A panel discussed future New Jersey cannabis stores featured Assembly Speaker Craig Coughlin (D-Middlesex).
Noted attorney Fruqan Mouzon moderated the panel. He explained that Coughlin went on the legislative cannabis junket to Colorado years ago.
“It was a really informative trip,” Coughlin said. He said he toured facilities and met many local officials.
He noted legislators’ dislike of homegrow was sparked during that trip when Colorado allowed people to grow 99 plants at home. It has been said that Colorado addressed the issue and still has homegrow.
Overall, Coughlin came back supportive of legalization.
“The bill we put together was incredibly well-crafted. I was disappointed when we fell a little bit short,” Coughlin said regarding the failure of S. 2703 in 2019.
The Assembly had the votes for the bill when the Senate did not. Coughlin noted the NJ Senate was one vote short when it failed to pass the legislature.
Mouzon said that Coughlin made a pitch for conditional licenses. Coughlin explained he became supportive of the idea when people asked him how to get involved. He said people needed $2 million in capital, which is difficult for many. The idea was they could take the license and then obtain the funding.
Coughlin said excise tax would be used for education and training and business opportunity purposes.
“There’s an awful lot of chances for people to get involved who are not big business,” he said. “I’m hopeful to getting started with it.”
Mouzon noted excise rate is counterintuitive whereby prices will go down and the tax rate goes up.
Coughlin said that it was done to make sure the industry can get a toehold and compete with the underground market. He also noted the illicit market is not going to go away. A few legislators have seemed to be under the impression that it could be eradicated.
Coughlin called for advocates to be patient with legalization and for cannabis stores to open.
“The regulatory process is going to take some time,” he said.
“Hopefully, the governor will sign our thing,” Mouzon said regarding the bill.
Coughlin said he hoped so as well.
Launching an Adult-Use Market
4Front Ventures President Kris Krane noted most states did what New Jersey did with legalization starting with medical first and then going to adult-use.
He said those that didn’t take that route took a lot longer to open their markets. But New Jersey has a small medical program with a few operators and patients compared to others that were more developed. Illinois was similar. They had 19 medical cultivators and 60 cannabis stores, and 80,000 patients when they went adult-use. That led to high pricing and purchase limits to reserve flower for patients.
New Jersey currently has about 100,000 patients and 13 dispensary locations open. They are all cultivating or planning to since they have vertically integrated licenses.
“The first six months were hard,” Krane said. “I would take those challenges and problems over taking a long time to get it going.”
He noted that sales revenue can help businesses scale and expand their services once the adult-use market opens. Krane noted that adult-use programs improve in terms of prices and quality over time.
“Most businesses don’t have the capital to build that infrastructure right away,” he said. Krane explained most need cashflow to scale because they cannot obtain bank nor government loans easily.
He noted federal prohibition makes raising capital incredibly challenging.
Cultivation and Supply
The effects of cultivation were discussed.
Krane said Washington and Oregon allowed cultivators to grow as much as they wanted. There was then a great oversupply since it could not be shipped out of state, even to other legal states.
When there was so much cannabis that the price became so low, many small businesses went out of business because they could not produce cannabis at such a low price.
Mouzon noted large cultivators are limited to 37 in New Jersey.
“I do agree with there being some sort of limit,” Krane said.
He added it is much more important to examine how much cannabis is being grown overall to see how it will affect the price.
Mouzon noted they’re not limiting micro cultivation licenses.
Instead of focusing on creating an average product like Budweiser, Krane said small businesses should focus on more niche, high-end strains, and products, like a microbrew.
He said vape, edible, and drink products would be good to focus on.
Cannabis Store Zoning Issues
“Really the hardest part is getting local approval,” Mouzon said regarding the cannabis store opening process.
Land-use Planner Charles Latini agreed. He noted the issue is rarely discussed.
“I tell people they may need to hire a lobbyist,” Mouzon said if they are seeking a license in a town he does not know well.
Latini explained he handles that process for many of his clients. He also serves as Town Planner in some municipalities and has helped drafted pro-cannabis zoning ordinances.
He also has municipal clients where he is the town planner, and he has helped developed pro-cannabis store zoning ordinances. Latini said zoning is very restrictive.
Even in pro-cannabis towns, there might be a finite amount of places within the boundaries they can set up shop.
Towns have 180 days to adopt -pro-cannabis zoning or opt-out of legal cannabis.