March 7, 2021

Volume XI, Number 66

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March 04, 2021

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Growing Gold: Now that New Jersey Legalized Marijuana for Adult Use Here’s What You Need to Know About Winning A License

Home to nearly 9 million people, New Jersey is now the epicenter of the green rush hitting the East Coast. Investors, businesspeople, professionals, operators, pharmacists, doctors, and entrepreneurs have their sights set on what is predicted to be a billion-dollar adult use industry in the Garden State. Easily accessible to those living in New York City (8.4 million population) and those residing in Southeastern Pennsylvania (3+ million population), New Jersey stands ready to embrace the cannabis movement sweeping the nation. With limited licenses carrying unlimited potential for growth and profit, the emerging adult use marijuana market in New Jersey is slated to be one of, if not the most, competitive cannabis markets in the country.

Interested in applying for a license?

Well get ready for one the hardest, most demanding application processes in the industry. With the level of interest in the New Jersey market and the staggering value of an awarded license, the competition is going to be ferocious, the requirements rigorous, the margin of error slim, and the chances of winning unyielding small. But, if you have the time, money, resources, agility, determination, and risk tolerance, with a little luck and happenstance, there is a chance. Having the right team, hired professionals, and consultants helping you increases that chance.

What do you need to do?

A lot – but first, you will need to find and secure a viable piece of real estate. Generally speaking, that means a storefront for a retail dispensary, an industrial warehouse for a processing/manufacturing facility, and a warehouse/greenhouse for a cultivation operation. Finding suitable real estate is only half of the battle, you will also need to obtain local approvals from the host municipality and its governing board. Next (or at the same time), you will need to focus on your business operation plan. All the ins and outs of your prospective business will need to be developed, considered, mapped out, and scrutinized. Everything from employment practices and training to waste management and security need to be contemplated and documented. Community relations and impact plan, social equity initiatives and diversity plan, quality assurance and quality control plan, track and trace systems plan, environmental impact plan, tax plan, banking & insurance plan, and record keeping plan, to name a few, also play a significant role. Your application could be graded on a point scale based on pre-determined metrics and therefore every fraction of a point counts and can make the difference between a license and a loss.

What types of licenses will be available?

It is not set in stone yet, but based on the proposed legislation, there will be 6 primary categories of licenses:

Class 1 – Grower (grow, cultivate, and produce marijuana plants and raw materials)

Class 2 – Processor (manufacture, prepare, and package marijuana items)

Class 3 – Wholesaler (store, sell, and transfer marijuana items for resale)

Class 4 – Distributor (transport bulk amounts of marijuana)

Class 5 – Retailer (sell marijuana to consumers from retail store)

Class 6 – Delivery Service (home delivery courier for Cannabis Retailers)

Additionally, there will be microbusinesstesting facility, and cannabis consumption area licenses available.

How many licenses will be available?

Not completely clear yet, however, it seems there will be no more than 37 cannabis grower licenses available, including any of the current Alternative Treatment Centers that receive endorsement licenses to grow cannabis for personal non-medical use. It is anticipated that 30% of all issued licenses will be awarded to minority, women, and disabled-veteran owned applicants. Moreover, 10% of each class of licenses will be dedicated to microbusinesses, which must be wholly owned by New Jersey residents and operate at a smaller footprint. Preference will be given to applicants looking to operate in an economic impact zone and those applicants who plan to hire workers living in economic impact zones (those areas most heavily affected by marijuana arrests and socioeconomic disadvantages).

How much will it cost?

More than you think, but it depends on a litany of factors including type of license applying for, whether you buy or lease a property, the size and location of your real estate, renovation and retrofitting needs, past experience, application writing fees, application and licensing fees, professional and legal fees, and consulting fees. Out-of-pocket costs range from several hundred thousand dollars (less for microbusinesses) to a few million dollars.

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COPYRIGHT © 2020, STARK & STARKNational Law Review, Volume XI, Number 54
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About this Author

Gene Markin Attorney Stark & Stark Law Firm
Shareholder

Gene Markin is a Shareholder in Stark & Stark’s Complex Commercial, Intellectual Property, and Cannabis Litigation Groups where he concentrates his practice on complex litigation matters involving copyright protection and infringement, trademark and trade dress infringement and enforcement, trade secret litigation, false advertising, domain name disputes, unfair competition, class actions, fraud and consumer fraud, shareholder and partner disputes, breach of contract, cannabis business disputes, cannabis intellectual property matters, cannabis insurance coverage...

609-219-7446
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