Trenton — New Jersey CannaBusiness Association (NJCBA) President Edmund DeVeaux provided the following testimony on May 12th, 2022, to the Senate Judiciary Committee during their hearing on adult-use cannabis in New Jersey:
“Thank you, Senate President Scutari, Mr. Chairman, Madame Vice Chair, and members of the committee for the invitation to address the topic of “Access to Capital in the Cannabis Industry.” It is an honor to join you and my distinguished colleagues in discussing this and other urgent matters as it relates to moving the state’s newest significant contributor to our economic, social, and physical landscapes forward.
“As President of the New Jersey CannaBusiness Association, the state’s first and largest trade association founded to help New Jersey develop a responsible, sustainable, diverse, and profitable cannabis industry, I would be remiss if I did not recognize association co-founders Scott Rudder and Michael Turner of Burton Trent Public Affairs. It was Michael and Scott who coincidentally traveled out West with the legislative delegation over five years ago to witness first-hand the emerging adult-use cannabis markets. I could not sit here confidently without their advice and counsel. More importantly, it is with the support of the Board of Directors and membership that I am proudly serving in my second term of what is now widely known as the “New Jersey Cannabis Chamber of Commerce.”
“Before I delve into the heart of my remarks, I would like to offer once again my sincere thanks to you, Senate President for all your work to make cannabis legalization a reality for the state. Your focus on making social justice a legislative priority and stemming the tide of wasted investment in the prison industrial complex speaks volumes of your wisdom and character as you set us down the right path of beginning to correct the injustices of the past and creating future opportunities.
“It is the notion of opportunity that begs the questions “Is there access to capital? Is there access to resources for those we deemed legislative and regulatory priorities?”
“This becomes a moot point if the Federal government would address the disparities in banking and insurance laws and provide equitable access to essential services for small and start-up cannabis businesses.
“The one word that seems consistent in conversations about cannabis commerce is “Disparity.” The reality is all new business start-ups, regardless of market segmentation, require access to capital. What presents the greatest challenge to cannabis start-ups is the lack of traditional avenues of access to certain resources.
“Cannabis legalization does not magically wipe away the devastation wrought upon historic communities of color and poor communities. I would use the analogy that we have prevented certain classes of people from legally participating in the 100-yard dash of the cannabis economy, and other economies for that matter, for years. Now we say it is okay to get to the starting line. When we examine the field, we find that certain participants do not have starting blocks, others do not have running shoes, and oh yes, the rest of the field has a 50-yard head start.
“What New Jersey has done well early is lower the bar to entry to the industry by creating licensing categories like Conditional Licenses where the applicant does not need to possess all local approvals or a site to apply. There is also the Micro License category where the applicant is applying for smaller, scalable operations mitigating certain cost factors. We are pleased that the state has approved over 100 Conditional and Micro Licenses to date.
“Allow me to focus on three aspects of capital and other resource management issues, and how we might better facilitate better access. Those three areas of capital and resource management are personal access, private access, and public access.
“Just last week I participated in a panel discussion on new license holders and what they can expect when pursuing a cannabis license. The new license holder on the panel was a dispensary owner/operator from Massachusetts. The young lady shared her local and state authority administrative challenges. And when asked about investment issues including cost overruns – a natural part of any development project, she said “I went to the Bank of Dad, and he wasn’t always happy about it.” It might have been insulting had she not been such a nice person. This year the New Jersey Institute of Social Justice reported the Black median household income is less than a tenth of White households. Going to the “Bank of Dad, Mom, Grandmom, Cousin, etc.” is not an option. At the New Jersey CannaBusiness Association, we are collaborating with legislators and regulators to make sure that we caution those interested in entering the cannabis market that their investment is done at-risk because of the free-market system we are engaged in.
“Private access to capital by virtue of venture capital and other partnership arrangements is permissible under the current laws and regulations. The NJCBA is proud to have been an advocate for oversight of those arrangements. As the Cannabis Chamber of Commerce, we also make sure that technical resources are also available as we provide networking, webinars, and support other industry-wide activities for support of future license holders and ancillary businesses.
“Public funding of cannabis investment is a little further away, but we are in talks with relevant state agencies about how we make that happen in the most effective way possible. Remember, there are those without starting blocks or running shoes that are 100-yards away from the finish line. What the NJCBA advocates for is an earned-assistance program, where potential recipients of state funds participate in classes to develop or enhance business skills to better protect the state’s investment. Plus, it demonstrates a willingness on the part of the applicant or participant to give, not just receive.
“Thank you, Senate President, Chairman Stack, Vice Chair Pou, and members of the committee, for your time. I look forward to answering any questions you may have regarding the CannaBusiness Association and the evolving cannabis industry in New Jersey.”
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