Author: ryan

With the signing of a series of landmark bills in February, 2021, New Jersey Governor Phil Murphy ushered in a new era for the Garden State. In particular, the bill called AS21/S21 sets out the rules and regulations for the state’s adult-use cannabis industry. And with a projected value of some $1.2 to $1.5 billion by 2023, New Jersey was immediately set to become one of the country’s largest legal cannabis markets.

Now that the cannabis industry regulations are on the books, a more pressing question is on entrepreneurs’ minds: How do you get a cannabis license in NJ?

In today’s article, we’ll walk you through the regulatory landscape, offering tips and observations from seasoned experts in the legal cannabis realm. Some of the topics we’ll explore include:

• What kinds of NJ cannabis licenses will be issued?
• How many NJ cannabis licenses will be issued?
• Who will be first in line to get a cannabis license in NJ?
• Can certain towns or municipalities prohibit legal cannabis?
• What will successful applicants need to demonstrate?

Ready to dive in? Let’s begin with an overview of the regulatory landscape.

Tips for Securing a Cannabis License in NJ: Learning the Landscape

The recent signing of the cannabis bills inaugurated intense celebration. After all, just over 60% of surveyed New Jerseyans had come out in favor of legal cannabis less than a year before. In November of 2020, an even higher proportion of them had backed that up by passing Question 1, which amended the state constitution to allow the cultivation, processing, sale and use of cannabis for adults 21 and over. 

Momentous though that vote was—New Jersey was the first mid-Atlantic state to pass such a measure—the details were left up to the state legislature to work out. Now that cannabis industry legislation is on the books, it’s time to get in gear if you’re interested in securing your cannabis license in NJ. Here are a few top-level questions around that topic.

What kinds of cannabis licenses will be issued in NJ?

The bills recently signed into law create six “marketplace” classes of license:

• Class 1 Cannabis Grower: Issued for facilities involved in growing and cultivating cannabis
• Class 2 Cannabis Processor: Issued for facilities involved in the manufacturing, preparation, and packaging of cannabis items
• Class 3 Cannabis Wholesaler: Issued for facilities involved in obtaining and selling cannabis products for resale by other licensees
• Class 4 Cannabis Distributor: Issued to businesses involved in transporting bulk cannabis products within the state from one licensed cannabis establishment to another
• Class 5 Cannabis Retailer: Issued for locations at which cannabis items and paraphernalia are sold to consumers
• Class 6 Cannabis Delivery: Issued to businesses providing courier services for a licensed cannabis retailer to make deliveries of cannabis products and related supplies to consumers

Now some hard numbers: At present, each license will cost $20,000 annually. Applicants will need to submit full payment in the form of two checks ($2,000 and $18,000) with their submission. If the application is rejected, the CRC will keep the smaller payment but refund the larger one.

How many cultivation licenses will be issued?

At present, the number of Class 1 licenses will be capped at 37, at least for the first 24 months of legal sales. However, there is an exception for microbusinesses: Those that employ no more than 10 employees and with a limit of 2,500 square feet of canopy.

How many dispensaries will be licensed? 

New Jersey plans to issue 24 new medical cannabis licenses. To date, the state has issued 12 medical cannabis dispensary licenses, only 10 of which are in operation. 

As for adult-use licenses, the early word from New Jersey’s Cannabis Regulatory Commission (CRC) is that there will not be a hard cap on licenses granted; instead, the Commission will gauge and respond to market demand. That said, a comparison with Washington State may provide a clue. 

Currently, the number of adult-use dispensaries in Washington State (total population just over 7.6 million) is capped at 556. That places the state 6th in terms of dispensaries per capita. By comparison, New Jersey boasts a population of nearly 9.5 million.

So, doing a little back-of-envelope math, we can look forward to a large number of retail licenses becoming available, especially given Governor Murphy’s highly public support of the state’s legal cannabis industry (not to mention the budget shortfalls following the fiscal wash of 2020). 

Who will be first in line to get a cannabis license in NJ?

At present, the state’s current 12 medical dispensary operators will be able to secure a Class 5 retail license, though reportedly such businesses would have to demonstrate the capacity to attract and serve the additional customers as well as maintain the supply chain and infrastructure to effectively serve current medical patients. In addition, it’s reported that existing medical dispensaries will have early access to cultivation, distribution, and wholesale licenses, though the specifics aren’t yet entirely clear.

What is clear is that the CRC is demonstrating a concerted effort to enact strong social equity initiatives. Other social equity points of focus include:

• Allocating 30% of licenses to women, minorities or disabled veterans
• Prioritizing residents of “impact zones”: Municipalities negatively impacted by unemployment, poverty, or past cannabis enforcement activity. As much as is possible, the CRC plans to grant 25% of all licenses to applicants from these municipalities or those who employ at least 25% of their employees from them
• Potentially levying a small “social equity excise fee” on cultivators, the proceeds of which would fund programs in the aforementioned impact zones

Over and above this, longtime state residents will have priority when it comes to the application process. The CRC defines these as those people who have resided in New Jersey for at least five years and who hold at least a 5% stake in any entity seeking a cannabis license in NJ  

What’s more, at least 35% of the total licenses issued for each class will be “conditional.” In other words, these applicants need not be in compliance with every aspect of the regulatory requirements for full licensure but will need to provide sufficient plans for future actions in order to eventually achieve compliance for full licensure by a certain deadline. 

Applicants seeking a conditional license must demonstrate that any person with a financial interest in the business and having decision-making authority have an adjusted gross income for the immediately preceding tax year of no more than $200,000 (no more than $400,000 if filing jointly).

Finally, at least 10% of the total licenses issued for each class—and at least 25% of the overall number of licenses issued—will be earmarked for microbusinesses (as defined earlier).

Can certain towns or municipalities prohibit legal cannabis?

They can, and they have. In fact, by this time two years ago, more than 60 New Jersey towns had passed ordinances to do so. That said, such a ban may turn out to be somewhat hollow: Under the new cannabis regulations, municipalities cannot prohibit licensed cannabis deliveries within their jurisdictions. For a more complete list of laws pertaining to New Jersey municipalities, click here.

What will successful applicants need to demonstrate to the CRC?

This one is key. Unfortunately, the Commission hasn’t yet made public the exact components of its point scale. But based both on our experience and our interpretation of the CRC’s goals, here are some of the criteria the Commission will consider over and above those named above:

• Direct experience in the cannabis industry
• A detailed business plan that includes all pertinent cannabis-specific aspects, including compliance software and reportage tools 
• Demonstration of financial and managerial competence
• Environmental-impact and sanitation procedures plans
• Safety and security procedures, including those for cybersecurity and diversion prevention
• An emergency management plan, as well as procedures to report adverse events

By necessity, this is only a partial list. Crafting a business plan and understanding the regulatory, financial, and marketing landscapes require intense focus and the help of an experienced and trustworthy guide. 

If you’re serious about trying to secure a NJ cannabis license, there’s no one better qualified to help you navigate and manage the process. Since 2009, we’ve helped over 400 license holders all across the United States navigate the daunting array of rules, regulations, and pitfalls around applying for and securing a cannabis license. Reach out, we’d love to talk.

With New York State having embraced adult-use cannabis, the race to secure cannabis business licenses in the Empire State is hotter than ever. And while there are several different types of licenses on offer, getting any one of them will require you to do your research, formulate a winning business plan, and be prepared to be nimble and light on your feet as you navigate a challenging regulatory environment. 

In today’s post, we’ll explore the NY cannabis licensing requirements with the goal of giving you a solid grounding in the facts. Some of the areas we’ll cover include:

• Types of NY Cannabis Licenses
• NY Cannabis Licensing Criteria 
• Social and Geographic Equity
• Preparing to Apply

And with that, let’s jump in!

NY Cannabis Licensing: Types of Licenses Offered 

The state’s Marijuana Regulation and Taxation Act (MRTA) established two governing bodies. The first—the Cannabis Control Board (CCB)—oversees the second, the Office of Cannabis Management (OCM). The two offices will work in tandem to formulate the regulations around license types, implementation of social and economic equity plans, and allocating tax revenue from cannabis sales towards social and economic equity programs.

At the moment, there are still many open questions around the licensing process. However, one thing is certain: Instead of pursuing a staggered release of licenses, NY is likely to offer most if not all types simultaneously. This means that applicants must understand the regulatory framework and be laser-focused on the type of license they’re pursuing. These types include:

• Adult-Use Cultivator License: Applicants may apply for only one processor license, and may not also hold a license to distribute, a retail dispensary license, or have a direct or indirect interest in a retail dispensary
• Adult-Use Processor License: Applicants may not obtain a license to distribute, and may not also hold a retail dispensary license or have a direct or indirect interest in a retail dispensary.
• Adult-Use Distributor License: Applicants may not also hold a retail dispensary license or have a direct or indirect interest in a retail dispensary.
• Adult-Use Retail Dispensary License: Applicants may not have a direct or indirect financial or controlling interest in more than three adult-use retail dispensary licenses. In addition, they may not also hold an adult-use cultivation, processor, or other cannabis license.

What’s more, retail licenses will not be granted unless the applicant can demonstrate possession and complete control of the premises for at least a two-year term (i.e. the standard term for a NY cannabis license).

• Microbusiness License: Authorizes the limited cultivation, processing, distribution, and dispensing of a business’s own adult-use cannabis. Applicants may not hold an interest in any other license and may only distribute its own cannabis to dispensaries.
• Delivery License: Licensees may employ no more than 25 individuals for full-time paid delivery services, and may not also have a direct or indirect financial or controlling interest in more than one delivery license.
• Nursery License: A person or entity holding a cultivator’s license may obtain one nursery license to sell directly to other cultivators, cooperatives, or microbusinesses.
• Small Business Adult-Use Cooperative License: A cooperative must be comprised of New York residents as an LLC or LLP, or some other business structure approved by the Board. Applicants may not also hold a retail dispensary license or have a direct or indirect interest in a retail dispensary
• Adult-Use On-Site Consumption License: Applicant must demonstrate possession and complete control of the premises for at least a two-year term (i.e. the term of the license), and may only have a direct or indirect financial or controlling interest in three adult-use on-site consumption licenses. Applicants may not also hold an adult-use retail dispensary, cultivation, processor, microbusiness, cooperative, or distributor license or be a registered organization.

Reading between the lines, this list gives us a lot to chew on. For one thing, the regulations would seem to demonstrate a strong bias against the sort of vertical integration other cannabis-legal states have embraced to varying degrees. 

Also embedded in the relatively dry language of the cannabis licensing legislation is a commitment to social equity. We’ll turn our attention to that in the following section.

NY Cannabis Licensing: Social and Geographic Equity

Many of the license types stipulate that strong preference will be given to social and economic equity applicants, with a goal of 50%. How will the OCM/CCB determine this? The wording of the adult-use bill directs the office to prioritize applications by people from communities disproportionately impacted by cannabis enforcement, and applicants who qualify as a minority- or women-owned business, distressed farmer, or service-disabled veteran.

These “Social and Economic Equity” applicants will enjoy several benefits, including fee waivers or reductions, access to low-interest or interest-free loans, and no-cost counseling services such as small business coaching and financial planning. All in all, the state plans to issue 50% of licenses to these applicants.

What’s more, these special dispensations are designed to prevent their being used as a “back door” for non-qualifying applications. The law prohibits the sale or transfer of a social equity license for three years after initial licensure unless the license is sold or transferred to another qualified social equity licensee (and the transfer is approved by the CCB).

Finally, the CCB has demonstrated an interest in maintaining geographic diversity among license-holders.

NY Cannabis Licensing: Preparing to Apply

Now that you’ve got an understanding of the licensing landscape, let’s turn our attention to the nuts-and-bolts questions of what applicants will need to provide. While the OCM/CCB has not yet set out specific requirements, applicants, officers, directors, and other principals of entities applying for a license can expect at a minimum to provide such pieces of information as:

• Complete personal and demographic details
• Corporate structure and investment information
• Fingerprints for a background check
• Information about the specific property to be used for the cannabis business, including address and proof of the right to use it for at least the next two years (again, the standard licensing period) 

By necessity, this is only a partial list. Applicants will need to demonstrate the capability to implement strong security and tracking procedures, as well as the necessary regulatory compliance measures expected of any cannabis business. This includes procedures to combat the diversion of cannabis products and their sale to underage people. 

Finally, there are the licensing fees themselves, which have not yet been set. Previously, in the medical cannabis market applicants paid a nonrefundable $10,000 application fee and—if approved—a $200,000 fee securing their license for two years.

While it’s not yet known if the OCM/CCB will require submission of a business plan, you will most certainly need to create one. And take it from us: Crafting a business plan and understanding the regulatory, financial, and marketing landscapes require intense focus and the help of an experienced and trustworthy guide. 

If you’re serious about trying to secure a NY cannabis license, there’s no one better qualified to help you navigate and manage the process. Since 2009, we’ve helped over 600 license holders all across the United States navigate the daunting array of rules, regulations, and pitfalls around applying for and securing a cannabis license. Reach out, we’d love to talk.