How To Open A Dispensary In New Jersey
(2022 Complete Guide)
Table of Contents
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, and 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.
On March 15th, 2022, New Jersey Cannabis Regulatory Commission started accepting applications for adult-use retail cannabis stores.
On March 24th, 2022, 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.
The Cannabis Regulatory Commission of New Jersey is currently accepting public comments on suggested changes to the legislation governing the adult-use cannabis industry in the state. Residents of New Jersey have until September 30 to submit their insights. The 325-page document containing the proposed rule revisions makes adjustments to the licensing procedures for delivery, distribution, and wholesale businesses.
We anticipate that further information about legalization, regulations, and applications 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 businesses. The CRC will only license cannabis enterprises that have municipal backing and 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, from 2016 through 2017, post-traumatic disorder, migraines, Tourette’s, autism-related anxiety, Alzheimer-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 the pricing listed and cannot 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 127,708 patients in New Jersey.
In NJ, medical cannabis licenses are granted to what is called “Alternative Treatment Centers” (ATC), which are defined as businesses that:
- manufacture, and/or
- dispense medicinal marijuana and related paraphernalia to qualifying patients according to the Compassionate Use Medical Marijuana Act
Here are application instructions to start a medicinal marijuana business in New Jersey. However, as of August 27th, 2019, no new license applications for medicinal marijuana are being accepted. Attention appears to be shifting in New Jersey to full legalization.
Existing ATCs won’t need to fill out a complete application if they want to start competing in the recreational cannabis market. Businesses must inform the CRC of their intentions and demonstrate that they have enough supply to cover the reassuringly expected demands of medical cannabis patients. Additionally, the municipalities where they are situated will need to approve them.
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 favored legalization.
- Governor Phil Murphy is very pro-legalization, calling it an “incredibly smart thing to do” and a “no-brainer.”
- 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 a 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 highlights from the rules and regulations sections. They are as follows:
Adult-Use Cannabis License Types
- Class 1 Cannabis Cultivator License – Authorized to grow adult-use cannabis. Indoor or outdoor growing is allowed, but only with a municipality’s approval.
- Class 2 Cannabis Manufacturer License – 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 License – Authorized to store, sell, or move adult-use cannabis products between cannabis cultivators, wholesalers, and retailers.
- Class 4 Cannabis Distributor License – Authorized to transport adult-use cannabis products bulk between cultivators, manufacturers, and retailers.
- Class 5 Cannabis Retailer License – 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 21 can acquire cannabis, and sales will be limited to one ounce per customer.
- Class 6 Cannabis Delivery License – 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.
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 your experience, expertise, and 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
How much does it cost to open a dispensary in New Jersey?
The costs to open a dispensary in New Jersey include:
- Adult-use dispensary:
Type of Fee
Application submission fee
$200 (conditional), $400 (annual)
$100 (conditional), $200 (annual)
$800 (conditional), $1,600 (annual)
$400 (conditional), $800 (annual)
You can view the complete fee schedule provided by the NJ Cannabis Regulatory Commission here. Unless otherwise stated, all fees are nonrefundable.
- Alternative Treatment Center:
Type of Fee
Application fee (nonrefundable)
Application fee (can be canceled upon denial of license)
Currently, the CRC is not taking applications for Alternative Treatment Centers. Once applications open, we’ll update this section.
The buildout cost for a retail dispensary can be between $250,000 and $300,000, according to Darrin Chandler Jr., Director of Cannabis Real Estate for RIPCO.
The startup cost for a standard retail dispensary business can range from around $250,000 to $2,000,000. On the other hand, the start-up costs and licensing fees associated with a cannabis microbusiness model are much lower.
Getting Your Cannabusiness Funded: Funding, Loans, Grants, And More
Start-up costs for most cannabis businesses depends 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 benefit 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 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 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.
People with prior experience living in an economically disadvantaged area of the state or who have prior convictions for cannabis-related crimes are eligible to run Social Equity Businesses. During the application process for the cannabis business license, social equity businesses are one of the types of cannabis businesses that will be given priority evaluation and approval.
Aside from social equity businesses, other types of priority applicants are diversely Owned Businesses and Impact Zone Businesses. Director of Diversity and Inclusion – New Jersey CRC Wesley McWhite, advises reading the descriptions of the various priority designations and applying for your highest priority the first time to avoid starting the curing process. Look at all the forms that must be included with your application. The social equity attestation form that must be completed and notarized, along with any other papers you might provide to show that you are a social justice candidate, is the most crucial.
“Securing funding is the biggest problem for minority applicants,” according to Warren Harasz, VP of Regulatory Compliance of Cannaspire. “Get a strong business model. Show how you’re going to succeed. Show the ins and outs of the business and educate yourself to be able to educate the municipality and the state about what a strong prospect this is going to be. No one wants to license a business that will fall flat on its face in six months.”
To get your license, whether you’re applying under social equity or not, you’ll need a full and thorough security plan. According to Dave Myers, VP of Security at Cannaspire, the best way for social equity applicants to create thorough security plans for their applications is to create something very comprehensive, including physical security features, operational features, and cyber security features. So it includes those technological features as well.
You need to create your strategy. Darrin Chandler Jr., Director of Cannabis Real Estate at RIPCO, suggests determining which priority list you will use and if you will submit a conditional or annual application. If you want to go conditional, you may apply without a real estate or financial commitment, and you essentially just need a few key documents. If you already hold a conditional license, the conversion procedure is the next step. Finalize real estate, account resolution, financing, and then SOPs to re-apply again and get that conversion completed. Finish everything on the municipality level and then start construction and build up.
What you need to know to get started and get on the path to succeeding in the industry is discussed in Webinar: How to Get A Social Equity Cannabis Business License in New Jersey. You can watch the complete webinar here.
How To Choose Your Dispensary Location
There are a number of things to consider when choosing a location in New Jersey. You have to do your homework and search for it.
- Look at what your business model is and what your plans call for.
- Determine which areas are cannabis-friendly. You want to be in a cannabis-friendly municipality, especially in northern New Jersey. Counties and towns may prohibit cannabis companies, even in states that have legalized medicinal or adult-use cannabis.
- Find a place that will accommodate your demands and allow for expansion.
- Ensure passersby can see your dispensary. Even if you obtain a dispensary in a busy area, it won’t matter if people can’t see it.
- Competition is another important dispensary site concern. If there are several dispensaries on the block where you want to invest, you should probably look elsewhere.
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 the technology required per state regulations, but a smart technology plan will give you a competitive advantage in the market.
One example might be utilizing cloud video storage for your surveillance video needs to meet future compliance. You will likely need to look into the necessary technologies and 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 because in New Jersey, you won’t be able to “vertically integrate,” but also because 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.
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.
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