legal services in new jersey

Entrepreneur Opportunities: Growing a Cannabis Business

February 2019

An Article by:
Benjamin T. Branche

On January 18, 2010, the New Jersey legislature enacted the New Jersey Compassionate Use Medical Marijuana Act (the “Act”), N.J.S.A. 24:6I-1 et seq.  The Act declared marijuana has beneficial uses in treating or alleviating pain or other symptoms associated with certain medical conditions, and established a system enabling “qualifying patients” and their primary caregivers to register with the New Jersey Department of Health.  With the availability of marijuana being extended to recreational adult users pursuant to the proposed State Senate Bill 2703, “New Jersey Marijuana Legalization Act” (the “MLA”), not only are the number of consumers increasing, but also opportunities for new businesses.

Pursuant to the MLA, it is anticipated there will be 218 dispensaries, two recreational dispensaries in each legislative district, an additional 40 throughout the state, and 98 medical licenses.  Furthermore, the number of growing facilities would increase to a cap of 25, with 15 reserved for medical marijuana alternative treatment centers.  In order to obtain a permit as an operating entity, careful planning is required, which should include:

  1. Funding: Financing a cannabis business requires funding, lots of it. Although the application fee for the most recent RFA (Request for Applications) was $20,000 ($18,000 was refundable to denied applicants), many applicants spent thousands of dollars in preparing their applications.
  2. Key Persons: Experience and an ability to operate a marijuana facility were very important factors considered by the State in the last round of applications. Applicants are carefully scrutinized and must have an unblemished background.  Crucial to a successful application are experts in finance, security, growing, engineering, insurance, law, lobbying, and other areas, all of whom should be acquired early in the process.
  3. Location: Each applicant must demonstrate control of a site for the facility or must have a site under control within thirty (30) days of approval.  Any site must be carefully considered as there will be a limited number of facilities in each region of the state, and each site is intended to serve a certain portion of the population.  A further complicating factor to site selection is that the host municipality must provide written notice that it supports such a facility within its boundaries.
  4. PREPARE EARLY. Submitting a competitive application will be a lengthy process requiring detailed information and, as such, adequate time to prepare. To maximize the likelihood of success, planning early is of the utmost importance.

The most recent RFA was for 6 permits and there were 146 applications submitted.  The application process limited submissions to 300 pages. With a high degree of competition, it is imperative to have a thorough and complete application.

However, under the MLA there may be micro-permits for ancillary businesses that “touch” the plant, and opportunities for ancillary businesses that do not “touch” the plant and do not require a permit.  Such “ancillary businesses” include hydroponics and cultivation products, testing and lab services, lighting, packaging and warnings, security services and equipment, technology and software, banking and payment processing, insurance, “paraphernalia” (marijuana delivery systems), and professional training and education.

For more information on cannabis, please contact Ben Branche of Szaferman, Lakind, Blumstein and Blader, P.C. at bbranche@szaferman.com or (609) 275-0400.

 

 

 

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