The New Jersey Economic Development Authority (NJEDA) is working to help struggling New Jersey cannabis companies access capital needed to open.
Many have noted that access to capital or simply money is a significant barrier to entry for many into the legal New Jersey adult-use cannabis industry.
The NJ Cannabis Regulatory Commission (NJCRC) has said it wants to help struggling New Jersey cannabis companies and lower barriers to entry. The long-awaited program was first announced last December.
The New Jersey Legislature understands the issue and has sought to address it.
NJEDA Chief Community Development Officer Tae Cooper said New Jersey is a leader in social equity in cannabis with the work they are doing help companies access capital.
“This is an all-of-government approach as we think about cannabis and how we can support cannabis companies,” she explained.
Cooper noted they have met with many New Jersey cannabis companies to discuss the issues they’re facing.
“Access to capital and municipal barriers became a recurring theme,” she said.
Cooper explained the costs to open a licensed New Jersey cannabis company are between $600,000 to $10 million.
“We recognize the costs to enter this space are exorbitant,” she admitted.
“No other state is doing what New Jersey is doing with grants, not loans,” Cooper declared.
A grant doesn’t need to be back with interest like a loan.
Access to capital is an issue throughout the state-legal cannabis industry in the United States.
Cooper said companies that receive NJEDA cannabis grants could leverage them to secure more private investment.
NJEDA Cannabis Grant Pilot Program
Cooper explained that $10 million had been appropriated from the State for their pilot program. She gave an overview of the New Jersey cannabis grant pilot program they have discussed on their webinars.
She noted the first of the two phases, the Joint Ventures grant application portal is opening tomorrow on 4/20. It is only for a small number of very prioritized cannabis applicants that have real estate and municipal approval.
“This is a pilot program,” Cooper explained.
The nature of a pilot program means they start small. Only if it’s successful do they scale to make it eligible for more people.
Multi-Phase Program
NJEDA Program Manager Genevieve Jones said Seed Funding targets those with conditional licenses. $150,000 will be dispensed in increments of $37,500. New Jersey cannabis company owners that want cannabis grants need to enroll in the EDA technical assistance program. It will help them launch their businesses, secure municipal approval, and find real estate.
The goal is to help those close to opening, but still face financial barriers. The money can be used to reimburse people for costs already paid. But it can be used for certain costs subject to EDA approval.
“This is a new and nuanced market. EDA understands it’s an opportunity … for New Jersey to be on the map for cannabis,” Cooper declared. “It really is a comprehensive approach.”
She explained they want to help legacy operators, those who have been in trouble, and those impacted by the War on Drugs.
“Technical assistance was key,” Cooper argued.
She noted that since it’s a new industry, many need to be guided through the licensing and opening process.
“It can be overwhelming. It can be confusing,” Cooper remarked.
She said they “want to build a really thriving market. It has to be done in the right way. It has to be done in a collaborative way.”
Long-term Plans for Access to Capital in New Jersey Cannabis
Cooper said Governor Phil Murphy (D) understands the issues.
“This is the tip of the iceberg. We completely understand that,” she noted. “We want to help people open and thrive.”
Cooper described how they’re working with the NJCRC to build more resources for New Jersey cannabis businesses to access to thrive.
She said they are discussing establishing a Revolving Loan Fund for New Jersey cannabis companies.
Cooper explained that the NJEDA established a revolving loan during COVID to help many small companies, which was successful.
“The mechanics of it make sense,” she noted.
They can loan more money than they give away in grants. It is something the NJEDA has done in other niche sectors.
“You’re literally feeding it in the system that needs it,” Cooper explained.
She said they’re giving out more cannabis grants than any other state.
“We really do lean heavily into the market, what the market is saying, what people in the industry are saying,” Cooper explained. “We’re taking questions from folks who have struggled in the cannabis businesses and who have succeeded. We want these businesses to thrive.”
She said EDA has supported many small businesses in the past. So they’re familiar with the struggles they face.
“That has been our sweet spot for a while,” Cooper explained. “It’s hard to start a business.”
They also want to provide pro-bono legal services to struggling cannabis companies. She noted a few noted cannabis lawyers have already volunteered their services.
“The fees can be exorbitant,” Cooper admitted.
Supporting the NJ Cannabis Market
She noted the NJ Business Action Center (BAC) has a comprehensive cannabis education program available in the coming months. They are working with them as well.
They have looked at what has worked in other states.
The New Jersey adult-use cannabis Social Equity excise fee, where adult-use cannabis tax revenue comes in and can be spent on social programs, could be a funding source for cannabis companies in the future.
The problem in its development was it would only be available after it was needed.
The NJCRC has explained the BAC education program has been funded from it.
Cooper said they want to figure out long-term how to make New Jersey have the most social equity-minded cannabis industry.
