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NJ Cannabis News: Senate Hearing Features NJ-CRC

In NJ cannabis news, the State Senate Judiciary Committee held a hearing on cannabis legalization featuring the NJ Cannabis Regulatory Commission (NJ-CRC).

“The CRC is quote “building the plane while flying it,” Judiciary Chair Brian Stack (D-Hudson) said.

He also called it a success with half a billion dollars in revenue. There are 32 recreational cannabis dispensaries with a new medical conversion this week. More are being added.

However, only three recreational only dispensaries have been licensed and entered the market. Stack said New Jersey has the highest cannabis prices in the country. He noted the lack of edibles available in many other states.

“This and factors have pushed customers to the black market,” Stack said.

“Many are still waiting months for approval costing businesses thousands of dollars in a “high-risk unpredictable regulated market,” he said.

It has hurt social equity and minority business owners hurt by the War on Drugs.

“The recreational marketplace is largely made up of White-owned Multi-State Operators (MSOs),” Stack said.

NJ-CRC Testimony

“The Commission is only two years old and making progress,” CRC Chair Dianna Houenou said.

She noted they tripled the number of medical dispensaries open, legal recreational adult use cannabis sales began, and there is some local ownership by people of color.

“The NJ-CRC has held true to prioritizing our values of equity and safety,” Houenou declared.

Of nearly 150 annual license awards, she said more than 20 percent have been given to Social Equity businesses. Two-thirds have been given to Diversely-owned businesses. There was $540 million in sales this fiscal year and $26 million in tax revenue for the State.

“It is the Commission’s responsibility to the people of the State to ensure operators allowed in the market be held accountable to the law and their commitments,” Houenou said.

She noted they are working with the NJEDA (NJ Economic Development Authority) program, $250,000 in the first batch to a select few. The EDA does want to do more. They’re working with the NJ Business Action Center on the Cannabis Training Academy launching this year.

They also have a “Drive high, get a DUI” campaign to alert people.

“Continuing to work together is the only way we can keep patients first and reflect the diversity of our state,” Houenou said.

Expanding the New Jersey Cannabis Market

NJ-CRC Executive Director Jeff Brown said New Jersey would be the premiere cannabis market on the East Coast.

“New Jersey’s total cannabis market in the last year… generated just under $700 million in revenue. Within a year this will be a $1 billion market. There are new businesses opening up every month,” he said.

According to him, 1068 conditional licenses and 150 annual adult licenses have been awarded.

“Review times have begun to normalize,” Brown emphasized.

He said applications with no issues are getting ready for approval in 8-18- 21 weeks depending on their prioritization and class.

On the NJ-CRC website, their email and phone number are available to check in. Brown assured them they could speak to a live person when calling. Ninety are in the final stages of Quality Control.

NJ Cannabis News: License Winner Issues

“We are seeing more conditional licenses convert,” Brown said.

Three hundred fifteen conversion applications have been received thus far. Town approval, real estate, and money are the biggest hurdles to conversion to an annual application.

Of those Annual Licenses needed to open awarded, 22 percent of annual licenses have gone to Social Equity. 20 percent of all annual licenses have gone to minority enterprises. 15 percent went to minority women and 1 percent to disabled veterans. 29 percent are Black owned 28 Asian owned. 11 percent are Latino owned.

They’re trying to help those in the legacy market transition. There’s a $10 million pilot program for struggling companies being set up.

“Prices do remain high but through licensing new businesses and increasing competition, it will change,” Brown said.

Brown said there are 50 annual cultivators licensed.

“We expect that number to increase,” he argued.

Brown explained they’re still building the agency. They started with 21 staffers and have grown to 81 staffers with a goal of 135 in 7 offices.

Legislators Question NJ Weed Legalization

“Flavored cannabis. Is it in the market?” State Senator Fred Madden (D-Gloucester) asked.

“The gummies and tinctures they do in many cases have flavors. All of our products are packaged in child-proof containers,” Brown said. “We have some of strongest manufacturing regulations in the country. We studied other states.”

He added they banned additives that could be harmful.

“Having oversight of the cartridges of cannabis, how are you doing that?” Madden asked.

“They have to file with us a master formulation records. It also contains the methods by which they have produced it,” Brown said.

He noted third-party testing for products to not include mold and yeast.

Madden lamented the low number of licenses to minorities, women, and veterans.

“Those numbers are higher when looked at the newly licensed,” Brown said.

“Would you consider 4 percent for vets a success?” Madden asked.

“It’s disabled veterans specifically. We’re always working on outreach. We can always do better,” he said.

Curaleaf Questions

Senator Bob Smith (D-Middlesex) said they voided Curaleaf’s’ New Jersey adult use recreational cannabis license, which was restored.

“The industry was shaken to the core. Can someone tell me what happened?” he asked.

Houenou explained at the April NJ-CRC meeting they did not renew Curaleaf. She said they were concerned about adherence to the law and labor requirements.

“That company did come back to the table. The board decided to renew that license with certain conditions,” she added.

“The Board of Commissioners is committed to making sure our industry has safe and responsible operators who follow the rules and follow the law. We make sure we hold businesses accountable if they want to op in this industry,” Houenou declared.

“Did the CRC talk to that company before to say you’re meeting our standards?” Smith asked.

“Our staff is in constant communication with our regulated industry,” Houenou said.

NJ Cannabis Report to the Legislature

“How often do you report back to the legislature?” Stack asked.

“We provide reports to the legislature in multiple forms. The Commission provides the legislature with recommendations on how to spend funds raised by the social excide fee,” Houenou said.

“I don’t see much from the CRC. It would be good to see something at least quarterly. It’s important to be transparent,” Stack said.

“We’re happy to provide reports to the legislature,” Houenou replied.

Stack said major New Jersey hospitals want to do research with Clinical Registrants.

Stack “wants reports back to the legislature… every 90 days. A written report, by email, just so that’s out there.”

“We’re working on the 1st annual report to the legislature and Governor. We do do quarterly reports,” Brown said.

“As much information as possible. What about what Pennsylvania is doing with medical?” Stack asked.

Brown noted the special meeting this week addressed NJ Clinical Registrants.

Delta-8 Hemp Problems

“I hear more and more complaints about people just straight up selling marijuana. There’s something called Delta 8. Does the CRC have any involvement in that?” Senator Joe Lagana (D-Bergen) asked.

“The Commission only has oversight over licensed businesses and those businesses seeking licenses,” Houenou said.

They don’t have the authority to go after the legacy operators and hemp shops.

“We engage with law enforcement and local officials to alert them to who is licensed,” Houenou said.

“We also talk to our legacy operators,” she explained.

Houenou said they encourage them to come over to the regulatory side with the doors open as wide as possible. Many of them want licenses.

“It certainly has impacted legal sales. More should be certainly done,” Brown said. “Those products are coming from other states.”

“Is it the obligation of local law enforcement to deal with? It just seems like it’s happening… and there’s no real authority to do it,” Lagana said.

He wanted them to shut down legacy and hemp shops.

“What we see in gas stations are in these hemp products. Those have proliferated because of the 2018 Farm Bill,” Brown said.

He said they have spoken to the NJ Attorney General Matt Platkin and coordinated complaints to appropriate agencies.

“Should we move to ban those types of sales?” Lagana asked about hemp.

“I can’t comment on pending legislation. They do pose challenges,” Brown said.

“Adults and kids are going to these types of places. They’re getting high. It’s bootleg. It’s not even made in labs,” Lagana said.

“We shut down 2 businesses in Union City. We need to see guidance,” Stack said. “Police don’t know what to do.”

Labor Peace Agreement Issues

“What is the timeline operators are required to have a Labor Peace Agreement (LPA)?” Senator Troy Singleton (D-Burlington) asked.

This was regarding Curaleaf losing its license and regaining it.

Houenou noted there’s a 200-day deadline.

“We engage with our regulated entities constantly to see where they are,” she said.

“Did they meet that statutory deadline?” Singleton asked.

Houenou noted the need for an LPA.

NJ Cannabis License Business Approval

“How many of those 315 have been approved?” Singleton asked.

“We’re at 70 conversions approved,” Brown said.

Singleton claimed the process started in March 2021.

The Dispensary portal opened last March 2022, not March 2021.

“Are … those small businesses?” Singleton asked.

“There’s businesses of all sizes,” Brown replied.

Singleton noted workplace impairment expert guidance was issued last year. He wanted a deadline for the updates.

“We know it’s a priority. It’s new to New Jersey. We want to get it right. We continue to work to get those standards out the door,” Brown said.

Singleton noted the cost of cannabis and the lack of supply.

Lack of Quality NJ Cannabis Supply Discussed

“What tools does the CRC have at its disposal to put pressure on pricing?” Singleton asked.

“It takes a long time to get cannabis businesses operational. Price does need to be lower,” Brown said.

He explained the industry standard is about 1 cultivator for 80,000 residents in other states. But New Jersey has 1 cultivator for every 400,000 residents.

“We need more cultivators serving this market,” Brown said.

“889 licensed cultivators would meet the standard,” Singleton noted. “We need to move the pipeline. We gotta execute that process.”

“I agree with you,” Brown said. “The cultivators in particular, take a long time to build out and become operational.”

He said 6 months was an outlier versus 1-3 years to be open and harvest. Brown said micro cultivators can launch quicker.

Outdoor Cultivation Issues

“If there was outdoor cultivation in New Jersey, the price would drop by 50 percent,” Brown said. “They do want sun and soil-grown cannabis. It’s all outdoor.”

Then he explained it could be done in New Jersey since it’s done in Vermont. But operators struggle to do so and ultimately opt to grow indoors.

Singleton said operators had problems outside the CRC dealing with towns that don’t want it for reasons “some real and some imaginary.”

He said growing cannabis inside is bad for the environment. Singleton said they should work on outdoor growing.

Senator Mike Testa(R-Cumberland) said, “I can get what I want on the street cheaper. What is being done?

He wants to “eradicate the black market.”

“The police are afraid to deal with that. They think it’s ok to be out there. It’s reaching the kids,” Stack said.

Houenou said they are launching a “Safe Use campaign.”

“You can smell the strong odor of burnt marijuana,” Testa said. “Nobody wants this in their backyard due to the odor.”

He said people could steal weed crops to smoke.

New Jersey Cannabis Advocates Testify

Cuqui Rivera of the Latino Action Network (LAN) noted the stigma issued and said agencies need resources to conduct. She said informal cannabis businesses support Latino families. Rivera lamented the White dominatedsales versus legacy Black and Hispanic businesses. She also lamented the lack of licensed Hispanic businesses.

(Full disclosure I am a member of the LAN Board).

Ami Kachalia of the ACLU lamented the lack of access to capital or money. However, she noted tax revenue would go to help companies. She wanted to track tax revenue going to needy communities.

Rev Charles Boyer wanted 60 percent of licenses to go to minorities because 60 percent of those arrested were arrested. He noted the need for an incubator to help legacy operators to help with technical assistance. Boyer noted the need to account for revenue directly.

“Business owners are being squeezed on all sides,” Houenou said.

“What more can we do as a legislature to make this move along?” Stack asked.

“Happy to work with you,” Brown said.

Houenou noted the legislation was amended, which would help the EDA provide grants.

Eric Richard of the AFL-CIO said Curaleaf shut down a facility that was about to unionize. That’s why the NJ-CRC did not review the license. He explained they helped them unionize their cultivation facility.

Helping Struggling NJ Cannabis Companies

Todd Edwards of the NAACP said they should incentivize investors to encourage access to capital.

Stack asked what money was available.

Brown said explained the $10 million program.

“I don’t think it’s enough. They’re talking about low-interest loans,” he added.

NJ Cannabis Trade Association Executive Director Todd Johnson noted delays in the products, a lack of responses by the NJ-CRC to complaints, and a great deal of red tape to comply with. He said they want an expanded market.

He noted the need to figure out an ideal number of cultivators since other states have too many growers.

“17 is not enough. We need many more cultivators,” Johnson added.

Lobbyist Beau Huch noted some towns favor MSOs and advocated regulating town actions.

New Jersey towns have enjoyed a lot of independence for more than 100 years.

NJ Home Grow Issue Raised

Jim Miller advocated for New Jersey home grow. He noted bills S 342 and S 353 introduced by Singleton and Vin Gopal D-Monmouth) would do so in different ways. One legalizes just medical versus medical and adult use home grow. Both have bipartisan support.

“This is personal to me. I don’t make money at it. The medical cannabis industry has been off the ground for over a decade,” he noted.

Miller said the bills were gathering dust on the shelf since Senate President Nick Scutari (D-Union) is blocking them. He said Singleton requested to make an open forum hearing.

“Thank you for your testimony,” Stack said in reply.

(Heady NJ is throwing a home grow forum tomorrow in Trenton to highlight the issue! Come hear what advocates have to say! Enjoy a fun vibe and network!)

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