A new chapter will open in the history of Tri-state cannabis on March 15th. New Jersey will beat Connecticut and New York by becoming the first to accept license applications for adult recreation retail businesses. All three states approved opening an Adult Rec. cannabis market in 2021, but New Jersey is set to be the first to open its door by at least six months.
The application process for limited cultivation, manufacturing and testing licenses opened on December 15th, 2021.
As with most states, applying for and obtaining a license will not be easy, with several hurdles in the way, including:
- 70% of municipalities, or almost 400 towns have banned cannabis operations
- MSOs are already present in the medical market and are aggressively expanding their cultivation and manufacturing facilities in hopes to dominate the new adult use market
- Although there is no deadline for applying, hundreds of applications for a limited number of retail license and permitted retail locations is expected
So why apply at all?
- $2+ Billion-dollar annual adult use market within four years of opening
- Limited licenses and permitted locations mean less competition and higher profit margins
- 98 Municipalities will allow cannabis retail operators
- First in Tri-state area to bring adult rec sales online
Apply for a license now!
So, while it won’t be easy to get a retail license, if you obtain one you’ll likely have a very profitable business on your hands. We also know from experience from other states that opportunities for finding a permitted retail location will expand as the market becomes established. More municipalities will allow for cannabis retail operators after tax, employment and other benefits become clear. However, having ‘first mover advantage’ by being one of the first operators in the state can do wonders to increase the value of your operation, the ability to establish a brand, build a loyal local client base, and ease expansion of your operations when new opportunities arise. Getting a license now is the first step.
Social Equity
Under the New Jersey application process your chances of obtaining a license are increased if you are a minority, or come from a disadvantaged, veterans or formerly incarcerated group. The New Jersey Cannabis Regulatory Commission has prioritized applications for review, scoring and approval in the following manner:
- Social Equity Businesses Applicants: owned by people who have lived in an Economically Disadvantaged Area of the state, or who have convictions for cannabis-related offenses (expunged or not)
- Diversely Owned Businesses Applicants: minority-owned, woman-owned, or disabled veteran-owned and certified as such by the New Jersey Department of the Treasury in one or more of the listed categories
- Impact Zone Businesses Applicants: located in an Impact Zone, owned by people from an Impact Zone, or employing residents of Impact Zones
- License Applicants receiving bonus points for collective bargaining agreements, project labor agreements or residency
- All other applicants*
*https://www.nj.gov/cannabis/businesses/priority-applications/
Microbusiness licenses:
Are you a native of New Jersey with strong roots in your community? Applying for a microbusiness license might be the right course for you. A significant number of licenses may be issued for this category. New Jersey cannabis microbusinesses will only need to compete against one another during the application process, not against the bigger, better funded MSOs and other large players who want to enter the market. This gives start-up companies and entrepreneurs seeking a path toward market entry an opportunity.
Here are a few of the criteria needed to qualify for a microbusiness license:
- All of the owners of the business must be current New Jersey residents, and must have resided in New Jersey for the past two consecutive years.
- At least 51% of the owners, directors, officers, and employees must be residents of the municipality where the business will be located (or at least an adjoining municipality).
- The business can have no more than 10 employees.
- The business operating space can be no more than 2,500 square feet
Microbusiness applications are currently being accepted for cultivation and manufacturing. Retail microbusiness licenses will be accepted on March 15th. The cap on cultivation licenses do not apply to those applying for a microbusiness cultivation license. *
*https://www.nj.gov/cannabis/businesses/
Current medical market
New Jersey enacted a very limited medical cannabis program in 2010 that has been expanding patient access and business licenses. Gov. Phil Murphy signed the Jake Honig Compassionate Use Medical Cannabis Act law in 2019 which increased the number of conditions to qualify for a medical card and patient count increased rapidly.
23 medical dispensaries are currently operating with 30 more medical retail licenses just awarded in late 2021. New Jersey currently has over 121k registered patients with a total annual market size of under $200 million.
Market opportunity:
The Governors of New Jersey, New York, and Connecticut signed adult-use cannabis sales into law in 2021. New Jersey is poised to be the first of these states to come online. Market projections show New Jersey could have $730 million in sales the first year of sales and increase to a $2+ billion annual market within four years.
Conclusion
Being one of the first license holders and operators in New Jersey will be lucrative in the long run and a prime location to build a national and global brand. The regulations in New Jersey will have strong social equity components for those harmed by the War on Drugs and allow for microbusiness licenses for the little guy. If you aren’t a publicly traded multimillion dollar MSO, you still have a fair chance to get a license and realize your cannabis business dreams. Reach out to Arcview Management Consulting at https://arcviewconsulting.com
Editors’ Note: This is an excerpt from our Monthly Playbook. If you would like to read the full monthly playbook and join the thousands of others you can sign up below.
