that in the situation described above, the applicable estate tax credit will be based on the greater of the two amounts. For example, if an individual makes a gift of $9 million in 2019 when the exemption amount is $11.4 million and then dies in 2026 when the exemption is $5 million, the individual’s estate may use the higher exemption of $11.4 million to ensure that tax will not be due on the amount in excess of $5 million. Thus, if you are considering make a large gift (or a series of gifts), now is the time to do it, when the exemption amount is the greatest it has ever been.

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The New Jersey estate tax was repealed effective January 1, 2018. Coupled with the significant increase in the federal estate and gift tax exemption ($11.4 million in 2019), the repeal has reduced the need for transfer tax planning by many New Jersey residents. However, because the New Jersey inheritance tax remains in place, clients must still consider the effect of the inheritance tax upon their estate plans.

New Jersey is one of six states that have an inheritance tax, the others being Iowa, Kentucky, Maryland, Nebraska and Pennsylvania. New Jersey’s rates begin at 11% and rise to 16%. N.J.S.A. 54:34-2. The inheritance tax applies to gifts at death, or within 3 years of death, to beneficiaries who are separated into different classes based upon the relationship of the decedent to the beneficiary. N.J.S.A. 54:34-1 and 54:34-2. Class A beneficiaries (spouses, civil union partners, direct descendants, direct ancestors, and stepchildren) are exempt from the tax. Class B was eliminated as a category in 1963. Class C beneficiaries (siblings, sons- and daughters-in-law, and civil union partners of children) receive a $25,000 exemption and are taxed at rates ranging from 11% to 16%. Class D beneficiaries (everyone else) are taxed at 15% on bequests up to $700,000, with a rate of 16% for amounts above $700,000. Qualified charities are Class E beneficiaries and gifts to them are exempt from application of the tax.

There is no exemption from the New Jersey inheritance tax based upon the size of one’s estate. Even transfers from a very modest estate will incur the tax if the recipients are in a taxable category. The inheritance tax is assessed against the recipients unless the will directs otherwise. Executors are charged with deducting the tax from the bequests before distributing to the beneficiaries. N.J.S.A. 54:35-6.

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As our clients age they often tell us they do not feel comfortable with their ability to continue to manage their financial affairs. They also express the unfounded fear that upon their death all their bank accounts will be frozen for months on end with no ability for anyone to access their funds to satisfy their obligations after death for the care of their home or loved ones. The common step taken by many is to put a family member or trusted friend on their accounts as joint owner so that in the case of a disability or death, funds will be readily accessible to satisfy the client’s obligations without interference.

Unfortunately, this step, although well-intentioned, has sometimes resulted in significant confusion, litigation and costs to the client’s estate because the creation of the joint account and the transfer of those assets to the surviving joint owner at death were not clearly understood by the elderly client or were not properly explained to her by the custodian of the account.

This miscalculation was recently demonstrated in an Appellate Division case, In the Matter of the Estate of Jones, No. A-2557-16T2, 2018 WL 4471686 (N.J. Super. Ct. App. Div. Sept. 19, 2018). Subsequent to the death of her husband, Erna M. Jones visited her investment broker with her middle daughter, Barbara, to open a new account distinct from the one she held jointly with her husband. Mrs. Jones executed a new account application that identified her daughter Barbara as a second party, and the box was checked that the account was “Joint Tenants with Right of Survivorship.” Subsequent to this account opening, Mrs. Jones managed the account, paid her bills and handled her investments with the representative of the brokerage company. At her death in 2015, her daughter Barbara claimed the account as hers as the surviving joint tenant. Barbara’s older brother, David, objected and filed a Complaint under New Jersey’s Multi-Party Deposit Account Act (“MPDAA”) alleging that the account was not held with right of survivorship but was merely a “convenience account,” and that all money in the account was to be distributed equally amongst Mrs. Jones’ surviving three children. Mrs. Jones’ Last Will and Testament provided that her estate was to be divided equally amongst her children and throughout her life, David stated, she had always treated her three children equally. David further alleged that Barbara had utilized undue influence in getting her mother to name her as a joint owner on the account.

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