A guide to navigating the cannabis industry in New Jersey – nj.com

There are billions of dollars at stake in a new market so lucrative that entrepreneurs everywhere are eyeing New Jersey. It’s an economic opportunity unrivaled in modern state history.

But obstacles loom large.

What can investors, entrepreneurs, lawyers and realtors do to prepare?

How will politicians and lawmakers parse the complex policy decisions?

Will accountants, marketers and sales professionals be well-positioned?

Can businesses providing security, lighting and fencing take advantage of a new opportunity?

The insiders will hold the power. And you can be one of them.

We are here for you

Our job is to inform you about the issues, politics, policies, laws, regulations, as well as the people who are making an impact on the cannabis industry, community and marketplace in the Garden State and beyond.

More than that, we’re here to connect you with others in the industry and community. One of the ways we do that is with our networking events and industry conferences. Insiders are the first to learn about breaking news stories in the space using our text messaging service — for members on our annual and semi-annual subscription tiers.

Whether through email, phone, our text messaging service, or in person (when it’s safe), reach out to us. Let’s have a conversation about what you’re hearing, what you’re interested in, what types of articles you’d like to see, who you’re learning from, and how you see the industry developing.

Follow us on LinkedIn, Twitter or drop us an email at tips@njcannabisinsider.biz.

One more thing: We host networking events and large all-day conferences for insiders at every level of their development in the cannabis space.

— The NJ Cannabis Insider news team

The checklist you need before diving into a cannabis business

Starting up a business in the cannabis space, like any business, requires a few essential elements — a business plan, time, capital, inspiration and sweat equity, along with the ability to avoid potential missteps.

“Often we get calls from folks interested in starting up a cannabis dispensary or cannabis retail store,” said Scott Rudder, founder of the New Jersey CannaBusiness Association. “My common response is whatever it will take for you to pursue a liquor store license and shop, and then some, is what it will take to start a cannabis business.”

Cannabis industry insiders agree there are several necessities when starting up a cannabis business:

• Financing. Lots of it, at least $1 million to $2 million to show you have the bankroll to support a successful operation.
• Experience running a successful business. And if you’re looking to start up a cultivation operation, you’ll likely need to demonstrate you have experience growing cannabis professionally (not in your mom’s basement).
• A history of paying taxes.
• The ability to pass an intensive — almost proctological — level of scrutiny in a review of your personal and professional background. Additionally, all of your business partners and associates will likely need to pass the same level of vetting.
• A New Jersey residence.
• A company name that does not include the words weed, marijuana or 420.

Vikas Desai of WelCan Capital, a private investment group focused on the cannabis industry, said it’s “crucial for those in the industry to act with good partners due to stringent regulations and requirements.”

“One failed background check could be the difference between obtaining a license and not,” he said.

Moreover, according to Rudder, if you’re not already taking the steps necessary to get your application ready, then you’re already behind.

“The people who are most serious about this industry are already taking the steps necessary,” he said. “If you’re waiting until legalization to start your business, you won’t be able to compete. You need to start taking active steps today.”

— NJ Cannabis Insider staff

Dianna Houenou

Gov. Phil Murphy named Dianna Houenou to chair the Cannabis Regulatory Commission last week, moving quickly on his first appointees just days after voters said yes to the ballot question seeking to legalize marijuana.

Houenou serves as associate counsel and senior policy adviser to the governor. She previously worked as policy counsel for the ACLU-NJ.

The CRC may be in holding pattern as we await enabling legislation and additional appointees, but Houenou already has ideas as to how she wants to steer the CRC in a way that promotes equity among licensees, protects patient access and reduces stigma around cannabis use.

This interview has been edited for brevity and clarity.

Q: How and when did you first become interested in cannabis reform?

A: My interest in cannabis law reform was actually rooted in the broader criminal justice reform efforts… understanding how the criminal justice system really has a ripple effect on everything else in a person’s life really struck me. I wanted to get to work on tackling the barriers that prohibited people from reaching their potential in life. I think we’ve got a lot of work still left to do in criminal justice reform.

The way we look at people who use substances has been one that has only hurt people, by demonizing them, by pushing them underground and by sending messages that they are irredeemable. I think that ignores the complexities of what it means to be human. I think we can do a lot better. We can take positions on drug policies that actually reflect science and are based in evidence and give people a chance to do what’s right for them.

Q: What kind of work did you do on cannabis with the ACLU-NJ?

A: I was at the ACLU, primarily in the form of leading the statewide coalition, NJUMR. I engaged in public education efforts, talking to state and federal lawmakers about why it’s important and some of the aspects that really make it a racial and social justice and issue.

I developed testimony to present before the legislature. While the state ultimately did not get legalization done through legislation, I am thrilled that the voters have made it unequivocally clear that this is something that they want and we have the opportunity to infuse justice at the outset.

Q: Twelve states plus D.C. have already taken this step. What lessons are you gleaning from those states as you get ready to head the CRC?

A: The top takeaway that I’ve gotten from my engagement with other people and their jurisdictions is it’s going to be an involved process. I’m under no delusion that the initial regulations we develop won’t necessarily go perfectly well at the outset. But we’ve got to be open and willing to tinker with the language as things go on to make sure that our laws and regulations are appropriate.

Other jurisdictions have had to go back and modify how they restrict certain products that are available on the market based on things that they were finding out on the ground. Those are measures that would be taken to make sure that we protect public health. What’s critically important for us as the commission is to be open minded to everything on the table and always be able to re-evaluate and course correct as the facts warrant such.

Q: What do you see as the biggest obstacles the CRC will have to tackle in New Jersey?

A: One obstacle that can be challenging is the fact that traditionally the barriers to entering the legal regulated market tend to be kind of high, particularly in terms of capital costs. I’m interested in exploring ways that we can lower those barriers to entry and make sure that access to licenses and the permits for participating in the medical and personal use market is equitable, that it is a meaningful opportunity to people no matter what you look like or which part of the state you come from.

I think that will require a holistic understanding of why certain people might not have access to entering the market and devising ways that are specifically tailored to tackling those barriers.

Q: What is your vision for the CRC going forward?

A: My vision for the commission is that the commission remains dedicated to equity, long after I leave the commission. I hope to instill a culture both in and among the staff and members of the commission, and infuse in the commission’s work that really prioritizes minority voices and equity and promotes access to local communities.

My vision also is that we build a system that is strong, that has integrity and that people can believe in and know that the regulations are fair, and that enforcement is real and that we are really looking to protect public health and provide opportunities for New Jersey.

— Amanda Hoover

Brown joins national regulators group to establish best practices

Cannabis regulators from New Jersey and other 18 states have joined forces to form a national association that will coordinate efforts on marijuana policy and facilitate the sharing of information across various cannabis programs.

Jeff Brown, who was last week named executive director of the Cannabis Regulatory Commission (CRC) by Gov. Phil Murphy, will serve on the association’s executive committee.

“As New Jersey moves forward with enacting the will of the voters to legalize cannabis, and continues to expand our medical cannabis program, membership in CANNRA will help our state learn from best practices in other states,” Brown said in a statement. “Working with CANNRA to bring the best evidence-based policies to New Jersey will help ensure our market is fair, equitable and safe for consumers.”

Regulators and stakeholders from around the country have communicated for years to share their experiences. But the Cannabis Regulators Association, or CANNRA, plans to act as a formal body to facilitate those interactions and allow regulators to learn from one another.

It will not formally promote legalization, but provide information to governments considering changes to their cannabis policies.

“The association will strive to create and promote harmony and standardization across jurisdictions which choose to legalize and regulate cannabis,” Norman Birenbaum, the director of Cannabis Programs for New York State and CANNRA’s first president, said in a statement. “The Cannabis Regulators Association will also work to ensure federal officials benefit from the vast experiences of states across the nation to ensure any changes to federal law adequately address states’ needs and priorities,” he said.

In addition to New Jersey, the following states have joined: Colorado, Delaware, Hawaii, Illinois, Iowa, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Nevada, New York, North Dakota, Oregon, Rhode Island, Utah, and Washington. The association also plans to offer membership to county and municipal regulators in the future.

Another group, the Cannabis Regulators of Color Coalition (CRCC), recently formed. It shares a similar mission to provide information for governments and legislators on legalization and decriminalization.

“As a coalition, CRCC offers our support to the New Jersey legislators interested in amending NJ Bill A-21/S-21 and passing a legitimately creative and progressive adult-use legalization bill that truly surpasses the cannabis equity efforts in our collective jurisdictions,” the organization said in a memo.

Murphy also appointed Dianna Houenou, associate counsel and senior policy adviser to the governor, to chair the CRC. She previously served as policy counsel for the ACLU-NJ.

The governor and Houenou have emphasized the need to learn from the 12 states that have already legalized marijuana as the CRC begins to develop its rules and regulations.

— Amanda Hoover

2020 was consequential year for N.J. cannabis

Even as the coronavirus pandemic demanded the attention of state policy and lawmakers, 2020 was the most consequential year yet for the future of cannabis in New Jersey.

That’s largely because last year, lawmakers decided voters would choose whether to pass a constitutional amendment legalizing marijuana on Nov. 3. And voters did, by a 2-to-1 margin. Efforts to pass legislation had failed.

But the referendum was not the only newsmaking event of the year. Here’s a recap.

Feb. 3: The state Department of Agriculture publishes new rules for hemp farming. By October, the state had licensed 59 hemp farmers.

Feb. 28: Senate President Steve Sweeney tells NJ Cannabis Insider he has selected the person he intends to appoint to the future Cannabis Regulatory Commission: Krista Nash, a social worker and program director for the PROMISE (Program for Returning Offenders with Mental Illness Safely and Effectively) at Volunteers of America Delaware Valley. It would take months for Gov. Phil Murphy to name any of his three appointments and Speaker Craig Coughlin still hasn’t done so.

March 10: NJ CAN 2020, a coalition of public safety, medical, civil rights, faith, industry, legal, labor, political, and criminal justice reform organizations, announce at the NJ Cannabis Insider Live conference its campaign to ensure voter turnout on Election Day to vote yes on Public Question No. 1 to legalize cannabis.

March 21: Murphy includes medical cannabis cultivation sites and dispensaries on the list of “essential businesses” that may continue operating during the pandemic-driven shutdowns.

March 23: The Department of Health announced dispensaries would offer curbside pickup of cannabis orders to help prevent the spread of the coronavirus and to reduce the long lines.

April 27: The New Jersey Department of Health announced it has issued a permit to Justice Grown in Ewing to begin growing medical marijuana. It has not yet opened.

May 27: The state Department of Health announced it had issued final permits to Zen Leaf Elizabeth and Columbia Care in Vineland. Zen Leaf opened May 29; Columbia Care opened June 11.

June 4: Sens. Ronald Rice and Teresa Ruiz, both D-Essex, introduced a bill decriminalizing marijuana possession. Sen. Nicholas Scutari, D-Union, the sponsor of the legalization bill and chairman of the Judiciary Committee, urged Sweeney to block the bill, out of concern it may jeopardize the chances of the ballot question passing on Nov. 3. Rice, an opponent of legalizing marijuana, and Scutari would later exchange harsh words privately and would do so again publicly on the floor of the Senate.

Sept. 26: The Secure and Fair Enforcement, or SAFE, Banking Act passed the U.S. House, legislation that would enable banks to lend and do business with cannabis companies. It is one of several bills the House would support but not gain traction in the U.S. Senate this year.

Nov. 3: Voters overwhelmingly supported the ballot question asking whether to legalize marijuana sales and possession for adults 21 and older.

Nov. 6: Murphy announced his policy advisor, Dianna Houenou to chair the still-to-be-constituted Cannabis Regulatory Commission. She is a Black woman and former policy counsel for the ACLU-NJ who helped lead efforts to change marijuana laws that have disproportionately targeted people of color. Murphy also named Assistant Health Commissioner Jeff Brown as executive director.

…And Sen. Scutari introduced the legislation that would outline how the legitimate marijuana industry would operate. It would undergo changes later to earmark tax proceeds for programs in communities adversely affected by the war on marijuana after social justice advocates complained the bill was lacking.

…And Sen. Ruiz said she will be the prime sponsor of a long-awaited decriminalization bill. But the legislation stalled after Assembly Speaker Coughlin and others rejected a provision that would reduce the criminal penalties for possession of psychedelic mushrooms.

Nov. 19: An Assembly committee and a Senate committee approved two different bills creating and regulating the marijuana industry. It was the clearest sign yet that the Senate, Assembly and Gov. Murphy remained at odds over how they would carry out the will of the voters.

Nov. 25: State Attorney General Gurbir Grewal ordered prosecutors to halt all low-level marijuana cases statewide, as a result of the election. Anyone charged only with possession, being under the influence of marijuana or having marijuana while driving, among other charges, should have their cases postponed until at least January 25, Grewal said.

…And an appellate court threw out the state Health Department’s picks for medical marijuana growers and retailers. The health department must try again because the system it established in 2018 was “unreasonable.” Seven applicants sued after they were passed over for arbitrary reasons.

Nov. 30: The Apothecarium, New Jersey’s 13th medical marijuana dispensary, opened. Located in Phillipsburg, it is the first dispensary in northwestern New Jersey. Owner TerrAscend of Canada received a license to operate its cultivation site in Boonton in January.

…And Assemblyman James Kennedy introduced a bill that would reduce the jail time for people caught with “magic” mushrooms. This allowed the marijuana decriminalization bill to move forward unimpeded by the discomfort of lawmakers who felt blindsided by the mushrooms provision.

Dec. 2: New Jersey’s most influential cannabis business group, NJ CannaBusiness Association ushered in new leadership when Scott Rudder announced he was stepping down as president. Edmund DeVeaux, a lobbyist with Burton Trent Public Affairs, succeeded him.

Dec. 4: The U.S. House approved landmark legislation to end the federal ban on marijuana and allow states to decide whether it should be legalized. The Marijuana Opportunity Reinvestment and Expungement Act, or MORE Act does not have support in the Senate. But the vote marked the first time that either house of Congress voted to end the conflict between federal law, which prohibits the use of marijuana, and New Jersey and the other states that have decided to legalize weed for recreational or medical use.

Dec. 9: The House unanimously approved the Medical Marijuana Research Act to study the medicinal properties of cannabis. The Republican-controlled U.S. Senate is not expected to take up the bill.

Dec. 17: Finally after weeks of at time tense behind-the-scenes negotiations, the state Legislature approved the enabling legislation establishing the legal weed industry, (S21). The state Assembly voted 49-24 with six abstentions; the Senate approved it 23-17. It awaits Murphy’s signature to become law.

Dec. 21: Enrollment in the medical marijuana program reaches 100,000.

Dec. 28: Murphy reveals at a coronavirus briefing he wants to make “technical but important” changes to the marijuana decriminalization bill involving penalties for minors who are caught possessing marijuana. The governor said he wants the Legislature to pass a new version of the bill, which would likely delay the signing until mid-January.

Dec. 29: Murphy’s office send revised language saying police shall not arrest young people 21 and younger for marijuana possession, but would simply issue a summons, comparable to a parking ticket.

— Susan K. Livio

The future of cannabis in Washington under Joe Biden

The election of Joe Biden and Kamala Harris will boost efforts to remove the federal ban on marijuana and make it easier for states to move ahead with allowing cannabis use within their borders, according to advocates of legal weed.

Biden was alone among the major Democratic presidential contenders in refusing to remove the drug from the federal list of controlled substances, proposing instead to decriminalize marijuana and reschedule it from Schedule 1 like heroin to Schedule 2 like cocaine, to allow research into possible medicinal benefits.

He also proposed expunging previous convictions for using cannabis, supported medical marijuana and wanted to let states decide whether to legalize the drug for recreational use.

Harris, on the other hand, was the lead Senate sponsor of the Marijuana Opportunity Reinvestment and Expungement Act, or MORE Act, and was a co-sponsor of U.S. Sen. Cory Booker’s Marijuana Justice Act, which also would eliminate the federal cannabis ban and leave it up to the states.

“Let the states do what they want to do,” Booker told NJ Cannabis Insider. “I really see a wider opening to get that done.”

NORML Political Director Justin Strekal said he hoped the administration would put pressure on Congress to enact the MORE Act, the bill with Harris’ name on it.

But any progress on marijuana may depend on the winners of the runoff elections in Georgia for two U.S. Senate seats. If the Republicans win even one of them, they will control the chamber and Kentucky Republican Mitch McConnell will continue to decide which bill will be voted on.

“The challenge is going to be if Mitch McConnell is going to be in control and in charge of the Senate floor or not,” Booker said. “If he is, then it’s going to be a lot harder to get these kinds of things done.”

Biden, though, wouldn’t need congressional approval to again make it Justice Department policy not to enforce federal marijuana laws in states that have legalized the drug, said Morgan Fox, a spokesman for the National Cannabis Industry Association.

“Overall, this is a positive result for cannabis policy reform,” Fox said. “While Biden may not yet support descheduling, he has shown he is capable of evolving on the issue and Senator Harris is the lead sponsor of the MORE Act in that chamber, which suggests that – at the very least – Biden would not veto comprehensive descheduling legislation”

In addition, the industry can expect “cabinet appointees who don’t view the state level cannabis industry as inherently unlawful,” said Michael Bronstein, president, of the American Trade Association for Cannabis and Hemp.

— Jonathan D. Salant

Here’s how to start thinking about the future of cannabis in N.J.

By Chirali V. Patel, an attorney with Carella, Byrne, Cecchi, Olstein, Brody & Agnello, P.C. She’s also founder of Blaze Responsibly. Find her on Linkedin.

Without speculating on what the regulations may be post-legalization, do you ever wonder about what the landscape looks like in an adult-use market?

If you’ve had the opportunity to visit legal states like Colorado or California, you won’t miss the dispensaries that outnumber coffee shops! Many people are uncertain of what is to come in New Jersey, but one thing that is certain, there will be no zombie apocalypse.

It is safe to say that states that have legalized cannabis for adult-use are doing just fine, and though there are challenges, the opportunities outweigh them.

If adult-use passes on the ballot, it is likely that the existing Alternative Treatment Centers (ATCs) will be grandfathered-in such that they may begin to cultivate and dispense cannabis at the standards set by the state regulations. The ATCs may decide to separate their operations into distinct locations or brands, delineating a clear distinction between medical and adult-use cannabis.

Or they may decide to cultivate and dispense at their existing sites, but offer a separate counter/section for purchasing medical. Either way, it is unlikely that the state will wait for regulations to be in play or licenses to be available before allowing the existing ATCs to participate in the adult-use market.

Allowing the ATCs to get a head start may seem like an unfair advantage, but the reality is that it is more time efficient to allow them to participate to enable the adult-use market to get going without undue delay.

Once regulations are drafted by the state Legislature and the Cannabis Regulatory Commission (CRC) is established to begin accepting applications for licenses, we will probably be somewhere towards the end of 2021.

If the state allows for a similar licensing structure as was done for the ATCs, then the following license types will be available: Dispensary, Cultivation and Manufacturing. Presumably there will be also opportunities to obtain a license or certification as a lab-testing facility, delivery provider, or wholesaler.

Depending on the number of licenses available and the rate at which build-outs are completed, a full scale adult-use market should be live by early 2022.

Although it may seem like things are moving slow, this time frame allows the regulations time to be fleshed out so that they address any potential issues that license holders may face. In Colorado for example, regulations regarding labeling requirements were modified in a way that led to hundreds of thousands (for some, even close to millions) of dollars in expenses for license holders as they had to discard existing purchased packaging, and obtain the new regulated packaging as required by that state.

It’s beneficial for both the state and residents if the regulations in New Jersey are drafted to be as comprehensive as possible, even if it takes time.

All this and we didn’t even scratch the surface as far as what opportunities await after adult-use is legalized.

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