Atlantic City Cannabis Commission

Update on Cannabusiness Applications

The state’s Cannabis Regulatory Commission (CRC) will begin accepting applications for recreational cannabis businesses beginning on Dec. 15.

At today’s New Jersey State League of Municipalities Conference in Atlantic City, the chair and executive director of the CRC  discussed application and licensing rules and processes, including the types of businesses that will initially receive priority review of applications.

Before a packed conference room at the Atlantic City Convention Center, Dianna Houenou, CRC chair, said two types of recreational cannabis licenses will be given: conditional and annual. 

“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,” Houenou said.

The newer 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 commented.

Whether conditional or annual, the types of cannabis licenses are classified into six operational groups: cultivation, manufacturing, wholesale, distribution, retail and delivery services. Additionally, testing labs also have to be licensed by the CRC.

Within these groups, businesses can have additional designations, which are more of a description of ownership and size of operations. 

According to Houenou, they are: microbusinesses (smaller operations, constrained by statute with respect to size, the amount of products handled, and the number of employees); social equity businesses (owned by people who have lived in economically disadvantaged areas or who have past convictions for cannabis offenses); diversely-owned businesses (minority-owned, woman-owned, or disabled veteran-owned businesses certified by the New Jersey Department of Treasury); and impact zone businesses (municipalities with a large population, high unemployment rate, or high numbers of crime or arrests for marijuana). 

The CRC will be giving priority review to conditional applications as well as social equity businesses, diverse and impact zone businesses.

Houenou explains: “If you look across the country, historically you can see how the need for property control has posed a barrier for a number of applicants looking to operate [a cannabis] business. … We decided to lessen that burden as much as we could. So, we are prioritizing conditional license applications ahead of annual license applications.”

According to Jeff Brown, CRC executive director, the commission is not limiting the licenses it is granting at the state level, although it has the authority to do so. For now, he says, the goal is to let the market grow and develop.

He said the authority or role a municipality plays in the process includes passing ordinances concerning zoning regulations, establishing limits on the number and types of cannabis businesses than can operate within its borders, regulating hours of operations, and having the ability to implement a 2% transfer tax on any cannabis item moving through businesses within the municipality. 

Municipalities can also weigh in on the selection process. “They can let the CRC know what their preference is for licensure. That preference has to line up with letters of support that the municipality gives to businesses [conditional license applicants],” Brown said. 

He added that the applications that will be accepted on Dec. 15 are for businesses that are cultivators, manufacturers and testing labs. Retail applications will be accepted starting on March 15, 2022.

“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 said.

He stressed there will be strict review of applications and additional documents submitted.

“We want to make sure that businesses are not taking advantage of some of the designations that get them priority review, where they would otherwise not qualify.

“We do have a background investigation process, and applicants are going to have to submit to criminal background checks,” he said, adding, “We are not looking at low level cannabis offenses … that will not disqualify you. Convictions that would disqualify someone would be directly related to running the actual business.”  

During a Q&A session, Brown stressed: “We are trying to prevent anyone getting into the industry who … will sell to underage kids or who has a history of violence associated with illegal drug activity … we are looking to prevent bad actors from getting into the industry.” 

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