Today is the first day cannabis cultivators, manufacturers, and testing lab cannabis license applications to operate in the New Jersey adult-use market are accepted.
The application portal on the New Jersey Cannabis Regulatory Commission’s (CRC) website opened this morning at 9 am. Almost 500 individuals and entities established accounts in the first four hours after the CRC started accepting recreational cannabis license applications. By 1 p.m. the application platform was averaging 155 new users per hour.
“We are happy to reach this milestone,” said CRC Executive Director Jeff Brown. “Applications are coming in, the platform is performing well, and we can officially mark the launch of the state’s recreational cannabis industry. Getting cultivators, manufacturers, and testing labs licensed and operating will set the framework and establish supply for retailers who will start licensing in March 2022.”
While there is no deadline to apply, like in the previous medical RFA process, which lasted 29 months, there is a great incentive to apply for cannabis cultivators.
According to the adult-use cannabis implementation law, only 37 large-scale cultivators are allowed in the New Jersey adult-use cannabis market. There are an unlimited amount of micro cannabis cultivation licenses available.
While the 12 licensed vertical cannabis license holders were expected to claim the first 12 cultivation licenses, that is not certain as they must go through a certification process, and two have yet to open their primary dispensary. The 2019 cultivation winners can only do business in the market for a year prior to entering the adult-use cannabis market.
Increasing cannabis cultivation is critical to the New Jersey cannabis market, and cannabis policy experts, advocates, and activists agree there has been a shortage of cannabis flower in the market since its inception which has made the price too steep for many. In addition, legal medical cannabis is often worse than cannabis found on the underground markets.
Manufacturing licenses are also critical to creating products beyond mere flower. Flower, while popular among longtime cannabis connoisseurs and aficionados, does not hold the same appeal for those who do not want to spend time breaking up a plant and filling a pipe or papers with it. Thus, those with manufacturing licenses can make the lozenges and syrups the CRC has authorized.
While the traditional pot brownie and similar products are not currently allowed in the interim regulations, the CRC has since indicated that they will be allowed in some form under the final adult-use regulations, which are likely to be released in August 2022, a year after the initial regulations were released.
Thus, in theory, someone could apply for a license now to make edibles or infused drinks in the long term but stick to lozenges in the short term.
Testing labs are especially critical for the New Jersey cannabis market. Currently, only the State’s Department of Health lab is allowed to review the quality of cannabis currently being produced. This system has been criticized for its slowness and inadequacy for some time by cannabis advocates. The problems likely led to mold being found in medical dispensary cannabis.
The Cannabis License Applications Process
The CRC has a unique prioritization system where social equity is at its center. Under their rules, Social Equity Businesses, diversely-owned businesses, microbusinesses, and conditional license applicants will receive prioritization in the review and scoring process. These include businesses owned by individuals with past cannabis convictions, those from designated Economically Disadvantaged Areas, and minority-owned, woman-owned, and disabled veteran-owned businesses.
Some of those unsuccessful in the 2019 medical RFA will likely be applying for an adult-use license today.
The CRC has released an adult-use cannabis license guide that explains the technical aspect of applying for a license through their website.
It is the first time that this new system is being used. The CRC is likely mindful of the issues that have held up New Jersey cannabis thus far and would like to eliminate them.
They have put out graphics that show all the basic steps one goes through to set up a business before applying.
Cannabis license applications must note everyone who is a “Person of Interest” (POI) which “is any person substantially involved in the financing, operating, or management of a license applicant or license-holder. It includes owners, principals, management services contractors, and financial sources but does not include passive investors, employees, or volunteers.”
In addition, “a “Significantly Involved Person” is person/entity a person that holds at least 5% investment interest in a proposed or licensed cannabis business, or who is a decision making member of a group that holds at least a 20% investment interest in a proposed or licensed cannabis business, in which no member of that group holds more than a 5% interest in the total group investment interest, and the person/entity makes controlling decisions regarding the proposed or licensed cannabis.”
“Applicants are solely responsible for reviewing the rules, the Notice of Application Acceptance, and associated guidance, and for ensuring their application submissions are complete,” the document says.
Unlike previous medical license rounds, the CRC does not plan to release all winners at once, but likely one at a time. While they said they want to review applications in only 90 days, they also said it will likely take longer.
Thus, while the time to apply for an adult-use cannabis dispensary license begins March 15th, CRC Executive Director Jeff Brown indicated they are unlikely to have released any winners who applied today and afterward by then.