The networking event Canna Pop Up offered an interesting look into the nuances of the NJ cannabis industry as it’s developing into the Green Rush in New Jersey.
It was run by Robert Allen and Holli Ehrlich, their post-COVID first event after holding digital events during COVID. It was held in Parsippany in Morris County in a nondescript office park. The even offered an opportunity to connect with people in the nascent NJ cannabis industry. Comparable to their pre-COVID and digital events, it was focused on those seeking to capitalize on the Green Rush.
NJ Cannabis Industry Insight from Experts
Speakers included New Jersey CannaBusiness Association (NJCBA) Ed DeVeaux. He noted that many of the best opportunities in cannabis are often in ancillary businesses versus those selling cannabis. He employed the often-used metaphor of the American Gold Rush of the 1850s. Many call the budding cannabis industry a “Green Rush.”
The idea of the NJ cannabis industry worth millions or even billions of dollars is a vision cannabis advocates, entrepreneurs, and professionals articulate. It includes enough money generated to build generational wealth, redevelop vacant stores, and sufficient tax revenue to fund public projects.
It is not a vision shared by enemies of cannabis legalization. They claim that so many will be causing trouble and lose money overall since enforcement will be so costly.
He likened the NJCBA to the cannabis chamber of commerce. DeVeaux welcomed people to join if they wished to capitalize on the Green Rush.
Bob Vidal of the Vidal Insurance Agency + Cannasure. Harry Carpenter of the accounting firm Citrin Cooperman, Teresa Kearney of Panacea Payroll, and Brian Ellis of the law firm Bressler, Amery & Ross, P.C. made up the first panel of cannabis professionals.
“We’re two-thirds of the way there,” Bressler Attorney Brian Ellis said about the launch of the NJ cannabis industry.
“We are at the precipice of a brand new industry,” he added.
Preparing for the Green Rush
DeVeaux noted that those who sold pickaxes and shovels to the miners made the most money. The best example of this is Levi’s Jeans, designed to be durable pants for the miners.
“There’s an opportunity for everyone,” Ellis said. “The cannabis space is definitely challenging, but there are also a lot of opportunities.”
“The payroll industry has never been so much fun and interesting,” Teresa Kearney Panacea Payroll joked.
Harry Carpenter of Citrin Cooperman noted the issue with accounting for a plant-touching business is that in the IRS tax code, under Section 280 E, they can’t deduct expenses. Thus, they are taxed on gross profit, not net income. This leaves them liable to have a large tax bill.
Carpenter suggested that cannabis companies set up a separate company for vending non-THC goods of CBD, paraphernalia, and apparel.
Legal NJ Cannabis Business Issues
“Being in this industry, you’re under a huge microscope,” Kearny noted.
She advised that companies not classify workers as 1099 independent contractors like a business versus employees if they truly are employees since this will draw the attention of the IRS.
A panel of cannabis entrepreneurs included Daniel Taveras of Stasharoo, Justin Johnson of the web aggregator BudsFeed + Chill, Sara Gluck of Ken Ahbus, which makes cannabis apparel, and Oleg MaryAces of Lock & Key Remedies which sells CBD.
They noted how difficult it was to cope with Google, Facebook, and Instagram, which do not like cannabis companies advertising. Many have horror stories of having their social media account, which had a following of thousands be shut down.
It was suggested that companies collaborate with educators and influencers (like headynj.com) for promotion.
Johnson noted it was a transition for him to become an entrepreneur with limited means in the nascent NJ cannabis industry versus an executive at a corporation with well-known clients and large budgets in an established business.
Oleg MaryAces of Lock and Key Remedy lamented the state of the CBD industry.
“The lack of regulations is a major industry issue,” he said.
Most finished products have not been of adequate quality in dosing. Thus CBD products can be hit or miss, especially if bought at a gas station or convenience store.