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Pro-Corporate Cannabis MSO NJCTA Report Criticizes Underground Legacy Operators & CRC

The pro-corporate cannabis Multi-State Operator (MSO) NJ Cannabis Trade Association (NJCTA) released a report criticizing the New Jersey Cannabis Regulatory Commission (NJ-CRC) for penalizing their members and enabling the underground legacy market.

New Jersey Cannabis Industry Progress Ignored

They claim there’s stagnation in the New Jersey cannabis market versus steady progress. Recently, several dispensaries have opened at a quicker pace than previously. The 2019-2021 medical dispensaries converting to adult use recreational cannabis sales and exclusively adult use licensed dispensaries are launching rapidly.

“That report does more to hurt this growing industry than to help it at this point,” NJ CannaBusiness Association (NJCBA) President Scott Rudder declared. “The intent may have been intended to help the process. But the reality is I think it hurt more than it helped.”

(Full disclosure: he is a Heady NJ Patreon supporter.)

You would likely assume the NJCTA hired public policy experts who researched the issue. Instead, a Public Relations salesman spun talking points together.

“Now is the best time to get involved in the industry,” Rudder explained. “It’s only going to grow. New Jersey is prime and ripe for investment and expansion.”

NJCTA Background

The NJCTA is an organization largely comprised of corporate cannabis Multi-State Operators (MSOs) overwhelmingly owned by White men. Very few of the owners are from Jersey. They largely produce low-quality cannabis that is sold for high prices. The NJCTA could be called a cartel for selling mediocre cannabis for high prices.

The members of the NJCTA and the NJCTA itself barely contributed to the New Jersey adult use cannabis legalization referendum’s passage in 2020.

NJCTA President Shaya Brodchandel of Harmony dispensary has had legal issues which have not been resolved. They were supposed to open locations in Jersey City and Hoboken two years ago. But they have yet to do so. The NJ-CRC  revoked their adult use cannabis license for lack of payment in June.

Anti-Legacy Operators Rhetoric

The NJCTA hates underground legacy “black market” operators. They seem to believe this is a zero-sum game, and legacy operators are cutting into the market, which they perceive as limited.

Cannabis consumption crosses social, economic, and political groups in society. There’s a reason 67 percent of New Jersey voted for adult use recreational cannabis legalization in 2020.

Many minority and women vendors operate in the legacy market. They sell cannabis flower and products that are fresher and stronger for far more reasonable prices than the NJCTA’s members.

The NJ-CRC is between a rock and a hard place. They have issued rhetoric encouraging legacy operators to enter the legal New Jersey cannabis market and criticized the legacy market.

Creating a path from legacy to legal makes sense if you want to shrink the underground market. To do so, you must acknowledge why they do well.

(That’s why on October 28th, Heady NJ is hosting a South Jersey Legacy to Legal Cannabis Forum!)

Despite the outrageous prices, which encourage underground legacy sales, the NJCTA insisted that there was enough cannabis prior to the opening of the market in spring 2022.

Pro-MSO NJCTA Hates Low Taxes

Amusingly, the NJCTA report criticizes the low amount of New Jersey cannabis tax revenue generated. If New Jersey cannabis state taxes were higher, more consumers would likely turn to the legacy market. The underground legacy California cannabis market is four times the size of its legal market. Part of that is due to the high legal price.

“We have the lowest tax rate in the country when it comes to taxes,” Rudder noted.

He argued this makes the New Jersey cannabis market more competitive.

Defending Bad Actors in New Jersey Cannabis

The NJCTA hates that the NJ-CRC took action against the worst maneuvers of their members.

It’s amusing the NJCTA called the NJ-CRC’s enforcement “weak” and then criticized them for penalizing bad actors. The report defended Curaleaf, likely the worst of the MSOs.

Their pressure behind closed doors Jersey Style likely led to the reinstatement of their New Jersey adult use recreational cannabis dispensary license only a few days after they lost it due to labor violations.

The NJCTA also hated that the NJ-CRC was unhappy the MSO Columbia Care had many labor problems. They nearly denied their New Jersey adult use recreational cannabis dispensary license renewal in July. The MSO TerrAscend also wanted to make changes to their license that were not allowed.

NJ-CRC Makes Progress

“An industry group declaring yesterday’s problem are today’s problem creates problems,” Rudder explained. “The complaints in that report deal with issues that are predominantly past tense at the CRC. The challenge that the CRC had when they started, when they opened up their first portal in December of 2021, was that 300 applicants applied in a two-week period.”

He noted there was a similar large flood when hundreds of dispensaries applied in March 2022 for New Jersey Cannabis licenses. Rudder also noted they were understaffed, which is a state budget issue.

“Those are genuine challenges and general concerns, and it impacted everyone,” he said. “The CRC has received additional resources with employees and a budget to speed the process up, which it has,” he explained. “A lot of the concerns are already being resolved.”

Rudder noted they are becoming more transparent as well.

Anecdotally, New Jersey cannabis license applicants have said the CRC is responding their requests more rapidly now.

In the June New Jersey legislative oversight cannabis hearing, NJ-CRC Executive Director Jeff Brown said the NJ-CRC only had a staff of 21 transferred from the New Jersey Medical Marijuana Program under the NJ Department of Health. He explained they were up to a staff of 81 people with the goal of hiring 135 staffers.

The number of applications and lack of staff likely led to severe delays.

Knives Out for the NJ-CRC

There are rumors among New Jersey cannabis policy and industry experts that the NJCTA wants the NJ-CRC disbanded. Doing so would only delay the process more and create more confusion.

That confusion and delay only benefits the NJCTA members.

Reformation would make more sense.

One significant issue is that if New Jersey cannabis companies only needed a letter from a town’s mayor, then the New Jersey town cannabis process would be a lot easier. Currently, they need a town council to vote on a resolution. It has created many problems.

“The biggest challenge right now is fundraising for your business and dealing with municipalities,” Rudder noted.

“Every state that has started a brand-new cannabis program has delays and setbacks,” he added.

New York is having worse problems launching a robust legal adult use cannabis market versus a bolder legacy market. Some of the same MSOs are involved in a lawsuit blocking their market development.

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