The NJ Economy Development Authority (NJEDA) held a New Jersey cannabis license industry webinar for entrepreneurs last night since the application for the initial round of cannabis grants opens next week on 4/20.
NJEDA and Access to Capital via Cannabis Grants
“This is a pilot program. This is a pilot we want to scale up and grow. We want folks to be successful and transition from conditional to annual licenses,” NJEDA Chief Community Development Officer Tai Cooper declared. “I’m hella competitive. So I want to make sure we’re outpacing New York.”
“There is no other state agency or financial institution in the nation providing grants to this amount,” NJEDA Managing Director Jenell Johnson said.
She explained it’s very costly to enter the legal cannabis industry. It costs about $3 million for a cannabis cultivator or manufacturer to launch.
In contrast, a potential New Jersey cannabis dispensary retailer only needs a mere $650,000 to $1 million.
“We understand there’s plenty of barriers to entry,” Johnson said. “We recognize there’s a limited amount of real estate out here. The lack of access to capital, the inflation of the rent payments. We hear you loud and clear. Municipal barriers and local controls, we get it.”
She explained the previously laid out qualifications and the amount of money available.
A very limited amount of cannabis companies are going to get a fraction of the amount of money they need.
Johnson explained the many strings tied to their grants, including the limited things they can be used for. For example, there will be fees to apply. But some are eligible for waivers.
Helping Struggling NJ Cannabis Companies
NJEDA Program Manager Genevieve Jones explained they want to help struggling cannabis companies that cannot access capital elsewhere.
“We expect that this application will be oversubscribed and time will be critical,” she said.
Jones explained the many necessary details to apply.
Cannabis companies must fill out very lengthy applications and answer many questions to secure a cannabis grant.
“We would like you to upload evidence that 51 percent of the owners that founded the company founded a company located in any US state or territory,” Jones explained. “If you haven’t started a business, we would ask you to provide information on management, executive, supervisory, or business leadership experience.”
NJEDA Cannabis Grants Details
The Joint Ventures Grant will give out $6 million to 24 cannabis company companies.
Winners will have a conditional or annual license, have obtained site control over their real estate, and have municipal approval. The goal is to support businesses that do not need technical assistance but have many costs.
The grant will be disbursed in two rounds. The first portion will be $100,000. The second disbursement of $150,000 will happen once the grantee receives its annual license and shows it utilized the first disbursement for eligible costs.
A free eligibility tool is available for those looking to qualify.
Eligible applicants formed their business after March 9, 2020, and employ 50 or fewer full-time employees. Some of the allowed uses for the Joint Ventures Grant include rent and mortgage payments, payroll and independent contractors, utilities, legal, accounting, marketing, and more.
Ineligible applicants for the Joint Ventures Grant may qualify for Phase II. The Phase II Seed Equity Grant of $150,000 is for applicants who meet the NJCRC criteria for social equity and have obtained a conditional license. However, they have not secured real estate or municipal approval and need assistance in converting their conditional license to an annual license.
Those who do not qualify for the Phase I grant will be connected to training and other programmatic resources.
NJCRC Diversity & Inclusion Progress
“This is a model unique to New Jersey. These are the largest grants ever in this country given to potential cannabis businesses,” New Jersey Cannabis Regulatory Commission (NJCRC) Office of Diversity and Inclusion Director Wesley McWhite declared.
He explained their goal is to see 30 percent of licenses go to minorities, women, and disabled veterans. McWhite noted the NJCRC had awarded 1,035 conditional licenses thus far. They have given out 251 cultivation licenses, 166 manufacturing licenses, and 618 New Jersey cannabis dispensary licenses. Of those, 404 are micro businesses.
However, only 35 have converted thus far. They have awarded 55 annual licenses.
McWhite said 72 percent are diverse. He claimed the NJ Department of the Treasury had certified this.
“We are meeting our benchmark goals,” he boasted.
He noted their prioritization process.
“We understand the market challenges. They will change over time,” McWhite argued.
Barriers to Entry Hurt NJ Cannabis
“Through partnerships with the EDA and the New Jersey Business Action Center, we are trying, um to turn the tide on some of these challenges and reduce as many barriers as possible,” McWhite explained. “There is more work to do.”
He claimed they have been working on educating the towns that enjoy a lot of power in New Jersey.
“Our municipalities need resources. On our website, there are resources. We are meeting constantly with municipal officials, uh, through our Chief of Staff’s office. We are educating them and connecting them to each other,” McWhite explained.
“Talk to your legislators about the exp that you’re having at the local level. Legislators need to hear from you. A lot of what you are seeing is outside the CRC’s control,” he noted.
McWhite recommended people visit business.nj.gov and njchamber.com.
NJ Legacy Operator to Legal Pathway
“We are crafting a legacy to legal program. We have been dialoguing and talking to individuals from what was known as the “black market,” he exclaimed.
“(The NJCRC) We don’t want to leave them outside this regulated industry. We are trying to create pathways and resources for folks to transition. We understand the challenges,” McWhite declared. “Legacy is here whether it’s in the regulated space or whether it’s still in the unregulated space.”
Cannabis Education for Cannabis Companies
NJ Business Action Center (NJBAC) consultant and noted attorney Jessica Gonzalez explained she is planning a thorough application course for aspiring licensed cannabis companies. The courses will be free and bilingual in Spanish. There will be ten levels with 67 courses.
The most important courses are for those who are minorities, Social Equity, and legacy operators, she explained.
Gonzalez won’t be the only teacher. There will be thoroughly vetted instructors and mentors, she explained.
“We do have this problem in the cannabis industry of predatory practices,” she declared.
“We’re really hoping with the legacy to legal program that legacy operators not only see themselves as students but see themselves as mentors,” Gonzalez said.
She could not give a date when the education program would start.