Marquee Background
Marquee Background

Offit Kurman Blogs

Business

Cannabis Manufacturing Complicated by New Jersey Industrial Site Recovery Act (ISRA) and Potential Environmental Liability

March 9, 2023

By Matthew Karmel

New Jersey’s Industrial Site Recovery Act (ISRA) may impose significant environmental liabilities on unsuspecting Class 2 Cannabis Manufacturers, including liability for historical contamination.  ISRA requires investigation and remediation of all historical contamination, whether or not caused by the manufacturer, each time certain business goes through a change of ownership or control or ceases operations including as a result of a lease termination, subject to specific exceptions and limitations.  Cannabis businesses that may be subject to ISRA will want to take additional precautions through due diligence, contracting, and perhaps even obtaining environmental insurance, to limit potential liability.

However, ISRA does not apply to all businesses or transactions, and will not apply to all Class 2 Cannabis Manufacturers.  In fact, the provisions of ISRA only apply if the following the place of business must have a North American Industry Classification System (NAICS) code listed in N.J.A.C. 7:26 B – Appendix C of the regulations implementing ISRA.  A Class 2 Cannabis Manufacturer may fall under a few different NAICS codes, including:

  • 311812 – Commercial Bakeries: This industry comprises establishments primarily engaged in manufacturing fresh and frozen bread and bread-type rolls and other fresh bakery (except cookies and crackers) products.”
  • 311991 – Perishable Food Manufacturing: This industry comprises establishments primarily engaged in manufacturing perishable prepared foods, such as salads, sandwiches, prepared meals, fresh pizza, fresh pasta, and peeled or cut vegetables.
  • 325411–Medicinal and Botanical Manufacturing: This industry comprises manufacturing uncompounded medicinal chemicals and their derivatives (i.e., generally for use by pharmaceutical preparation manufacturers) and/or Grading, grinding, and milling uncompounded botanicals
  • 424590– Other Farm Product Raw Material Merchant Wholesalers: This industry comprises establishments primarily engaged in the merchant wholesale distribution of farm products (except grain and field beans, livestock, raw milk, live poultry, and fresh fruits and vegetables).

It is possible that a business will have multiple operations at a single location, and then the dominant use must be determined for purposes of ISRA.  The only ISRA-subject code noted above is 325411 (Medicinal and Botanical Manufacturing), but other ISRA-subject codes not listed above could apply in certain situations.   Class 2 Cannabis Manufacturers with medicinal and botanical manufacturing as the dominant use may need to comply with the requirements of ISRA each time a change of ownership or operations, or a cessation of operations, including a lease termination, occurs.  These businesses should protect themselves by conducting due diligence on historical contamination, carefully allocating environmental risks and liabilities in leases and other real estate contracts, and perhaps even obtaining pollution legal liability or other environmental insurance.  Competent local environmental attorneys can assist with the evaluation of whether ISRA applies, and, if it does, advise on risk mitigation.

Categories: Business

Related Services

  • Posts
  • About
  • Subscribe

Firm Highlights

  • Blog Posts
    Law, Love, and Life's Battles: Facing Breast Cancer
    What happens to a marriage and a family when a breast cancer diagnosis changes everything? In this episode of Love Ends, Law Begins, hosts Fara Rodriguez and Stephanie Lehman have a deeply personal conversation about breast cancer, marriage, family, and the challenges that can come with a serious illness. This episode is especially meaningful for Fara, who shares her own recent breast cancer diagnosis and journey. She opens up about discovering a lump, receiving her diagnosis, undergoing a double mastectomy and subsequent treatments, and navigating the emotional impact of cancer while continuing to work and care for her family. Fara and Stephanie discuss how a cancer diagnosis can affect a marriage in unexpected ways—from changing family roles and creating new caregiving responsibilities to putting pressure on finances, health insurance, and household responsibilities. They explore how illness can either bring couples closer together or create additional challenges, particularly when one spouse becomes the primary caregiver or when the family is dealing with fear and uncertainty. The conversation also addresses the unique challenges of parenting during an illness, including how to talk to children about a cancer diagnosis and how divorced parents may need to adjust parenting schedules and responsibilities when one parent becomes sick. From navigating medical expenses and insurance coverage to balancing work, parenting, caregiving, and intimacy, Fara and Stephanie offer a candid look at the ways illness can reshape relationships and family dynamics. In recognition of Breast Cancer Awareness Month, this episode provides an honest and personal conversation about facing cancer while navigating marriage, family, and the many practical challenges that come with a serious diagnosis. In this episode, you'll hear about: • Fara's personal breast cancer diagnosis and journey • How a cancer diagnosis can affect a marriage • The challenges of becoming a caregiver to your spouse • How illness can bring couples closer together—or create new challenges • Talking to children about a parent's cancer diagnosis • How divorced parents can navigate parenting responsibilities when one parent becomes ill • The financial impact of illness and the loss of household income • Health insurance and medical coverage considerations • How medical expenses can create additional financial strain • The importance of support from family, friends, and caregivers • Balancing work, parenting, treatment, and recovery • How illness can affect intimacy and marital dynamics • The importance of supporting children through a parent's illness • Why communication and cooperation matter during a health crisis • Breast Cancer Awareness Month and the importance of mammograms
  • Events
    AIA Tri-State Conference
    Princeton will serve as the backdrop for three days of connection, learning, and design leadership. From keynotes to tours to the Tri-State Design Awards, this year’s conference is designed to go far beyond education sessions. Kick off the week with pre-conference intensives and individual state component Design Award celebrations, followed by three days of education, inspiration, networking, and design excellence at the 2026 AIA Tri-State Conference—featuring pre-conference intensives, three keynote speakers, 25 education sessions, curated tours, an expo, spec academies, and the AIA Tri-State Design Awards—bringing together architects and design professionals from New Jersey, New York, and Pennsylvania to connect, learn, and celebrate the best of the profession. G2. Designing Secure Practices: Cybersecurity, Data Privacy, Contractual Provisions, and Insurance Risks for Architects (4:00 PM - 5:30 PM) Architects and design professionals increasingly rely on cloud platforms, BIM software, and digital tools to manage sensitive data, creating cybersecurity and privacy risks. A single incident can trigger liability claims, regulatory obligations, reputational harm, and insurance challenges. Yet many firms underestimate how contracts, insurance, and internal practices intersect during a breach. This program offers legal and insurance perspectives on cyber risk in architecture, examining liability exposure, risky contract provisions, and mitigation strategies. A cyber insurance expert will explain policy responses, coverage gaps, coordination with professional liability, and best practices for aligning insurance with contractual risk and protecting firms from evolving cyber threats. Learning Objectives: Identify key cybersecurity and data privacy risks faced by architecture firms and explain how these risks can impact professional liability and project outcomes. Analyze common contractual provisions to determine which clauses may increase exposure to cyber incidents and propose strategies to mitigate these risks. Evaluate the scope and limitations of cyber insurance policies, including coordination with professional liability coverage, to determine how a policy would respond in a breach scenario. Develop actionable risk management strategies by integrating legal, contractual, and insurance considerations to protect sensitive client and project data.