New Jersey’s adult-use cannabis market continues to take shape. In late May, the New Jersey Cannabis Regulatory Commission (CRC) issued additional licenses, including the industry’s first conditional retail licenses.

Growing Recreational Cannabis Marketplace

New Jersey’s adult-use cannabis sales officially launched on April 21, 2022. In the first month, the state’s 13 approved dispensaries made $24 million in sales, according to the CRC. With more retailers coming online in the coming weeks, the State’s cannabis sales are expected to continue to grow. “It’s really only a beginning,” said Jeff Brown, CRC executive director. “It shows there’s a lot of growth left in this market. There’s a lot of opportunity left in this market still… We anticipate that this will ramp up.”

Issuance of Conditional Cannabis Licenses

The CRC meets monthly and continues to work through the deluge of license applications. According to Brown, the CRC has received more than 1,000 cannabis license applications and is working diligently to issue approvals. The application window for cultivators, manufacturers, and testing laboratories opened on December 15, 2021, while retailers have been able to submit applications since March 15, 2022. “The interest in getting into this industry is tremendous. And certainly, we’re working to move all those forward,” Brown said.

At its May 24, 2022 meeting, the CRC issued certifications for five more expanded Alternative Treatment Centers (ATCs), which have been the first entities approved to sell recreational cannabis. Additionally, the CRC issued a total of 46 conditional licenses, which included: 22 class I cultivator applicants, 13 class II manufacturer applicants, and 11 retailer applicants.

As discussed in greater detail in prior posts, conditional applicants will only need to submit background disclosure information to the CRC, along with a business plan and a regulatory compliance plan. At the time of application, all owners with decision-making authority of the conditional license applicant must prove that they made less than $200,000 in the preceding tax year or $400,000 if filing jointly. Once approved, conditional applicants have 120 days to find an appropriate site, secure municipal approval, and apply for conversion to an annual license.

Conditional license-holders that convert to an annual license will not have to submit the sections of the application that, under the statute, require applicants to demonstrate past experience in a regulated cannabis industry. Conditional license-holders can add new owners in the conditional license phase, provided that the majority of the equity in the business remains with the persons or entities that can qualify for the conditional license. Once ready, the license-holders can then submit a conversion application, which includes submitting standard operating procedures for the business, an environmental impact plan, a workforce development plan, and a security plan.

Conversion of ATCs to Recreational Retailers

The CRC is also making it easier for medicinal cannabis retailers to expand into recreational sales. Medicinal cannabis permit holders that were awarded permits as part of the 2019 RFA no longer have to wait one year to expand into recreational sales. Awardees will, however, have to show they’ve met the full plans of their application for medicinal cannabis, as well as meet the expanded ATC standards. Required conditions include, but are not limited to: municipal approval; proof of sufficient supply to continue to meet patient needs after expansion; plans to ensure patient access; and plans to address social equity and safety.

What’s Next?

After a slow start, the New Jersey adult-use cannabis market is poised to evolve quickly. The CRC meets again on June 23, 2022, and is expected to approve additional license applications.

For businesses interested in applying for any class of cannabis license, it is important to have a knowledgeable team assembled to navigate the application process and complex regulatory regime. Scarinci Hollenbeck has help[ed several clients successfully obtain cannabis licenses in New Jersey for several years.  We encourage you to contact Scarinci Hollenbeck’s Cannabis Law Group for more information regarding applications, CRC regulations, and other legal compliance issues.

If you have questions, please contact us

If you have any questions or if you would like to discuss the matter further, please contact Dan McKillop, or the Scarinci Hollenbeck attorney with whom you work, at 201-896-4100.

This article is a part of a series pertaining to cannabis legalization in New York, New Jersey and the United States at large. Prior articles in this series are below:

• Will New York Allow Cannabis Businesses to Deduct Expenses?
• Are You Eligible for New York’s New Cannabis Licensing Opportunities?
• New York Will Allow Hemp Farmers to Start Growing Adult-Use Marijuana
• Gifting Cannabis Lands New York Retailers in Hot Water

Disclaimer: Possession, use, distribution, and/or sale of cannabis is a Federal crime and is subject to related Federal policy. Legal advice provided by Scarinci Hollenbeck, LLC is designed to counsel clients regarding the validity, scope, meaning, and application of existing and/or proposed cannabis law. Scarinci Hollenbeck, LLC will not provide assistance in circumventing Federal or state cannabis law or policy, and advice provided by our office should not be construed as such.