How To Open A Dispensary In New Jersey
(2022 Complete Guide)
Table of Contents
- The Opportunity Size
- Local Cannabis Restrictions & Laws
- Medical Marijuana
- Recreational Use Legalization
- Getting Your Cannabusiness Funded: Funding, Loans, Grants, And More
- New Jersey Cannabis Business Technology, Products, and Partnerships You Need
- Technology Requirements
- Product and Service Partners
Are you wondering how to open a cannabis dispensary in New Jersey? This page is dedicated to keeping you up to date on the latest news and information relevant to opening a cannabis business in New Jersey. This includes helpful insights on what is next to come for the state.
On August 19, 2021, the New Jersey Cannabis Regulatory Commission (CRC) issued its first set of rules and regulations for the recreational adult-use cannabis market. Key components include:
- Prioritizing social equity businesses, diversely-owned businesses, and impact zone businesses;
- Setting flexible requirements for micro businesses and conditional marijuana license applicants;
- Requiring cannabis businesses to control odors, connect with neighbors, develop environmental sustainability plans, and provide customer education materials.
The 160-page ruleset can be found here.
The CRC hosted a Recreational Cannabis Statewide Information Webinar on October 13th, 2021 and provided essential information about the state’s adult-use cannabis program. The CRC explained the initial rules, the application requirements, as well as what businesses may do to prepare for applying. Also, this meeting discussed the requirements for CRC background investigations, MSA and FSAs 101: protections and red flags, as well as expectations for communities allowing the operation of cannabis businesses. The CRC website has a video recording of the webinar that you can watch.
On December 15th, 2021, the New Jersey Cannabis Regulatory Commission started accepting applications for recreational cannabis cultivators, manufacturers, and testing laboratories.
Beginning on March 15th, 2022, New Jersey Cannabis Regulatory Commission started accepting applications for adult-use retail cannabis stores.
On March 24th, the Commission approved 68 conditional licenses including 50 Class 1 Cultivation Conditional Licenses and 18 Class 2 Manufacturer Conditional Licenses. License applications are accepted on a rolling basis and will remain open.
The state’s regulators set a date of February 22, 2022, for the state to begin selling recreational marijuana. However, the deadline was missed. Gov. Phil Murphy said in late February that the launch is not far away. “We are within weeks – I would hope in March – you would see implicit movement on the medical dispensaries, some of them being able to sell recreational,” Murphy stated on a radio broadcast.
According to Jeff Brown, executive director of the commission, a number of hurdles remain in the way of the doors opening, including a lack of municipal buy-in. Local leaders must certify in writing that they approve alternative treatment centers to sell the product for recreational use in their jurisdiction.
We anticipate that further information about legalization, regulations and the application will soon become available. As new information becomes available, we will update this page to provide the most up-to-date information. Here’s what you need to know right now.
Here is important information for those looking to start a dispensary or cannabis business in New Jersey as it pertains to both the medical and recreational programs.
The Opportunity Size
Marijuana Business Daily projects the recreational market in New Jersey to be at 1.2-1.5 billion by 2023. This would make New Jersey one of the largest cannabis markets in the country. With 9 million residents, millions of annual visitors, and a higher than average national income, it’s evident that this will be a hot market to start a cannabis business.
The impact on the state via new recreational sales would be huge, and is predicted to bring in an estimated $300 million in tax revenue annually. To give some perspective, this would be more than double what the state of Colorado gets in tax revenue for its state.
Local Cannabis Restrictions & Laws
When you are looking to open a cannabis business in New Jersey, one of the most important considerations is location. There are particular municipalities where they have implemented an outright ban on all licenses of cannabis business. The CRC will only license cannabis enterprises that have municipal backing, zoning approval, and are operating in accordance with municipal regulations. This means you might find it a challenge to set up recreational or medical cannabis businesses here.
According to an analysis of ordinances, more than 400 municipalities in New Jersey have decided not to participate in the recreational marijuana industry. They have passed ordinances that ban cultivation facilities, manufacturers, distributors, delivery services, and dispensaries.
Only 98 municipalities passed ordinances that allowed legal weed dispensaries inside their borders. Most of them were in South Jersey and Central Jersey.
More than 40 other towns in New Jersey have passed ordinances that ban dispensaries, but allow some of the other five types of New Jersey cannabis businesses, like cultivation centers and delivery companies.
Medical Marijuana has come a long way in New Jersey. In 2010 the Compassionate Use Medical Marijuana Act allowed medical cannabis use for individuals with particular conditions including cancer, glaucoma, MS, HIV/AIDS, seizure disorders, Lou Gehrig’s disease, severe muscle spasms, muscular dystrophy, inflammatory bowel disease, Crohn’s, and any terminal illness where the patient has a year or less. Eventually, in 2016 through 2017, post-traumatic disorder, migraines, Tourette’s, autism-related anxiety, Alzheimer’s related anxiety, and chronic pain in particular circumstances were added to the list for use.
The most recent medical marijuana legalization effort was the Jake Honig Compassionate Use Medical Cannabis Act which New Jersey Governor Phil Murphy signed into law in July of 2019. The bill intended to create affordable and accessible cannabis medical treatment for those that need it most. This includes:
- Allowing physician’s assistants and advanced practicing nurses to prescribe patients marijuana
- Authorize patients to be treated for up to 1 year
- Employer protections
And as it pertains to New Jersey Dispensaries:
- Home Delivery – Approves adoption of regulations to allow dispensaries to deliver to patients
- Price Lists – Requires dispensaries to have a price list of all their medical marijuana products listed on their website. They will not be able to deviate from that pricing listed and are not allowed to change pricing more than once per month.
The Cannabis Regulatory Commission – is a state established regulatory commission in but not of the New Jersey Department of Treasury responsible for overseeing and enforcing the medical marijuana program and its legislative regulations.
Since its inception, the NJ Medical Cannabis program has grown rapidly to 104,523 patients in New Jersey. As of August 27th 2019, No new license applications for medicinal marijuana are being accepted at this time. Attention appears to be shifting in New Jersey to full legalization.
However, here are application instructions to start a Medicinal Marijuana Business in New Jersey.
In NJ, licenses are granted to what are called “Alternative Treatment Centers” which are defined as businesses that:
- And/or dispense medicinal marijuana and related paraphernalia to qualifying patients in according with the Compassionate Use Medical Marijuana Act
The applicant of the Alternative Treatment Center (or “ATC” for short) is required to make two payments with the application. One $2,000 and another $18,000. The $18,000 payment can be canceled upon denial of license.
Recreational Use Legalization
On November 3rd, 2020, New Jersey’s referendum on the ballot passed overwhelmingly in favor of recreational marijuana legalization. New Jersey voters voted for adult-use legalization. Here’s why:
- In a most recent survey, 61% of New Jersey residents were in favor of legalization.
- Governor Phil Murphy is very pro-legalization, calling it an “incredibly smart thing to do” and a “no-brainer” earlier this year.
- New Jersey has been hit particularly hard by COVID-19 plummeting tax revenue and increasing costs associated at the same time. Even before COVID-19, there were state tax revenue issues. These challenges will put even more pressure on the state to find ways to gain more tax revenue. NJ Marijuana legalization could provide hundreds of millions of dollars in tax revenue.
- Criminal justice reform has never been more popular. This puts even more pressure on the state to legalize than ever before.
After the residents approved legalizing recreational marijuana, New Jersey’s legislature created Bill S21 or the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (CREAMM). The bill can be viewed here. Originally, the bill was intended for vote on November 21st 2020 but it was delayed. After the bill was debated, including some disagreements over underage use penalties, on Monday, February 22nd, 2021, the state legislature and later Governor Phil Murphy signed the bill into law which regulates the sale of cannabis to anyone over the age of 21.
Requirements To Get a Cannabis Business License In New Jersey
Here is what we know so far when it comes to your requirements to open a dispensary or other type of cannabusiness in New Jersey.
As previously stated, the CRC published its first set of rules and regulations in August of this year. The cannabis business license types, approved conduct, and fees are just a few of the highlights from the sections of the rules and regulations. They are as follows:
Adult-Use Cannabis License Types
- Class 1 Cannabis Cultivator – Authorized to grow adult-use cannabis. Indoor or outdoor growing is allowed, but only with the approval of a municipality.
- Class 2 Cannabis Manufacturer – Authorized to grow cannabis for adult-use. Cannabis must be manufactured under the supervision of a manufacturing supervisor in a secure facility.
- Class 3 Cannabis Wholesaler – Authorized to store, sell, or move adult-use cannabis products between cannabis cultivators, wholesalers, and retailers.
- Class 4 Cannabis Distributor – Authorized to transport adult-use cannabis products in bulk between cultivators, manufacturers, and retailer.
- Class 5 Cannabis Retailer – Authorized to buy adult-use cannabis from licensed growers, manufacturers, or wholesalers and sell it to consumers. Age verification measures will be required to ensure no one under the age of 21 can acquire cannabis, and sales will be limited to one ounce per customer.
- Class 6 Cannabis Delivery – Authorized to transport adult-use cannabis and related supplies from retailers to consumers.
Before February 2023, the commission plans to award 37 licenses to cannabis cultivators. Meanwhile, the commission has no limit on the number of licenses it may issue to manufacturers, testing laboratories or dispensaries.
Application for a temporary conditional permit allows a business to legally engage as a cannabis cultivator, manufacturer, wholesaler, distributor, retailer or delivery service while pursuing a full license.
To reduce restrictions on market entry, initial application fees are low. According to the initial rules released by CRC, applicants must pay only 20% of the application fee at the time submission of the application, with the remaining 80% collected at the time of license approval. Only successful applicants will pay the entire application charge. The initial application fees start at $100, with completed application fees between $500 and $2,000.
For a complete list of required fees to open a cannabis recreational business effective August 19, 2021, view here.
Recreational License Requirements
According to the current recreational marijuana bill:
“Each license application shall be scored and reviewed based upon a point scale with the commission determining the amount of points, the point categories, and the system of point distribution by regulation. The commission shall assign points and rank [all] applicants [, from the most to the least points,] according to the point system.”
This approach of a “point system” does fall in line with what we have seen in other states that have recently legalized. Your application will be graded on a point system that will take into account experience, expertise, and the credentials of you and your team on a wide variety of topics. To give you a sense of some of the topics you’ll be graded on, here is a potential list:
- Environmental impact plan
- Safety and security procedures
- Cybersecurity plan
- Emergency management plan
- Diversion prevention
- Sanitation practices plan
- Procedures reporting adverse events
- Proof of financial competence to carry out plans
Getting Your Cannabusiness Funded: Funding, Loans, Grants, And More
Start-up costs for most cannabis businesses in New Jersey can range from around $250,000 to $2,000,000, depending on a variety of criteria such as location, size, and objectives. Costs may include application and licensing fees, staffing, rent, renovations, equipment, product, security, and more. Despite medicinal cannabis being legal in New Jersey, standard banking services and loans are still inaccessible to cannabis businesses as it is still illegal under federal law. Most startups can receive funding in a variety of ways including:
- Self-Funding – Due to the difficulty in acquiring finance through traditional channels, cannabis entrepreneurs are likely to select this as their most popular alternative.
- Friends and family – You can reach out to family and friends for financial assistance or even a no-interest loan. Getting loans from family and friends who believe in your business plan is a good idea because they fully understand the risks involved in lending money to your startup business.
- Partners – The cannabis industry is full of people looking to break into it. Forming a partnership could be beneficial for both parties, making this a great potential source of investment capital.
- Personal Loans – You may be qualified for a personal loan if you have good credit and a consistent salary. When approving a loan, profit, time in business and business credit score are not considered; nonetheless, you must specify how the cash will be used.
- Cannabis Business Loans – A growing number of lenders who are willing to work with and fund cannabis businesses are emerging. You can get a loan from a cannabis-specific credit union or bank.
- Crowdfunding – Startups are increasingly turning to crowd funders for help with funding. This method, however, could take several months or even longer to raise the funds you’ll need to get your business off the ground.
- Private Equity – The cannabis industry has attracted a significant amount of private equity capital. Private equity funds acquire and invest in privately held companies to increase their value, resell them, or hold them for a long time.
- Angel Investors – An angel investor puts money into a startup that they feel will thrive in exchange for shares or future repayment. Since angel investors are individuals, they can choose which companies to invest in.
- Venture Capital – A venture capital firm is one possible alternate source of cannabis industry investment. Many VC companies have already entered the cannabis business. Notably, accepting VC investment means selling equity in your cannabis business and lowering your ownership stake.
- Capital Brokers – Finding investors through the help of a capital broker who specializes in the cannabis industry is yet another excellent option to consider. It is their responsibility to locate and qualify potential marijuana investors who are interested in investing in the cannabis industry.
It is important to note that determining the best route for how you will fund and successfully carry your business into profitability starts with your business plan and pitch decks. Following your initial planning, research, and consultation, you should have a better sense of your initial startup financial needs.
New Jersey Cannabis Business Technology, Products, and Partnerships You Need
Whether you aim to open a cannabis dispensary or other type of marijuana business, there are a variety of products and technologies that you will need to become familiar with.
Technology is very important for a cannabusiness. Not only is technology required per state regulations but a smart technology plan will give you a competitive advantage in the market.
One example of this might be utilizing cloud video storage for your surveillance video needs to meet future compliance. You will likely need to look into the technologies necessary but also potential tech partners that can help fill important knowledge gaps to save you time and money.
Here are a few examples of tech necessary in a cannabis business. (6 Must-Have Cannabis Softwares)
Product and Service Partners
When running a cannabis business, not only due to the fact that in New Jersey you won’t be able to “vertically integrate”, but also due to the fact that cannabis businesses require a wide set of knowledge and skills to properly operate the business and achieve compliance, the quality of your product and service partners is critical to your business success.
For example, in the past few years there have been data breaches due to lax security of 3rd party vendors such as software that exposed cannabis businesses’ client lists. For these reasons it is essential to choose vendors and partners wisely. Considerations can include:
- Trustworthy track record of staying compliant to government requirements;
- Track record of product consistency;
- Ability to handle scale;
- Able to competently handle problems when they occur.
To better understand the types of cannabis businesses you’ll be dealing with, HERE are the types of cannabis licenses currently available for New Jersey.
As you can see, aside from direct cannabis expertise, there are a wide variety of topics that you must be competent on including storage, inventory, security, sales, purchase limits, waste disposal, sanitation, and many many more. This is because each of the above topics is part of running a cannabis business, and any gaps in operational knowledge can impact long-term success.
Due to what has been an unprecedented year for New Jersey, events are continuously unfolding that will affect when and how recreational legalization will happen. By adding yourself to our New Jersey Cannabis Mailing List (below), we will keep you updated on how to open a dispensary in New Jersey and all relevant NJ news that matters, including the not so easy to find news, and comments based on New Jersey Legalization below.
This includes but is not limited to
- When will new cannabis license applications be available?
- How much will it cost to open a dispensary in New Jersey?
- What are the requirements to open a dispensary in New Jersey?
- What special programs will be available?
- And more
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