The legalization of cannabis in New Jersey has come a long way since the Compassionate Use Medical Marijuana Act was signed into law by outgoing Governor Jon Corzine in 2010. This law allowed the use of medicinal marijuana for the treatment of a host of conditions, including cancer, multiple sclerosis, HIV/AIDS, and any terminal illness where the doctor has determined that the patient will die within a year.
In 2016, the list of qualifying conditions was expanded to include PTSD, and in the subsequent year, chronic pain, migraine, autism-related anxiety, and Alzheimer’s disease-related anxiety among other conditions were added to the list. And just two years later, in 2019, the Compassionate Use Medical Cannabis Act was amended creating a Cannabis Regulatory Commission, easing the requirements for both patients and their caregivers, which made medical marijuana more accessible to patients who needed it.
On February 22nd, 2021, Governor Phil Murphy signed into law the “The New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act” which legalizes the possession and use of cannabis for people aged 21 and older. For cannabis entrepreneurs, the adult-use program will also allow the cultivation, processing, and retail sale of recreational cannabis.
New Jersey’s cannabis regulators voted unanimously to approve the 160-page Personal Use Cannabis Rules on August 19, 2021, paving the way for the beginning of adult use cannabis sales in the state. To view the first set of regulations for the recreational marijuana market, click here. According to commission executive director Jeff Brown, the next step will be a notice for the application acceptance period.
The February 2021 law “The New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act” has no effect on the current scheme for medical marijuana licenses. Furthermore, no new ATC (alternative treatment center) licenses shall be granted moving forward. However, it remains possible for existing ATCs to apply for endorsements that will allow them to function additionally either as a cultivator, manufacturer, retail, or all of three with a Vertically Integrated Permit.
The New Jersey Cannabis Regulatory Commission has set a fee schedule effective August 19, 2021. Click here to view application, certification, licensing and other fees.
Apart from decriminalizing the possession and usage of cannabis in the state, the recreational cannabis law in NJ is also aimed at reviving the economic impact zones by setting the grounds by which cannabis businesses can thrive. These zones are at an economic disadvantage and have been heavily affected by marijuana arrests in the past.
To date, the maximum number of licenses to be granted for recreational marijuana businesses in New Jersey (except for the Cultivation Licenses) is yet to be determined. The Cannabis Regulatory Commission is tasked with establishing the rules of the program, including how many licenses shall be handed out in each class. One of the factors that will decide this number is the market demand by June 2021.
So far, only one decision has been made certain: only 37 Cultivation Licenses will be awarded in the first 24 months. This number includes any ATCs with existing cultivation endorsements. Furthermore, the CRC has a list of preferences as to who will be awarded the licenses:
If you are planning to start a cannabis business in New Jersey, expect to spend several hundred thousand to a few million dollars unless you are a microbusiness. In addition to the application and licensing fees, legal fees and various professional fees, a big part of your investment will go to securing real estate (either by purchasing or leasing), retrofitting the property, and paying for the services that will help you obtain approvals. Consultation fees will also be a considerable cost because aspiring NJ cannabis businesses must have solid systems and impact plans in place to even have a shot at acquiring a license.
According to the Cannabis Regulatory Commission’s Personal Use Cannabis Rules, initial application fees are intentionally set low in order to reduce barriers to entry, with fees as low as $100. Only 20% of the application fee will be paid by applicants initially and the remaining 80% will be paid when the license is approved. Overall, the range of the application fees will be $500 – $2,000.
Current ATCs are allowed to sell recreational cannabis as long as they certify they have adequate supply for their medical patients. Conversion fee will be $300,000 – $1,000,000 depending on the size.
The date for when recreational sales can start has not been set yet. According to chairperson Dianna Houenou, the date is “admittedly uncertain.” She previously said that New Jerseyans probably won’t be able to buy cannabis from a dispensary until 2022.
Although it’s not clear how many licenses will be granted in NJ under the new law, it has already been determined that there will be six classes of licenses that future cannabis businesses can apply to acquire: Cannabis Grower license, Cannabis Processor license, Cannabis Wholesaler license, Cannabis Distributor license, Cannabis Retailer license, and Cannabis Delivery license.
General New Jersey Cannabis License Requirements
There are certain general licensing requirements that apply to all license classes, the key requirements include:
The Cannabis Grower license shall be granted to a person or entity that will grow or cultivate cannabis to be sold to other cultivators, manufacturers, wholesalers, retailers, but not to direct customers. Holders of this license are also permitted to transport their product to qualified recipients. For the first 24 months, only 37 cannabis grower licenses will be given by the state, including ATCs with a cultivator endorsement.
A cannabis processor is a person or entity that will process or manufacture cannabis and sell the resulting product to other manufacturers, wholesalers, retailers, but not directly to consumers.
A licensed cannabis processor is permitted to purchase cannabis from a licensed grower or another licensed processor or manufacturer. They are also allowed to transport their product to intended legal recipients.
A licensed wholesaler of cannabis is permitted to acquire and store cannabis and cannabis products intended to be resold later to cannabis retailers but not to direct consumers. Holders of this license are also allowed to transport their products to the retailers. The Class 3 Cannabis Wholesaler license will be issued for the warehouse where the cannabis products will be stored.
The Class 4 license is intended for persons or entities that will transport cannabis or cannabis products in bulk from one licensed cannabis establishment to another within the state. Holders of the Class 4 Cannabis Distributor License are also permitted to store the cannabis or cannabis products temporarily if it is necessary for fulfilling their duties in transporting the goods.
Intended for businesses that will sell cannabis, cannabis products, or paraphernalia at a specified location. Holders of the Class 5 Cannabis Retailer license are permitted to purchase from a licensed manufacturer or wholesaler and sell to direct consumers on site. In addition, they are also granted the privilege to pursue the services of a certified cannabis handler who will fulfill the orders off-site and licensed cannabis delivery services to deliver the cannabis products from the retailer to the consumer, or from the cannabis handler the retailer is working with to the consumer.
The Class 6 Cannabis Delivery license shall be granted to businesses that will act as a courier for a licensed cannabis retailer. A business with this type of cannabis license is also permitted to accept direct orders from consumers that will be fulfilled by a cannabis retailer. A licensed cannabis delivery service may also pick up the product from the certified cannabis handler a retailer is working with to be delivered to a consumer.
As New Jersey cannabis legalization moves forward in the state of New Jersey and the Cannabis Regulatory Commission forms their rules, guidelines, and establishes dates, we will keep you updated and provide our professional legal insight. If you are a strategic investor and would like to learn more about the New Jersey market and how it relates to you click here. To be kept up to date, subscribe to our newsletter below.
Building on almost 20 years in litigation, Justin’s practice specializes in regulated cannabis organizations consulting, formation, permitting, investment, expansion, and related ancillary legal services. Focusing on Cannabis law since 2016, Moriconi Flowers has successfully permitted applicants multi-state and on the Federal level. He is also co-owner of the first cannabis dispensary in Pennsylvania. Justin continues to return results in the face of adversity and against large firms for clients in all aspects of business and litigation. Justin and co-founder of Moriconi Flowers, Ted Flowers, regularly lecture on various topics on a local and national level in the commercial cannabis, security, insurance, and litigation space.
A 1997 graduate of Temple Law School, Ted’s experience in liquor licensing matters, representing hotels, bars, restaurants, distillers, and distributors through all stages of the licensing and regulatory process, made a natural transition to cannabis law practice in 2016. Focusing on Cannabis law since 2016, Moriconi Flowers has successfully permitted applicants multi-state and on the Federal level. He is also co-owner of the first cannabis dispensary in Pennsylvania. Ted and co-founder of Moriconi Flowers, Justin Moriconi, regularly lecture on various topics on a local and national level in the commercial cannabis, security, insurance, and litigation space.
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