New Jersey Cannabis Licensing – What’s Happening Now?

Nearly a year after New Jersey voters overwhelmingly passed the marijuana legalization amendment on November 3, 2020, the state is now in motion to start cannabis licensing processes for its adult-use program.

Though New Jersey may be the fourth smallest state in the nation, it is estimated that by 2021 adult-use annual sales could soar between $850-950M. Here are the latest updates for cannabis stakeholders interested in entering the market.

Application Process & Timeline

The New Jersey Cannabis Regulatory Commission is expected to publish applications for new marijuana businesses by September 20th. The notice for applications will be published here and the next upcoming Commission meeting will occur on October 5, where the public is invited to submit questions and offer comments.

License Limitations

New Jersey has six classes of cannabis licenses, including:

• Class 1 License: Cannabis Cultivator (growing cannabis)
  • New Jersey has issued a statewide limitation on the number of licenses for all types, including a cap of 37 cultivation licenses until February 2023, which includes existing licenses. This leaves only 12-13 cultivation permits available.
• Class 2 License: Cannabis Manufacturer (preparing and packaging)
• Class 3 License: Cannabis Wholesaler (selling to other wholesalers and retailers)
• Class 4 License: Cannabis Distributor (transport between cultivators/establishments)
• Class 5 License: Cannabis Retailer (selling to customers)
• Class 6 License: Cannabis Delivery (delivery from retailers to customers)

As of now, the Commission has made no other limitations on other license types, but there is the possibility more information will be released when the application is published.

Social Equity and Diversity

New Jersey is one of the most diverse in the country with  residents of color comprising nearly 45 percent of the population. Under the New Jersey Cannabis Regulatory Enforcement Assistance, and Marketplace Modernization Act that legalized adult-use cannabis, the state included a large social equity and diversity component which requires 30 percent of marijuana licenses to be allocated to businesses owned by women, minorities or disabled veterans.

For priority businesses under the Social Equity, Diversity, and Impact Zone law, diverse businesses must be certified by the Division of Revenue and Enterprise Services in the Department of the Treasury.

Additionally, at least 25 percent of licenses should be allocated to residents of impact zones, which are municipalities that have more than 120,000 residents that: rank in the top 40 percent of municipalities in the state for cannabis-related arrests; have a crime index of 825 or higher; and have a local average annual unemployment rate that ranks in the top 15 percent of municipalities.

Conditional Licenses

In addition to priority businesses, the New Jersey marijuana program also allows the commission to issue conditional licenses, which allows applicants the ability to avoid certain regulatory requirements of a full license initially. Conditional license applicants who have decision making authority must be able to show an adjusted gross income of no more than $200,000 or no more than $400,000 if filing jointly with another for the immediately preceding taxable year (2020).

During the 120-day period following the issuance of a conditional license, applicants must be able to provide a strategy and plans to achieve full compliance.

Microbusiness Licenses

A microbusiness license in New Jersey requires established local connections with the state that is restricted by number of employees and other operational limitations. There is no limit on the number of microbusiness licenses in New Jersey and after being operational for a year, microbusinesses are allowed to transition to an annual/standard license. Ownership limitations include that   51% of the total number of persons included in the business (owners, employees, etc.) must reside in the local municipality they are operating in or bordering neighborhoods. The Ownership and employees must be comprised of 100% New Jersey residents.

Next Steps for New Jersey Licenses Applicants

If you’re interested in applying for a New Jersey adult-use cannabis license, contact the CB Advisors team today to start developing your licensing plan and approach.

We have successfully secured licenses for clients in over 20 markets across the United States. If you are interested in applying for a cannabis business license in New Jersey, contact us by phone at (602)-290-9424‬ or email (info@thecannabisbusinessadvisors.com) for more information.