In the 2020 election, New Jersey joined Arizona and South Dakota in legalizing adult-use cannabis. Shortly after that, Governor Murphy signed the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (CREAMM) - officially making adult-use cannabis legal in the state.
Although New Jersey's medical cannabis industry has been active since 2010, there hasn't been much business opportunity. Not only has there been a strict limit on qualifying conditions for medical patients, but the state capped the number of dispensary licenses to a meager twelve. With adult-use legalization, many hopeful entrepreneurs wonder how to open a cannabis dispensary in New Jersey.
Adult-use cannabis sales started in New Jersey in April 2022. The industry is already pulling in millions of dollars each month. However, the only companies to conduct business thus far in the adult-use market are the original twelve medical cannabis operators. Nonetheless, the New Jersey Cannabis Regulatory Commission is finally issuing licenses to new businesses with no official cap on adult-use dispensary licenses. The future is looking bright in The Garden State.
Initial Plans for the New Jersey Adult-Use Cannabis Market
New Jersey opted to "grandfather in" established medical cannabis operations to streamline the adult-use market launch.
It’s worth noting that since the adult-use industry started with medical cannabis businesses, all early production of adult-use cannabis has been done so through vertically integrated business entities. Business operations for a vertically integrated cannabis company are far more complex than those with a stand-alone dispensary. To this end, vertically integrated cannabis companies must grow, process, transport, market, and sell their own products.
Luckily, New Jersey devised new license types shortly after legalization to move away from full vertical integration.
On December 17, 2020, New Jersey officials passed a bill outlining some essential points about adult-use cannabis in the state. As taken from the MJ Biz Daily website, critical issues were explained as such:
Established Medical Cannabis License Holders: would have direct entry into the new adult-use space.
Adult-Use Cultivation Licenses: would be issued to 37 business entities in the new market.
Microbusiness Licenses: New Jersey's adult-use cannabis program was designed to afford more opportunities for small businesses with fewer than ten employees.
Social Equity Licensing Applications: were promised early in New Jersey after adult-use cannabis was legalized. The idea has been to give preference to minority applicants and those living in economically disadvantaged areas.
As New Jersey rolled out its adult-use market in the spring of 2022, it largely followed through on its original plans as presented in late 2020.
How to Apply for a New Jersey Dispensary License
MOST Consulting Group has experience developing applications and winning licenses for dispensaries and cultivators in a number of medical and adult-use states. We can help guide you through the entire process, write the application, and maximize your chances of success. If you'd like more information on our application writing and consulting services, you can read our service page about cannabis licensing or contact us today — we'll explain how MOST can help.
Adult-Use Cannabis License Types in New Jersey
While New Jersey experienced a few delays in getting adult-use sales launched, they have made fast progress in ensuring that medical and recreational customers have adequate product supplies. Moreover, to stimulate the growth of the adult-use market, New Jersey opened applications for several cannabis business license types - including retail stores. They also issued several conditional licenses to operators outside the medical cannabis space in May 2022.
The current status of adult-use cannabis licenses in New Jersey includes:
Class 1 Cannabis Cultivator Licenses: were awarded to 22 new businesses in May 2022. New Jersey is currently accepting applications with no licensing cap.
Class 2 Cannabis Manufacturer Licenses: were awarded to 13 new businesses in May 2022. New Jersey is currently accepting applications with no licensing cap.
Class 3 Cannabis Wholesaler Licenses: have not yet been issued. New Jersey is not accepting applications.
Class 4 Cannabis Distributor Licenses: have not yet been issued. New Jersey is not accepting applications.
Class 5 Cannabis Retailer Licenses: were awarded to 11 new businesses in May 2022. New Jersey is currently accepting applications with no licensing cap.
Class 6 Cannabis Delivery Licenses: have not yet been issued. New Jersey is not accepting applications.
While the application window will remain indefinitely for adult-use licenses in New Jersey, the state has yet to open up licensing for distributors, wholesalers, and delivery services.
The Dispensary Application Process in New Jersey
Excitingly, New Jersey has not set any limits on the number of cannabis business licenses they will issue. Nonetheless, different municipalities can regulate the amount of local cannabis business activity or even impose an outright ban if they see fit.
While you won't run into issues with licensing caps at the state level, you need to pay attention to different towns, cities, and counties in New Jersey. According to the CREAMM Act, municipalities can "enact ordinances or regulations governing the number of cannabis establishments within their borders. Each city, town, township, village, or borough is responsible for establishing its own rules for getting local approval to operate a cannabis business in the jurisdiction."
It's also worth noting that competition for license approval is still highly fierce in New Jersey. Amazingly, the state received approximately 170 applications before granting 11 new conditional retail licenses for adult-use dispensaries in May 2022.
The Point System
Like other adult-use markets, New Jersey adopted the “point system” for selecting license winners. As such, dispensary licenses are awarded to businesses in New Jersey according to scoring criteria such as location, security, ownership, marketing strategy, and financial resources.
The state also implemented a social equity program as an added twist to adult-use dispensary licensing in Jersey. According to the New Jersey Cannabis Regulatory Commission website, “Social Equity Businesses, Diversely-Owned Businesses, Impact Zone Businesses, and applications that receive bonus points will be afforded priority review, scoring, and approval.”
Aside from social equity initiatives, examples of criteria used to score applications in New Jersey include, but aren’t limited to:
- Security: A deciding element of the point system is the security of the proposed cannabis dispensary. That being said, plan on being up-to-speed with the latest security cameras, door locks, security personnel, and safe storage technology.
- Environmental Impact: Environmental protection is increasingly important in the cannabis industry. Before starting your application, research New Jersey's requirements on irrigation water, waste disposal, electrical usage, and pesticide application.
- Financial Stability: A final notion to consider for the anticipated point system in New Jersey is that of financial stability. You must ensure that your operation is adequately funded to meet the demands of the startup environment. If your partners can't present a stable financial picture to New Jersey, you will have difficulty getting a dispensary license.
Tips for Submitting an Adult-Use Dispensary Application in New Jersey
With the New Jersey market poised to "generate about $126 million per year," according to the New York Times, you should not take the application process lightly. Even better, with no statewide licensing cap, New Jersey has plenty of room for entrepreneurs.
If you are planning on applying for a dispensary permit in the New Jersey adult-use market, we recommend that you take the following steps:
- Thoroughly study the New Jersey Cannabis Regulatory Commission website and pay attention to regular updates.
- Conduct proper research to ensure that the municipality where you plan on doing business is issuing adult-use dispensary licenses.
- Explore the New Jersey cannabis industry's social equity program to understand how it will impact your chances of being awarded a license.
- Be mindful of the point system, especially concerning critical factors such as proof of funding and a detailed business plan.
- Plan on paying various application and certification fees for an adult-use dispensary license in New Jersey.
- Work with a professional consulting firm like MOST to get ahead of the competition in securing a dispensary license.
How Much is a Dispensary License in NJ?
Each of New Jersey's different licenses has a different application fee amount, ranging from $1,000-$2,000. Renewal fees, depending on the type of license, can range anywhere from $1,000 to $50,000.
Expansion fees are on the higher end, ranging from $100,000 to $1,000,000.
After accounting for application fees, you can expect to cover the following expenses:
- Property leasing or purchase
- Building remodeling and renovations
- Hiring and staffing costs
- Security system and equipment
- Seed-to-sale platform
In addition to covering the aforementioned expenses, you'll want to show a certain amount of liquid assets to prove financial stability.
Get Application and Launch Strategy Support
Opening a new cannabis dispensary is a daunting task. Since the early days of legal cannabis, investors and entrepreneurs alike have spent millions of dollars on the application process - only to come up short with the point system.
Taking the extra step to work with a professional consulting firm like MOST will help you get ahead of the competition in securing a dispensary license. With the New Jersey market poised to “generate about $126 million per year,” according to the New York Times, you should not take the application process lightly.
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