New Jersey’s commission to regulate the sale of cannabis announced its first set of rules Thursday afternoon, bringing the state one step closer to opening dispensary doors for legal weed sales.
Many of the rules unveiled by the Cannabis Regulatory Commission favor local entrepreneurs from diverse backgrounds by giving them priority over multi-state operators in the licensing process.
That could address concerns many have voiced. Nearly all of New Jersey’s 12 currently licensed medical marijuana companies have out-of-state ownership. Local entrepreneurs have worried they will struggle to compete in the growing market.
The legal cannabis law signed by Gov. Phil Murphy in February set a deadline of Aug. 21 for the commission to establish its rules. While the law lays out the types of cannabis business licenses that will be available in New Jersey, it left the commission with autonomy to craft the industry.
“This has not been any easy process by any means,” said Charles Barker, one of the commissioners. “Everyone may not be satisfied, and there is still more work to be done. Know that we welcome that challenge.”
To meet the deadline, the commission drafted the most necessary regulations. They will continue work on the full rules to guide delivery, distribution and wholesaling, said the commission’s executive director Jeff Brown.
The law will allow only 37 new marijuana growers to be licensed before February 2023. But it did not set limits on the other types of licenses, which include manufacturing, delivery, wholesale, distribution and retail.
According to the commission’s rules, microbusinesses, which have 10 employees or less, will not count toward any license limits the commission sets. They also can pay just 50% of the licensure fees larger companies will face, but 100% of their ownership must reside in New Jersey.
The commission will also give priority to social equity businesses, those in “impact zones,” or municipalities unevenly affected by marijuana prohibition, and to those run by women, racial minorities and disabled veterans. The social equity businesses must have 50% ownership by people with previous marijuana convictions or by those who have spent five of the last 10 years living in economically disadvantaged areas.
“Focusing on microbusinesses and social equity first is the right direction to head in,” Ed DeVeaux, president of the New Jersey CannaBusiness Association, said in a statement. “The NJCBA has always stressed the importance of widening the market to allow as many cannabis entrepreneurs as possible.”
The licensing process will include background checks, but a criminal conviction will not necessarily bar someone from obtaining a license. If a person can demonstrate their rehabilitation to the commission, they could still move forward.
Now that the commission has regulations in place, a timeline for legal sales to begin takes shape. The board must pick a date within 180 days for the first sales to people 21 and older.
The commission rules say that people 21 and older can purchase and possess one ounce of cannabis products. This conflicts with the decriminalization law, which allows people to possess up to six ounces without any legal consequences.
Only businesses licensed to grow, process and sell medical marijuana to authorized patients currently operate in New Jersey. But many of these dispensaries will sell weed to the public, too. According to the regulations, the dispensaries must show they can legally grow, process and sell recreational marijuana in their home cities and towns, certify they have sufficient product to serve patients and customers 21 and older and that they will not make operational changes that favor the legal market over the medical one.
When determining if they can sell to the public, the commission will consider the total number of patients in the state and enrolled at that specific alternative treatment center, statewide and dispensary inventory, the amount of marijuana being grown in the state and at the facility, and the amount needed to serve patients.
They will also see higher fees. To expand a medical operation that grows, process and sells marijuana out of three facilities, alternative treatment centers will have to pay as much as $1 million.
The rules become effective upon filing with the Office of Administrative Law, and remain in place for one year.
The regulations became available just two days before municipalities must decide if they will allow, restrict or ban weed businesses from their borders. The law gave cities and towns the autonomy to decide where, how many and which types of cannabis businesses they would welcome, but some local officials have said it is difficult to navigate the process without available rules and regulations from the commission. Many have decided to ban all businesses for now and reconsider later, waiting to see how they affect other cities and towns that move ahead.
Earlier this year, Brown implored municipalities to wait for the rules and regulations before making their decision. On Thursday, he said the commission will welcome changes to those ordinances now that municipalities can see the final rules.
“It’s been a long road to get here,” said the commissioner’s chair Dianna Houenou. “And for many, really too many people, it’s been a decades-long effort to push the state of New Jersey to abandon its prohibitionist policies.”