State regulations, strict town laws, and confusion are making it very difficult for cannabis license applicants to find a good location for a business.
“The most difficult thing… is having a client identify a site that is viable,” Director of the Porzio Governmental Affairs lobbying firm Beau Huch said.
Less than 200 of New Jersey’s 565 towns allow any sort of cannabis company to be based within their borders.
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The problem is that New Jersey has a strong tradition of home rule whereby towns have a lot of autonomy. To make matters worse, many of the towns that will allow cannabis business are not allowing many.
Real Cannabis Entrepreneur Co-founder Gary George is having trouble finding a good location in North Brunswick where “the maximum number of licensed Cannabis Businesses shall be no more than two (2) for each Class of Cannabis Licensed establishment (Classes 1, 2, 3, 4, 5, and 6).”
According to their map pictured above, they are only allowing cannabis companies in a few strip malls and industrial areas.
“It really makes it difficult to find a place,” George said.
Problems Facing Cannabis License Applicants
However, there are even further restrictions imposed by the NJ CRC cannabis license applicants must navigate.
A problem has arisen from the NJ Cannabis Regulatory Commission’s CRC interim regulations that were released in August.
According to their website, the legalization law “prohibits cannabis retailers from being located “in or upon any premises which operates a grocery store, delicatessen, indoor food market, or other store engaging in retail sales of food [or] licensed retail sales of alcoholic beverages.”
It’s clear dispensaries nor lounges are allowed to sell food or liquor.
Huch pointed out that the interim regulations could seem to bar a cannabis company from being in a strip mall that has a separate food or liquor business in it since the rules say cannabis companies cannot sell food or liquor in the same building.
George noted that North Brunswick is only allowing cannabis companies in a few strip malls that already have businesses selling food or liquor. He noted that under that interpretation if a bookstore sells coffee and cookies or a larger retailer has a fast-food franchise inside, that could create problems for a cannabis license applicant seeking to rent space in the same strip mall.
“Zoning is so restrictive, there’s literally nothing there,” George said about North Brunswick.
The North Brunswick Council has already approved one of the two licenses per category they will permit for a dispensary license and a cultivation license.
The NJ CRC did release a FAQ that says “The cannabis business should have its own entrance and/or access point that is not accessible by other businesses in the strip mall,”
“Additionally, applicants must adhere to any municipal restrictions on being located in these areas. Applicants should also note that it will need to be able to comply with other laws and regulations, including requirements to verify patrons’ age and restrictions on displays, signage, and advertisements,” they said.
“The CRC does prohibit cannabis businesses from being located in shopping malls where there is an open corridor or service corridor that allows access between the cannabis business and other stores, and/or retail sales of food and/or alcoholic beverages,” they said on their site.
The enclosed malls are thought to be “shopping malls” versus strip malls which are open to the elements.
While the FAQ clarified dispensaries are allowed in strip malls and not shopping malls, Huch is concerned about the definition of an open or service corridor.
“That one line … applies to almost all the real estate,” he said.
Usually in the back of a strip mall, there is space for trucks to drop off goods via a back door or loading dock which you usually need a key or a code to open.
Most malls and similar buildings have an interior corridor unseen by the public which connects all the stores along with their open corridor.
“Put out several basic CAD (Computer-Aided Design) drawings of what you can and cannot do,” Huch suggested as a solution to the CRC that would help cannabis license applicants.
He noted, the ideal location for a cannabis company is a separate brick and mortar building.
The cannabis license applicants who find a location are likely those with deeper pockets who can hire consultants, lawyers, and lobbyists.
Other issues are not clear as towns remain in need of guidance and the CRC hires staff to fill its offices, which is likely made worse by the ongoing pandemic. The lack of guidance creates problems for cannabis license applicants.
Huch noted many towns incorrectly thought cannabis companies could get a license from the State first and then compete on the local level for one of their few allowed slots when in fact the CRC’s interim regulations say it’s the opposite.
North Brunswick’s ordinance says, “The Administrative Officer shall reject as incomplete, and without any further review, any conditional use application for a cannabis business that is not supported by a cannabis license issued by the State of New Jersey.”
“Towns don’t know who to communicate with,” Huch said.
Locations issues are a problem found throughout the state cannabis markets.