WHAT WE KNOW (AND STILL DON’T KNOW) BASED ON THE OCTOBER 13, 2021 NEW JERSEY CANNABIS REGULATORY COMMISSION WEBINAR

Over 1,000 attendees piled into the 2 hours long New Jersey Cannabis Regulatory Commission (CRC) informational webinar last night. Attempting to provide guidance to both municipal leaders and potential applicant, the CRC kept the contents of this Zoom meeting at a high level, touching on foundational topics such as guidance in starting a business; applying for certifications as women-, disabled-veteran-, and/or minority-owned; the composition of local government structures; the broadstroke differences between a Conditional Application and Annual Application; and a question and answer period.  If you missed last night’s meeting, the CRC will be posting it today. In the meantime, we want to share with you some of the pertinent topics of discussion:

 

  • Filing for a Business

The CRC expounded upon the foundational principles of starting a business in New Jersey. Applicants will be required to file for a business entity here in the State, but must first select the type of entity under which to operate (LLC, S-Corp, C-Corp, etc.). The CRC did not opine on what business entity structure best supports cannabis businesses, so we suggest working with a cannabis-specializing CPA to learn what will work best for your team. After filing, you must then obtain an EIN (your company’s federal tax identification number). This can be done for free through the IRS’ website. 

 

  • Selecting Your License Type

New Jersey offers 6 types of licenses: cultivator, manufacturer, wholesaler, distributor, retailer, and delivery. The CRC noted that they do not yet have rules on Delivery, Distribution, or Wholesale license types. This can certainly disrupt Applicants’ abilities to set forth their plans and strategies to apply for these licenses. 

 

  • Selecting Your Application Type

In New Jersey, there are two types of licenses: conditional and annual. Conditional licenses are prioritized over annual licenses in the application process, and have 5.5 months to convert to an annual license. Annual licenses will undergo the full application process and requires site control and municipal approval. 

 

Check out our blog post on the difference between annual and conditional licenses and some of the basics surrounding adult-use licenses in New Jersey or set up a call for a free 15-minute consultation here

 

  • Municipal Support

Obtaining a property has been, by far, the biggest challenge for would-be applicants in the State. Interested applicants are facing a unique storm: only have 70% of the municipalities opted out, according to Cannabis Business Times (keep in mind that municipalities may opt back into the program); Amazon.com Inc. has purchased a large number of warehouses throughout the State as stated by app.com; and property owners see the opportunity to charge extra to cannabis businesses (otherwise known as the “Green Tax”). If a team can obtain a property, they must have both (1) a letter or affidavit from zoning officials indicating that the proposed location is compliant with local zoning requirements; and (2) a municipal Resolution or letter from the municipal executive indicating that the intended business location is appropriate for cannabis activities. The CRC highlighted the fact that Annual License applicants must have both of these documents. 

 

  • Will There Be a Rolling Application Window?

The CRC mentioned that it will open up its application window at some point in the near future, although no date was provided. When asked if the window will close at a certain point, a representative stated that it would be a rolling application window. Presumably this means that there will be no closing date upon which to submit applications. However, the regulations do provide that the CRC may close its application window when the market demand has been met. What we do not know is the metric by which the CRC will determine that market demand is met and when the window will close.  

 

  • Next Steps

The CRC had received over 500 questions during the webinar and likely received hundreds of emailed questions over the course of the past months. The CRC stated that a list of FAQ answers will be provided, although no date was given. When asked when the Notice for Application will be released, the CRC avoided providing a date. This is likely because many of its rules are still being shaped by public comment and questions. The representatives did, however, provide milestones for its path forward in the following sequence: (1) It will hold its Executive Session where it will announce winners of the 2019 Request For Application Cultivation and Vertically Integrated licenses; (2) it will release data on Impact Zone and Economically Disadvantaged Areas; (3) it will provide a pre-application information session; and finally, (4) it will release its rules on delivery, distribution, and wholesaling. We will be attending the October 15, 2021 Executive Session and will provide details on these milestones as they are announced.

Now is the time to start getting your application materials in order before the adult-use application round begins. Get in touch with us today to begin your business plan! 

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