“We just started discussions very recently about perhaps allowing for a very, very slim amount of home grow applicants… So that’s something we’re actually finally talking about.”
By Sophie Nieto-Muñoz, New Jersey Monitor
New Jersey’s recreational cannabis industry launched one year ago, and Dominic Rivera is nearly $1 million in debt.
The Camden man thought his drive-through dispensary would be open by now, but it took 13 months to get the state to OK his application—approval he received just last week. In the meantime, he is nearly finished with construction, has hired nine employees and has spent thousands on electricity for a store that can’t have any customers yet.
“We’re happy and excited to start serving our community. But we’ve been paying rent for over a year and haven’t made a penny,” said Rivera, who is still weeks away from opening Organic Farms Dispensary. “It needs to go a little faster because this is people’s livelihoods.”
This is a story heard time and time again at monthly meetings of the Cannabis Regulatory Committee, New Jersey’s marijuana regulators. Cannabis entrepreneurs sound off about lost applications, delays without explanations and their unopened stores collecting dust while they shell out for rent and salaries without knowing when they can open.
Recreational cannabis sales launched on April 21, 2022, nearly 18 months after voters approved legalizing marijuana. Consumers could finally shop for legal weed, edibles and vapes at 13 dispensaries.
One year later, New Jersey has 24 recreational dispensaries, all run by multi-state operators that were first approved to sell medicinal cannabis. More than 1,200 conditional licenses have been awarded for cultivation, manufacturing and retail. About 100 annual licenses have been awarded, including 37 converted from conditional to annual licenses, as of this month.
But industry insiders, consumers and even some lawmakers say they expected the Garden State would be further along—more local shops open, better access to capital and transparency from the regulatory body.
Dianna Houenou, chairwoman of the commission and a longtime advocate of legalizing marijuana, said the commission has tried to act in a “thoughtful manner.”
“What we have done well is approaching the launch of this industry with deliberate intention. Setting up the whole industry has been, and it continues to be, a process, and that’s a process that shouldn’t be rushed into haphazardly,” she said. “We want consumers to understand where they can access recreational cannabis, and we want patients to understand that we have not lost sight of them.”
More than $328 million of recreational cannabis was sold from April 21 to Dec. 31, 2022 (figures for 2023 are not yet available). From that, the state has collected more than $20 million in tax revenue.
Senate President Nicholas Scutari, a Union County Democrat who championed marijuana legalization, said in an interview that he thought “we would have more to show for” legalization by now, and he is weighing another legislative hearing with the five-person commission (he called one last year before cannabis sales started). He’s also open to proposed legislation that would overhaul the agency, potentially moving its responsibilities to the state Department of Health, he said.
“Obviously, we’ve gotten a lot of places open, things are working, and they’re moving, but there’s certainly a lot of room for improvement, no doubt,” Scutari said. “We do need to have some oversight because they have an enormous amount of responsibility starting an industry from scratch.”
What’s gone right
While there’s no shortage of criticism from business owners in debt, frustrated investors and consumers eager for lower prices, lawmakers and experts say New Jersey has made plenty of moves in the right direction.
“We were ahead of the curve, ahead of many other states on the East Coast, to get into the marketplace. We got it done, and in some ways, that was one of the best things,” said Scutari.
A highlight of New Jersey’s legalization law, known as the CREAMM Act, is its focus on social equity, an attempt to allow people in communities harmed by marijuana prohibition to reap the benefits of legalization.
A social equity excise fee is imposed on cannabis cultivators and wholesalers, which is $1.52 per ounce, and a social equity tax is tacked on each purchase of recreational cannabis. There’s also an attempt to prioritize minority-, women- and veteran-owned businesses. About 70 percent of all cannabis licenses have gone to businesses with diverse ownership.
Cannabis activist Leo Bridgewater held up social equity as something New Jersey got “really right.” There is diversity among the people getting cannabis licenses and the advocates who advise the Cannabis Regulatory Commission, he noted, and on the body itself, which includes two Black people and a Latina.
Bridgewater characterized the state of New Jersey’s industry as a “remarkable miracle.”
“This has only been in place for what, 12 months?” he said. “You can’t say it’s anything less than remarkable.”
West Coast states that legalized marijuana years ago and handed out thousands of licenses now have to catch up to the East Coast’s prioritization of social equity, while New Jersey made it a part of the equation from the start, he said.
Ami Kachalia, a campaign strategist with the American Civil Liberties Union of New Jersey, applauded programs by the state Economic Development Agency to help licensees secure more capital. A $10 million initiative launched Thursday, with 60 percent set aside for social equity applicants and a cap of up to $250,000.
“We want to make sure essentially that we’re flipping the switch, making cannabis legal so that the people who have been most harmed by illegal cannabis are now seeing the benefit with economic opportunities to move forward,” she said.
Bill Caruso, an attorney who works with cannabis company Columbia Care, graded New Jersey’s first year selling cannabis as a “B-minus.” Caruso applauded the commission as independent and isolated from politics.
“If they’re subject to political pressure, that’s probably not good,” he said. “I understand there’s frustrations, but don’t throw the baby out with the bathwater. There are ways to fix this.”
Bumps in the road
Freddy Cameron, the senior operator of Cookies, a California-based company expanding to Harrison in Hudson County, said he thought New Jersey would be “the promised land to grow our business.”
The store’s franchise owner spent $150,000 for lobbying and legal fees to speed the process, but Cookies still needs state authorization to open.
“I think we may have to come to the conclusion that if these doors don’t open the next two months, then we may just have to lay everybody off and start all over again,” said Cameron.
Some lawmakers have become so frustrated with the commission’s slow approvals that one senator plans to introduce a bill that would shift responsibilities of regulating the cannabis market to a state department.
Sen. Vin Gopal (D-Monmouth) said he’s heard many stories from employees waiting to start work at a dispensary, investors pulling out of businesses and store owners running out of money. The commission needs accountability and oversight, he said.
“I think the biggest question I have is there needs to be clarity around how this is being awarded and what the timelines are,” he said. “I know there are challenges right now, and those should be fixed.”
Scutari agreed it’s time to assess the job the commission has done. He said he’s open to making the process less cumbersome for applicants, adding that while “significant changes are under discussion, none of them are decided.”
Houenou said she sympathizes with eager business owners who want to hang an ‘open’ sign on their doors, but added that some complications are out of the commission’s control—applications missing documents, struggles to secure capital funding and real estate, supply chain issues and municipalities hostile to legal cannabis. Roughly 70 percent of New Jersey towns have chosen not to allow cannabis businesses to open within their borders.
Houenou declined to comment on Gopal’s proposed bill.
“I stand by the commission’s work, and the proof is in the pudding. The numbers we’re seeing right now are very promising and show that the commission’s approach has been bearing fruit,” she added.
Looking ahead, Rivera said he wants to build another dispensary and get involved in manufacturing. A year from now, he hopes there’s less of a stigma surrounding cannabis and that more towns will welcome the product.
Cameron said he wants to open multiple stores in New Jersey but needs to see more help from the Cannabis Regulatory Commission.
“They need to be a true partner, not an organization that works against you. That’s just how it comes across right now,” he said. “The store is spotless right now. We’re just waiting for them.”
Gopal said the biggest change he wants to see is legalizing home grow. New Jersey is one of the few states with legal cannabis that doesn’t allow people to grow marijuana at home. Scutari said the idea is on the table, but he worries about the underground market flourishing while the legal industry is nascent.
“We just started discussions very recently about perhaps allowing for a very, very slim amount of home grow applicants, some of the more significant or serious medical patients,” he said. “So that’s something we’re actually finally talking about.”
Photo courtesy of Chris Wallis // Side Pocket Images.