Dispensaries in NJ Ready and Waiting

New Jersey’s Cannabis Regulatory Commission (CRC) began accepting applications for recreational cannabis businesses on Dec. 15, a step that inches the state closer to finally launching the adult-use cannabis market that residents voted for in 2020. In fact, February marks one year since Gov. Phil Murphy signed the official legislation that legalized cannabis use and possession for adults 21 years and older.

In August, the first set of rules to guide the cultivation, manufacture and sale of recreational cannabis were voted on by the CRC, which paved the way for the opening of applications.

“The rules will help create a market that is competitive, diverse and puts our core values of equity and safety first,” notes Jeff Brown, the CRC’s executive director. “They will ensure that entrepreneurs have access to the market, especially those who have been negatively impacted by cannabis prohibition; and ensure that consumers and stakeholders can have confidence in safe, well-regulated legal sales.”

Currently, there are two types of licenses available: annual and conditional.

“The annual license is the bread and butter of what we typically think of when someone is applying for a license. It gives business owners the authority to operate the cannabis operation year round,” says Dianna Houenou, CRC chair.

The conditional license delivers more of a provisional approval from the CRC. This is a license the commission can issue to applicants even if they haven’t identified a property and still have to work with a municipality in order to get necessary approvals and processes in place.

“The conditional license is meant to give applicants extra time to get all of their ducks in a row. … They then have 120 days to meet the additional requirements for the annual license,” Houenou adds.

The applications that began being accepted on Dec. 15 include cultivators, manufacturers and testing labs. According to Brown, retail applications will be accepted starting on March 15.

“After that, we will be working on getting regulations done for wholesale, distribution and delivery licenses. Then, we will be looking at regulations on the consumption side, which are attached to retailers,” Brown says.

Ready and Waiting

There are currently 23 existing medical cannabis dispensaries in New Jersey, and those that have been operational for at least one year can apply for licensure to serve both patients and adult-use customers under the cannabis legislation that was signed last year.

These medical dispensaries will likely be the first to sell to the recreational market once they complete a transition guidance document and get approval from the CRC.

Matt Harrell, vice president of the New Jersey Cannabis Trade Association (NJCTA), and vice president of government relations at Curaleaf, says that the guidance document asks existing medical cannabis dispensaries to outline specific information such as where they are with capacity, how they are going to service their current medical patients, and how the supply would work for adult-use, to ensure that availability of product for medical patients would not be interrupted.

Curaleaf, New Jersey’s largest medical dispensary, has already submitted its guidance document to the CRC, and at press time, is awaiting approval.

“We are ready to go,” Joe Bayern, CEO of Curaleaf, tells New Jersey Business Magazine. “We have been ready to go for a number of months. We have spent tens of millions of dollars building cultivation and transportation capacity to be able to serve the marketplace. We’ve hired hundreds of people to start producing product. As far as we understand, there is really nothing that is precluding us from getting started now.”

Is There Enough Product?

Estimates from New Frontier Data show that New Jersey cannabis market sales could top $1 billion in the year 2023, though some experts have said the market could be worth $1.5 billion to $1.8 billion within a year of legal, adult-use sales.

The question, of course, is if there is enough product to meet the demand for recreational cannabis within the country’s most densely populated state.

“We have done our own calculation and we believe that alone, we can supply the entire medical population of New Jersey ourselves and still have capacity for adult-use,” Curaleaf’s Bayern says.

Speaking for the NJCTA, Harrell says that there is enough product across operators to service both the medical and adult-use markets without disruption for the first year of sales.

“There is more than enough product across operators to start the process and allow the other players to build up their inventory and abilities,” he says.

In addition to existing operators continuing to grow their capacity, Harrell adds that the CRC has also issued 10 new growing licenses.

“On the flip side, this is going to be a $2 billion marketplace in New Jersey,” Bayern says. “For adult-use, there are going to be capacity constraints [in year two and year three] as we ramp up to $2 billion. If the rationale is to wait until we have all the capacity to service a $2 billion marketplace, it is never going to open, and you are going to be forfeiting hundreds of millions of dollars of tax revenue and losing thousands of potential jobs.”

For now, existing operators will continue to build out capacity while prospective business owners apply for applications in cultivation, manufacturing, wholesale, distribution, retail and delivery services, and testing labs.

Bayern adds that it is still important to take a disciplined approach to open up the marketplace.

“We want to do this the right way,” he says. “We have looked at the needs of the medical community and we do not think there is any risk in servicing them by opening up adult-use. We will continue to work with the state to build out the capacity that is going to be needed to eventually create a $2 billion inclusive marketplace.”

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