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Cannabis Social Equity Applicants Focus of Third NJ CRC Meeting

The third NJ Cannabis Regulatory Commission (CRC) focused on cannabis social equity applicants and cannabis license issues raised by the public.

“I’m really excited to have everyone join us for this conversation,” said NJ CRC Chair Dianna Houenou.

“Getting acclimated to a new state agency and new information is not easy,” she admitted.

Former NJ Health Department Assistant Commissioner and current NJ CRC Executive Director Jeff Brown said enrollment in the medical program is now over 107,000 patients. He added that the Apothecarium in Maplewood will become the 17th dispensary location to open this week.

“I know we have a lot more work to do there. Sixteen dispensaries is not enough,” Brown said. As a mark of progress, he noted that there was only one dispensary in North Jersey when he first started at the Health Department, and there were only five dispensaries.

“We are working… as quick as we can,” Brown said.

Brown said nothing was done on the 2019 Request For Application (RFA) because of a court-ordered stay on the lawsuit, which took 14 months to hear and three weeks to decide. However, Brown said they are pushing to get it done as quickly as we can.

In terms of creating the market’s infrastructure, he said other state cannabis regulators they are talking to have focused on mentorship and technical assistance to help learn to build a business.

Advocates Weigh In

Ami Kachalia of the ACLU NJ leading the cannabis coalition NJ United for Marijuana Reform (NJUMR) (which I serve on representing the Latino Action Network, full disclosure) said equity should be built into every facet of the industry and added on afterward.

“The market is dominated by white-owned businesses with resources and few else,” she said.

Kachalia had a plan to make the industry just that included creating an “equity applicant” as a designation to help those most harmed, ensure they own 51 percent of a business, make sure they have lived in an impact zone for 10 of last 20 years, or have a record, or have immediate family who do have a record.

She continued that such applicants should have access to start-up capital, prioritization in the cannabis licensing process, fee waivers, and technical assistance. Kachalia noted that banks are reluctant to give cannabis companies a loan, and revenue needs to come in before they can use it for something. She urged the legislature to appropriate money for social equity cannabis companies. Kachalia noted that the NJCRC needs to guide towns to understand their role in the implementation process.

“Money talks, right? Absent money, it’s very hard to get started,” Kachalia said.

Money Issues

The NJ State Bank, kicked around by Governor Murphy in his campaign, would be a good mechanism to help entrepreneurs with capital.

NJ CRC Vice-Chair Sam Delgado asked how the money would be given to applicants. Kachalia said grants were best since they don’t come with interest.

Commissioner Charles Barker asked what states are doing to promote social equity.

Oakland and San Francisco have tried to help applicants with capital and other issues. Kachalia said Illinois and Massachusetts’ programs are early in their implementation.

However, “we don’t have years of evidence,” she said.

They’ve had mixed results at best, which raises the stakes higher for creating a just cannabis industry in New Jersey. Many are aware of this. Part of the problem is that companies similar to the Multi-State Operators (MSOs) dominate the American economy overall.

Leo Bridgewater of Minorities 4 Medical Marijuana (M4MM) and formerly CannaGatherNJ spoke. He noted he testified in 2016 to have PTSD added as a qualifying condition for medical cannabis. Bridgewater noted there needs to be more education for cannabis social equity applicants and told the commissioners it would be good for them to work with New York.

“Workers’ rights and social equity are the same conversation period,” said Hugh Giordano, a Labor Organizer with the United Food and Commercial Workers (UFCW) Local 152. He said labor peace and collective bargaining agreements help workers get better benefits. Giordano said union workers earn more than 10 percent of what non-union workers make.

“Racial disparities are huge within cannabis, and this is a way to protect against that,” Giordano said.

“It’s the same fight,” he said. Giordano added Martin Luther King Jr. was fighting for workers to unionize when he was shot.

Medical Cannabis Problems

“We were at the Statehouse protesting outside for seven years,” Edward “Lefty” Grimes of Sativa Cross said. “Seven years later, we’re still out there.”

“We need your help,” Lefty said. “Our medicine is not covered by insurance. We’re getting taxed by the state.”

“Corporate cannabis is giving us moldy cannabis,” he added.

He argued against the two percent tax towns could impose as financially burdensome to patients.

“It was a privilege to hear your perspective,” Brown said. “We know we have a lot of work to do.”

He noted he met with the late activist Jeff Oakes with Grimes.

“I’m a medical marijuana patient. I suffer from a car accident four years ago. I want to take part of this new industry, but as a patient, I’m on disability,” said Chris Almada of Sativa Cross. He noted dispensaries are far from him in Morris County.

Christian Velasquez of Sativa Cross said there should be a mechanism to help felons get into the industry.

“The legacy market has been providing for the good people of New Jersey for decades,” he said.

“You should not be priced out of medication. Patients need homegrow,” he added.

Velasquez proposed a non-profit collective growing license that could help poor and sickly patients.

“I had friends who died of cancer because the State failed,” he said.

Cannabis License Issues

Cannabis lawyer Chirali Patel said the cannabis license process should not be cumbersome for people to navigate and noted that women and minorities have the hardest time raising capital. She said there should be zero-interest loans or grant to give them capital, along with assistance in applying. Small Business Development Centers fulfill a similar function. Ancillaries can access their services.

Jason Bacon said his home was violently raided by the police. They found immature plants and some cannabis. As a result, he was denied bail and held in jail for 365 days. Bacon explained he is still out on bail and has lingering legal issues, as does his girlfriend, who was at his home when it was raided. The government took all his money as well.

Legalization didn’t expunge such charges.

Bacon said, “50 percent of each class should go to micro businesses.”

He wants to apply for a cannabis license as well.

Michael Starling said the first round of adult-use cannabis licenses should go to those with New Jersey residency applicants. Starling said people should be able to smoke off work.

Houenou asked if only New Jersey residents could get cannabis licenses, how would that affect it?

Starling said out-of-state financing should be kept to a minimum.

Large Out-of-State Cannabis Corporation Loom

Barker asked Starling if adult-use New Jersey cannabis should be delayed, ensuring the industry is just. Starling said they should not necessarily delay the program but start on a smaller business level. Barker proposed that a delay could create a better framework, and Starling agreed to a delay.

“We shouldn’t think bigger means better,” CBD store owner Carl Burwell Jr. said, noting Barker’s issues of speed versus justice.

“It’s my firm belief we’re underestimating the cannabis community, and the legacy market has been doing it for 50 years,” he said. Burwell advocated they approve microbusinesses quickly.

It seems New Jersey is looking to again delay cannabis sales after months and months of bumbling and stumbling. There should not be a false dichotomy between a socially just industry and slowness or the NJ CRC approving MSOs quickly.

If cannabis reform had indeed passed within the fabled first 100 days of Governor Phil Murphy’s administration and sales started 14 months later, the adult-use program would have been open for almost two years by now.

Reducing Barriers to Entry

Advocate and attorney Jessica Gonzalez said they should help those most harmed by the War on Drugs and “provide resources and meaningful opportunities to participate in the cannabis market.”

She said there should be other ways to help people who don’t want to enter the industry” and agreed with Kachalia’s proposals. Gonzalez said they should stop any “pay to play” mechanism that might develop. In addition, some towns want to add fees that would be burdensome to cannabis social equity applicants.

Barker asked if private equity markets could help with capital. Gonzalez was wary.

“There are already companies looking to skirt these lines in terms of control,” she said in terms of the microbusiness and conditional cannabis licenses.

Gonzalez explained that part of the problem is that money needs to come in first to fund a program to help cannabis social equity applicants. She said in other states larger companies are taking many cannabis licenses after a short period.

Gonzalez said they should keep a close eye on those certifying as women, minorities, or a disabled veteran.

“Make sure the applicants… maintain control and are accurate in terms of their diversity and make-up,” she added.

Social Justice and the Cannabis Industry

Houenou said audit requirements could become burdensome for the applicants.

Nadir Pearson said the NJ CRC needs to define “social equity” regarding who qualifies as a cannabis social equity applicant with residency requirements. He also brought up homegrow.

“It is something that will definitely make cannabis more afford in the state,” Pearson said, noting New York and Virginia just legalized adult-use cannabis with homegrow.

He said businesses could “work on a collective scale and use space in a collective facility.”

Camden Business Association Vice President Nichelle Pace noted the conversation around cannabis social equity applicants is part of a larger economic justice issue. She said equity benchmarks should be transparent.

“Small businesses create the bulk of the jobs in this state,” Pace added.

Valerie Woodson said she was part of the NJ Alliance of Minorities in Cannabis and wants to help state residents enter the industry. She sought information from the NJ CRC to help others.

Cannabis Social Equity Applicants Testify

“We’re all aware of the huge supply and demand discrepancy that leaves patients far away from their treatment center,” Precious Osagie-Erese, Chief Operator Officer (COO) of Roll up Life Inc., said.

“Can you tell me about how the insurance companies treat you?” Delgado asked her.

Osagie-Erese said insurance is high because they pay premiums to insure everything.

“We really have to work with specialists,” she said. “We have top pros on our team that gave us quotes.”

“The licensing process is completely broken,” said Travis Ally.

He was a 2019 social equity applicant who noted politics, access, and real estate dominate it. Ally said they should foster businesses by evaluating businesses and connecting them with investors.

“This would make New Jersey revolutionary and stand out from the pack,” he said.

Ally said only four buildings in Newark are options because of the distancing requirements, and the landlord of all four is creating obstacles. In addition, Ally wanted to set up a business incubator.

Ally said cannabis social equity applicants should not need to get real estate first since it’s so difficult.

“There’s “not a whole lot of space within municipalities to do it,” Chuck Latini said, noting the 1000-foot distance dispensaries need to maintain from schools, unlike liquor stores.

“The land-use question is a huge one,” he said.

Latini said applicants should not need a lobbyist to get a cannabis license (which they should get if they have the money).

“It’s really hard because how do you give someone a license when they haven’t locked down the proper approvals?” Barker asked.

Latini said even opening a donut shop can be difficult due to the nature of municipal regulations.

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