How to Open a Dispensary in New Jersey

In the 2020 election, New Jersey joined Arizona and South Dakota in legalizing recreational cannabis. The market gained even more steam with the election of Democratic candidate Joe Biden. With a democrat in the white house, cannabis investors feel confident in the industry's future - even about national legalization. 

With such excitement pervading the nation, many hopeful entrepreneurs are wondering how they can open a cannabis dispensary in New Jersey. 

While the Garden State has had a medical cannabis industry since 2010, it has been fiercely competitive. Not only is there a strict limit on qualifying conditions for medical patients, but the state also capped the number of dispensary licenses to 12. All things considered, New Jersey has been an extremely difficult cannabis market in which to do business. 

As we enter early 2021, there is a great deal of anticipation about the adult-use market in New Jersey. Yet, we are mostly left in the dark concerning many of the application and licensing protocols for the state. Nonetheless, while we don’t know exactly what the application process will look like, there are some proactive steps you can take for opening a dispensary in New Jersey.

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Vertical Integration vs. Stand-Alone Licenses

A critical consideration to make if you want to open a dispensary in New Jersey is what types of licenses the state will be issuing. That being said, 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. Needless to say, the vertically integrated model requires much more sophistication, knowledge, and capital than relatively simple retail models.  

As of early 20201, the only operational cannabis businesses in New Jersey are vertically integrated. According to MJ Biz Daily, “State regulators requested applications in 2019 for 24 new licenses for vertically integrated and stand-alone businesses, including cultivators and retail.” However, these applications were held up in court with a lawsuit and never seemed to materialize before the shakeup of adult-use legalization in the 2020 election. 

If you are considering opening a cannabis dispensary in New Jersey, it’s critical you keep up-to-speed on what sorts of licenses will become available. 

Adult-Use Market Overview in New Jersey

The good news is the hard work is done in getting adult-use cannabis legalized in New Jersey. With the passage of this historical milestone, all eyes are now on the government of New Jersey to see how quickly they can get the new recreational market up-and-running. 

While we don’t have all the specific criteria needed for opening an adult-use dispensary in New Jersey, the state did release an interesting overview of the new market. On December 17, 2020, New Jersey officials passed a bill outlining some important points about adult-use cannabis in the state. As taken from the MJ Biz Daily website, important points are as such: 

  • Current medical cannabis business license holders will have direct entry into the recreational space.
  • New Jersey will issue a total of 37 cultivation licenses.
  • Cities and towns will have the right to ban recreational cannabis businesses if they see fit. 

Beyond these important points, New Jersey is also implementing a “microbusiness” plan for its adult-use market. In essence, there will be much more opportunity for small businesses that have under ten employees. Yet, for both larger businesses and microbusinesses, it remains unclear if New Jersey will be issuing stand-alone dispensary licenses, or staying with the vertical integration model. 

Another exciting point about the New Jersey industry is that the state is taking proactive measures to level-out racial and financial inequalities in cannabis. To this end, they will be giving preference to minority applicants and to those living in impoverished areas.

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The Point System

As previously mentioned, we are still waiting on specific application parameters for adult-use dispensaries in New Jersey. However, we know that New Jersey will likely adopt the “point system” for selecting license winners. 

A point system is a tool used by such agencies as Colorado’s Marijuana Enforcement Department (MED) to choose which applicants best meet the criteria for running a compliant and successful cannabis business. While many of the New Jersey adult-use market applicants will meet minimum standards set forth by the state, only those who win the most points will win a license. 

Many states have utilized the point system in awarding cannabis business licenses, including California, Nevada, and Illinois - to name a few. For purposes here, we will look briefly at the point system used in Colorado as a reference for what to expect in New Jersey. As the Colorado industry has been regularly recognized for best practices, the following points are worth considering.

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 technology in security cameras, door locks, security personnel, and safe storage.

Environmental Impact

Environmental protection is an increasingly important factor in the cannabis industry. Before starting your application, be sure to research New Jersey’s irrigation water requirements, waste disposal, electrical usage, and pesticide application.

Background Screening

As seen in most legal cannabis markets, the notion of criminal backgrounds will likely be a predominant issue in the New Jersey application process. That being said, it’s best that applicants have not been convicted of any past crimes that might disqualify them from winning a license.

Financial Stability

A final notion to consider for the anticipated point system in New Jersey is that of financial stability. You must make sure 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 a hard time getting a dispensary license.

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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