New Jersey Initial Rules for the Adult-use Cannabis Market

New Jersey Cannabis Regulations

New Jersey Cannabis Regulations

Almost six months after legalizing recreational marijuana use, New Jersey is one step closer to legal sales in the state. The New Jersey Cannabis Regulatory Committee (CRC) regulations were released on Thursday by state officials, outlining the future of the cannabis industry.

We don’t know when legal cannabis sales will begin in New Jersey, but officials have revealed how much it will cost to get started.

Here is a quick overview of what the Initial Rules of the CRC established:

Social equity

The new regulations designate three categories of cannabis companies that will be given priority assessment and approval during the application process:

  • Social Equity Businesses, which are owned by persons who have previously been convicted of cannabis crimes or who have resided in economically disadvantaged regions of the state
  • Diversely Owned Businesses, which are minority-owned, woman-owned, or handicapped veteran-owned and recognized as such by the New Jersey Department of Treasury in one or more of the categories mentioned; and
  • Impact Zone Businesses, which are located in an Impact Zone, are owned by Impact Zone inhabitants, or employ Impact Zone residents. Impact Zones are municipalities with a large population, high unemployment rate, or high numbers of crime or arrests for marijuana.

The laws put in place safeguards to prohibit exploitative business arrangements and misleading license ownership transfers.

The rules also call for the Commission to levy a Social Equity Excise Fee, which is a cultivation fee that has the potential to rise as consumer prices fall and will raise funds for initiatives such as educational support, economic development, and social support services in municipalities designated as Impact Zones.

Provisions regarding consumers’ health and safety

The laws limit under-21s’ access to cannabis companies and restrict advertising so that cannabis is largely promoted to people of legal age. Cannabis companies must control smells, communicate with neighbors who may be concerned about their presence, and develop and implement environmental sustainability strategies.

Cannabis companies will be obliged to have a staff person whom neighbors may phone to report any nuisances in order to promote rapid settlement of issues or complaints from the surrounding neighborhood. Residents will also be able to report concerns to the CRC directly.

Personnel working in a cannabis retail establishment will be expected to make consumer education materials available for consumers, including information on potential adverse effects of cannabis use, safe cannabis usage practices, and indications of substance addiction.

Products sold in stores will be required to come with warning statements about potential health risks as well as the hotline for accessing poison control centers.

The regulations expressly banned the use of cartoons, trademarked pictures, sweets, food, or anything else that may be appealing to children. The laws demand that packages be childproof – both before they are opened and after they have been resealed.

The only edible cannabis products permitted are:

  • Syrups,
  • Pills,
  • Tablets,
  • Capsules, and
  • Chewable forms;

Any kind of cookies, brownies, or other edible products resembling food are prohibited.

The CRC’s initial guidelines include manufacturing requirements that ban the use of any ingredient that has been found to be hazardous to consumers and limit what may be put to vape cartridges and other goods.

Entrepreneurs’ access to the industry

The CRC’s first regulations provide a licensing procedure in which applications are assessed on a continual rolling basis, with Social Equity, Impact Zone, and Diversely Owned Businesses always given priority over others.

The regulations establish and emphasize tiny companies, known as “microbusinesses,” as well as the conditional license procedure, which offers a path for entrepreneurs to enter the market. Conditional candidates will simply need to submit background disclosure information, a business strategy, and a regulatory compliance plan to the CRC.

If they are accepted, they will have 120 days to identify a suitable location, obtain municipal approval, and apply for conversion to an annual license. Conditional license holders who convert to annual licenses will not be required to submit the parts of the application that require applicants to establish prior experience in a regulated cannabis sector, as required by legislation. This adaptable application procedure presents a significant potential for New Jersey-based companies to enter this new market.

Microbusinesses with less than 10 employees and premises no more than 2,500 square feet will be favored, and if successful, will be allowed to apply to expand their operations to meet consumer demand.

Fees to enter the market

The first application fees are designed to be inexpensive, starting at $100 only to submit an application. Annual licensing fees range from $1,000 for a microbusiness to $50,000 for a grower with a growing capacity of up to 150,000 square feet.

Below you will find some charts with the application fees:

Type of License Conditional License Fee Annual License Fee
Microbusiness License ·      Submission fee – $100

·      Application approval fee – $400

·      Conversion application submission fee – $100

·      Conversion application approval fee – $400

·      Annual application submission fee – $200

·      Annual application approval fee – $800

·      Annual cultivator initial or renewal licensing fee – $1,000

·      Annual cannabis manufacturer initial or renewal licensing fee – $1,000

·      Annual retailer initial or renewal licensing fee – $1,000

·      Annual license conversion application submission fee – $200

·      Annual license conversion application approval fee – $800

Standard Cannabis Business License ·      Submission fee – $200

·      Application approval fee – $800

·      Conversion application submission fee – $200

·      Conversion application approval fee – $800

·      Annual application submission fee – $400

·      Annual application approval fee – $1,600

·      Annual cultivator initial or renewal licensing fee – (Depends on the tier, from $5,000 to $50,000)

·      Annual cannabis manufacturer initial or renewal licensing fee – (Depends on the square footage, from $20,000 to $30,000)

·      Annual retailer initial or renewal licensing fee – $10,000

Municipal authority 

The CRC’s initial regulations acknowledge municipalities’ essential role in regulating the emerging cannabis sector, as well as their rights to impose commercial limitations that are appropriate for their communities. While the Commission’s guidelines establish the foundation for running a cannabis business in New Jersey, municipalities have the authority to determine how that unfolds in their areas.

Cannabis businesses will only be licensed by the Commission if they have demonstrated support from the municipality, zoning approval, and have been verified to operate in compliance with any municipal restrictions.

Municipalities can choose their hours of operation, the number and types of licensed companies that operate inside their boundaries, and whether or not to impose a 2% transfer tax on any sales between cannabis enterprises.

They can also enact any requirement or restrictions on cannabis businesses that would apply for other business types, such as requiring compliance with all relevant codes and ordinances.

Municipalities will also be able to weigh in on which applications wanting to operate inside their municipality should be granted a license by the Commission.

These regulations give a thorough rulebook for managing a cannabis facility in the cannabis sector, but further guidelines are required.

After the most important regulations are in place, the CRC will begin assessing the needs of distribution and delivery service businesses and prepare for application approval.

If you need counseling on the cannabis industry, do not hesitate to contact us, and also don’t miss out on our Marijuana Legalization Map where you can browse the current status of laws in every state in the United States and see all our posts on each of them.

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