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Many NJ Conditional License Winners Out of Options & Failing to Convert to Open

Several New Jersey conditional cannabis license winners have given up after failing to raise money and secure the town approval and property needed to open.

Thus, their licenses from the NJ Cannabis Regulatory (NJCRC) are expiring if they have not already expired.

The NJCRC designed a New Jersey conditional license to be very easy to obtain.

Those who are underground legacy to legal license applicants, Social Equity applicants affected by the War on Drugs, and or minorities are likely the ones losing. These are supposed to be the Goldilocks applicants that advocates wanted to see open in the market.

At the last NJCRC meeting, they said they approved 233 conditional cannabis licenses for conversion to an annual license needed to open. Overall, the NJCRC has approved 445 annual licenses. More than 1000 conditionals were issued.

This is still pretty good, given how few licenses were previously permitted. Heady NJ covered the 7th New Jersey cannabis dispensary opening in 2020.

Despite many challenges, many successful New Jersey entrepreneurs have also been able to open dispensaries. Some have opened closer to their home than others.

Some won at the expense of the applicants who did not have the money, knowledge, or experience to compete.

Speculating on the Number of Losers

Since the flood of New Jersey legal conditional cannabis licenses began, lawyers, professionals, and advocates have debated how many conditional license winners would succeed and how many would fail.

No one ever thought that more than 60 percent would be able to convert. Most thought 20 to 35 percent at best would succeed, meaning a 65 to 80 percent fail rate.

The NJCRC has also noted several times that the more tax revenue they get from legal New Jersey cannabis adult use/recreational tax revenue, the more programs they can fund to help struggling businesses.

Money has gone out to help some. But then, it has only been a few drops while they tinker with the process. In addition, companies that were not majority locally owned won some of the initial NJ Economic Development Authority (EDA) grants.

The NJ Business Action Center Cannabis Training Academy that will open later this year might help too.

NJ Conditional Cannabis License Failures

Some New Jersey cannabis licenses might have been won with the direct intention of selling them. Flipping legal cannabis licenses is a common practice in other state-legal cannabis markets. The NJCRC is closely monitoring the transfer of licenses.

Some are still fighting by going to town council meetings and working a process mired in local politics and cannabis prohibition era concerns.

High-end cannabis industry investors seem to understand that the conditional license is not that valuable without town approval and land. So, the company that holds it is a riskier investment. Thus, many have found it impossible to raise money.

NJ Town Approval Hurdles

Towns in New Jersey have a lot of power to stop progressive state-approved ideas like integrated schools, affordable housing, and cannabis companies under the State’s Home Rule law.

Some towns need a mass movement to open them up. Others need an experienced professional like Ron Mondello to speak to them. He has been appointed Cannabis Attorney in several towns.

With about 39 dispensaries approved by the Jersey City Council, the city could contain a range including some Goldilocks and those similar, small MSOs, at least one celebrity, and at least four directly connected to Hudson County politicians.

Thus, advocates and those with high-end connected attorneys and lobbyists can get through the town process. Cannabis corporations that are Multi-State Operators (MSOs) are the best at the process. They range in terms of their values, products, and local ties.

Real Estate Games

When far less than half of New Jersey’s 566 towns are allowing cannabis companies, it greatly increases the difficulty of finding a friendly town. Most only approved a small Green Zone in an industrial area versus a place conducive to securing a lot of foot or car traffic.

Generally, the more Democratic and progressive a town is, the easier it is to get their approval. But some fairly progressive towns like New Brunswick only allowed three dispensaries, for example.

Landlords have realized they have all the leverage in the process months ago.

Some charge $10,000 a month just to hold a property before opening. That makes holding a property almost impossible for a businessperson without means. Other landlords demand a percentage of the company itself or a percentage of sales.

Ocean County Politics Stump Jersey Shore Extracts

Jersey Shore Extracts dispensary owners Candi Johnson and Chuck Benson wanted to open a mom-and-pop type dispensary. Johnson is the majority owner, so it’s women-owned.  

They first applied for local approval in Lakehurst in Ocean County. But they did not go to many council meetings. They had been friendly with the town clerk and had made progress on a location. But it had Green Zone problems.

Another town made them apply for $10,000. But they didn’t win a competitive process.

“We weren’t actively trying to lobby the town,” Benson noted.

On their third try, they made progress in Tuckerton on real estate.

“In Ocean County, there were few options. But the town was an Impact Zone where the State wants to see this the most,” he explained.

“We had a building in a pretty cool town. We spent upwards of a year going to town council meetings. They seemed to be somewhat excited. However, they were still a little bit unsure. They said they would put together a committee,” Benson noted.

Ultimately, the town council thought it might be good to hold a referendum on allowing businesses in town.

Benson explained the town voted in favor of it for the 2020 New Jersey adult use cannabis legalization constitutional referendum and expected a second referendum would pass.

“A month before the referendum, they voted to rescind it,” he said.

Running Out of Steam

The NJCRC approved them for a standard annual dispensary license on their second try. But they didn’t accept it because the town would not cooperate.

“We never accepted the second license. We’ve given up,” Benson admitted. “We’re out of money now.”

“We literally exhausted all of our resources,” Johnson added. “It’s happening to a lot of other people.”

“The towns are not doing what the State wants,” she observed.

“Where was the State to help out these small businesses compete? It’s something they talked about at great length,” Benson argued. “It’s very disheartening.”

He noted the need for deep pockets to succeed.

Johnson explained they did not understand how deep into politics they would have to get at the local level to get approved.

“It’s a little disheartening to hear about these grand openings from out-of-state companies. But we wish them nothing but luck,” Benson said.

I Bud You Wellness Expiring Licenses Not Renewed

Entrepreneur and Social Equity candidate Mario Ramos has also given up on his New Jersey conditional cannabis license for his “I Bud You Wellness” dispensary.

“Mine expired. They wouldn’t redo it,” he explained.

“I’m frustrated to death,” Ramos declared. “I would be open already if they didn’t have all these rules.”

He also has had issues finding land and town approval.

“You can never get in touch with somebody that minute. That email can come whenever, and that phone call can come whenever,” Ramos noted about the NJCRC.

He explained he was trying to get in contact with someone since he is a Social Equity applicant and wanted the waiver of a fee.

“It wouldn’t let me pass the portal. Nobody got in touch with me,” Ramos said.

The NJCRC said there were problems with their paperwork. The problem is it was due on New Year’s Eve, and the staff was not around to facilitate the process.

Ramos said he put in his paperwork two days before it was due. They told him it was not accepted due to paperwork problems and to re-apply since his license expired.

“I’m so upset. I didn’t want to redo it again,” he declared.

He noted the lack of quality products on the shelves.

“Maybe it’s a blessing. I hope this year we get a good crop,” Ramos added.

Like many others, he is also trying to open in the legal New York cannabis market, where he has long operated. While the progress has been blocked by lawsuits, Ramos is making progress with real estate.

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