New Jersey’s Cannabis Regulatory Commission (CRC) started accepting cannabis license applications today (March 15). Many in The Garden State are excited to begin recreational cannabis sales in 2022. Gov. Phil Murphy, for example, is already counting on millions in tax revenue from legal weed sales in his latest budget. But there’s still a lot to do before NJ’s rec market rolls out.
If you’re interested in joining New Jersey’s green rush as a business owner or operator, the CRC’s website has a detailed guide explaining their standards for licensees, including a 32-page Final Notice of Application. There is no deadline or limit on licenses, so prospective cultivators, manufacturers, and retailers shouldn’t count themselves out of contention before reviewing the requirements.
To help you dig into the weeds of NJ’s licensing process, we highlighted key points for potential applicants or investors to consider.
Whether you are interested in a micro-license, a standard license, or just want to know more about how New Jersey will grant recreational cannabis licenses, here’s what you should know about the New Jersey Cannabis Regulatory Commission’s application process.
Time and availability restrictions on NJ license applications
The CRC says there is currently no deadline for license application submissions, and that applications will be reviewed in order of submission, with respect to priority guidelines outlined below. There is also no limit on the number of cannabis business licenses available statewide.
The only exception is for Class 1 Cultivators (cannabis growers). Class 1 Cultivators, Class 2 Manufacturers and Testing applications have been allowed to apply for licenses from the CRC since December 15, 2021.
While Class 5 Retail licenses are unlimited for now, the state will only issue 37 Class 1 grower licenses prior to Feb. 22, 2023.
Other limitations to be aware of include local caps on the number and type of cannabis business licenses made available in certain municipalities.
Since there is no time or quantity limit to most types of licenses, it’s more important to submit your application correctly than it is to submit it quickly. Review all of the information below and consult the appropriate counsel to ensure your application’s success. Applicants should receive a response from the CRC within 90 days of submission.
If for some reason the CRC decides to stop accepting application submissions, the agency has said that a 30-day grace window will remain open for new submission following the announcement of the new deadline.
According to state guidelines, there is an order of priority for application consideration that puts social equity applicants at the front of the line. The CRC will first review applicants that qualify as Social Equity Businesses, Diversely Owned Businesses, and Impact Zone Businesses. These applicants will also receive bonus scoring and approval opportunities.
Application priority list
The state CRC has published an official priority list showing which application categories will receive priority, in order of rank:
- Social Equity Businesses (conditional license)
- Diversely Owned Businesses (conditional license)
- Impact Zone Businesses (conditional license)
- License applicants with bonus points (conditional license)
- All other applicants (conditional license)
- Social Equity Businesses (annual license)
- Diversely Owned Businesses (annual license)
- Impact Zone Businesses (annual license)
- License applicants with bonus points (annual license)
- All other applicants (annual license)
Conditional licenses are open to applicants with an annual adjusted gross income of more than $200,000 individually, or $400,000 jointly . Annual licenses have no limitations on an applicant’s annual adjusted gross income. See more on these designations below, under “The difference between a Conditional and Annual license.”
Three priority applicant categories
The CRC identifies the following categories as having priority application status:
- Impact Zone licenses
- Social Equity licenses
- Diversely Owned licenses
The state CRC has stated that Diversely Owned Businesses will receive higher priority than Impact Zone Businesses. But these designations are not mutually exclusive. In other words, a single business may qualify as both a Diversely Owned Business and an Impact Zone Business.
Impact Zone license requirements
Impact Zone licenses will be issued to businesses that are “more than 50 percent owned by a current resident or residents of an Impact Zone, who have also resided in that Impact Zone for at least 3 consecutive years at the time of application.”
An Impact Zone is defined as a municipality where past criminal marijuana enterprises contributed to “higher concentrations of law enforcement activity, unemployment, and poverty, or any combination.”
To qualify as an Impact Zone, a municipality must:
- have a population of 120,000 or more
- rank in the top 40% of New Jersey municipalities for marijuana- or hashish-related arrests
- have a crime index total of 825 or higher and a local average annual unemployment rate in the top 15% statewide.
- If a municipality does not have a crime index total of 825, or meet above population requirements, it must meet one of the following criteria:
a. The Impact Zone must be located in a county with a population of less than with a population of less than 60,000, that ranks in the top 40% of municipalities in the State for marijuana- or hashish-related arrests; has a crime index total of 1,000 or higher; but for calendar year 2019 does not have a local average annual unemployment rate that ranks in the top 15% of all municipalities
b. the Impact Zone must have a population of not less than 60,000 or more than 80,000, a crime index total of 650 or higher, and a “local average annual unemployment rate of 3% or higher using the same estimated annual unemployment rates for calendar year 2019”
Regulators want Impact Zone applicants to show intentions to locate in an Impact Zone, or to present a plan and further proof ensuring the applicant’s ability to be operational there within 90 days.
The CRC also wants Impact Zone applicants to show that at least 25% of the company’s employees reside in any of the State’s Impact Zones, and that among those employees, “at least 25% reside in the impact zone nearest to the cannabis business’s location or intended location.”
Social Equity license requirements
The CRC will require proof that Social Equity licensees are more than 50 percent owned by one or more persons that meet the following criteria at the time of application:
- Need to have lived in an Economically Disadvantaged Area for 5 of the 10 preceding years and are a member of a household that has a household income that is 80% or less of the average median household income in the state, as determined annually by the U.S. Census Bureau.
- More than 50% of the ownership interest of the license applicant is held by one or more persons with eligible cannabis charges in New Jersey, or another state, or the federal government, including “at least two marijuana- or hashish-related disorderly persons offenses,” or “at least one marijuana- or hashish-related indictable offense.”
Applicants can prove residency and income with the following documents, including but not limited to:
- a federal, state, or local government-issued identification like a driver’s license; utility bills; correspondence from the Internal Revenue Service or the New Jersey Division of Taxation issued within the past year
- documents from federal, state, or local governments that shows the applicant’s name and New Jersey address and date(s)
- other documents including time-sensitive bank statements, credit card bills, pay stubs, residential lease or rental agreements, or a deed or title to real residential property owned by the individual seeking qualification
Applicants can prove they have qualifying cannabis charges by providing government-issued correspondence or documentation of past convictions which may include but is not limited to:
- court documents
- probation documents
- expungement documents
- the results of a criminal history background check
Review all the Social Equity license requirements here.
Diversely Owned business license requirements
Diversely Owned businesses are defined as minority-owned, woman-owned, or disabled veteran-owned businesses. To prove that a business qualifies as a Diversely Owned enterprise, applicants must provide certification from the New Jersey Division of Revenue and Enterprise Services
- Applicants should note that “certifications from entities other than the Division of Revenue and Enterprise Services will not be accepted.”
The CRC states that “Diversely Owned Businesses are of higher priority than Impact Zone Businesses.” Because of this, “an application from an entity that meets the criteria to be a Diversely Owned Business and an Impact Zone Business will be considered a Diversely Owned Business for purposes of application priority.”
Review all the Diversely Owned license requirements here.
Conditional, Annual, Standard, and Microbusinesses
Another way the CRC is trying to nurture a fair retail cannabis market is with Conditional and Microbusiness applications. These distinctions are meant to lower barriers to entry for qualified applicants.
Conditional and Microbusiness applications will be given priority over Annual and Standard license applications, in order to give smaller companies and social equity operations a chance to compete.
Reference the chart on page 7 of the CRC’s Final Notice of Application for an outline of how applications will be prioritized by category, with 1A being the highest and 10B being the lowest.
For a full breakdown of how applicants will be scored, reference the scoring rubrics on pages 17-29.
The difference between a Conditional and Annual license
According to the CRC, all Conditional applications will be considered before any Annual applications. Conditional business license applicants will need to prove that for the taxable year preceding application, they had an adjusted gross income of no more than $200,000, or no more than $400,000 if filing jointly with another individual.
On the other hand, an Annual business licensee will have no cap on the adjusted gross income of applicants. This will put applicants who have less access to immediate capital at the head of the line. In Massachusetts, social equity candidates have already aligned considerable capital with the power of an early license.
The difference between a Microbusiness and Standard license
A Microbusiness is defined by the CRC as having less than 10 employees, or a facility with a footprint of less than 2,500 square feet. A Standard license contains no limit on the number of employees or the space their location takes up.
This provision should help New Jersey plant sustainable small businesses throughout the dense and diverse state. Some towns have opted to forbid or limit the number of cannabis operators in their jurisdiction, but the unlimited number of micro licenses should ensure wide access for the state’s 9 million citizens, and 116 million annual pre-pandemic visitors.
Review all the Conditional, Annual, Microbusiness, and Standard license requirements here.
What Microbusiness license applicants need to know
Microbusiness license applicants must prove and maintain compliance with the following requirements to stay qualified:
- “Facility will take up no more than 2,500 square feet.”
- “The microbusiness will have no more than 10 employees.”
- For microbusiness Retailers and Manufacturers, monthly volume will
- not exceed 1,000 pounds of cannabis.
- For microbusiness Cultivators, monthly inventory shall not exceed 1,000 cannabis plants.
- 100% of ownership interest in microbusiness licenses must be held by current New Jersey resident(s) “who have resided in the State for at least the past two consecutive years at the time of application.”
- At least 51% of the total number of persons included in the microbusiness license application or license holder, including all owners, principals, and employees, must be residents of the municipality where the microbusiness will be located, or of bordering municipality.
Standard and Annual license applicant reminders
The state’s attempts to create a fair and equitable industry by limiting Standard and Annual may feel unfair to you, but here are some important facts to remember:
- It is in the best interest of the entire cannabis industry to create a fair and balanced market. States like California and Florida are currently scrambling to correct inequities that were baked into their original cannabis legislation. Isn’t it better the contribute to building a fair industry from the ground up?
- Consider using your access to capital so that you can partner with a priority applicant. By arranging a deal that empowers a social equity or legacy operator, you may increase your odds of positively contributing to the growth of the industry from day one, instead of waiting for more Standard and Annual licenses to be given out.
Required fees, forms and supporting documents
A list of fees for Standard, Micro, Conditional, and Annual licenses will range from $100 to $1,600 as outlined here.
The CRC states that: “Submission fees are due at the time an application is submitted. Approval fees are due upon Commission approval for licensure to operate. Applicants who are denied approval for licensure are not required to pay approval fees. Expanded ATC Certification Fees are due at the time the ATC submits its required certifications to the Commission.”
Guidelines also state: “All fees are nonrefundable unless otherwise indicated by the Commission. Failure to pay the required fee at the designated time will result in denial or revocation of the license. Payment must be submitted as a certified check or money order, made payable to ‘Treasurer, State of New Jersey.’”
The CRC application requires 20 points of data for persons/entities “of interest.” It mostly includes official government documents that prove you are who you say you are. Data points will also confirm relevant financial, residential, and legal information needed to prioritize select application types.
Applicants are required to provide business, financial, and operating plans of varying degrees. Applicants will be scored for approval or denial on a rubric that is unique to each category of applicant. Tips for avoiding denial and disqualification include full review of guidelines and rubric, as well as timely/accurate responses, and complete submission of all requested documents.
If there is one overriding message from the CRC, it is this: Do your research and submit a complete, accurate, and true application. The CRC warns that incomplete, duplicate, delinquent, or false applications can lead to permanent disqualification. Unauthorized contact with any Commission member or staff can also cause disqualification. Additionally, seeking to set up shop in municipalities that opt out or limit the presence cannabis businesses could impact your application’s success. So do your research before suggesting that you open a cannabis retailer in a town that has voted against them.
To learn more about how to stay within CRC license applicant guidelines, click here.
How to get help with a retail license application
Even with measures in place to increase license access, the application process is complicated and time-consuming. A successful application may require some legal, financial, and strategic consultation, no matter the applicants’ level of expertise.
All applicants should consider contacting the CRC directly for help with specific questions.
If you want to invest in further consultation, there are a number of private firms that work with applicants in various financial situations. We’ve compiled a list of licensing consultants below if you wish to seek further help with your application:
- Point7 Group
This national team of experts has helped hundreds of applicants nationwide with licensing, compliance, design, strategy, and operations. Point7 Group works with new and veteran cannabis professionals to simplify the process, and their track record speaks for itself.
They’ve won licenses for clients in competitive markets like Ohio, Pennsylvania, California, Michigan, Massachusetts, and Missouri by providing financial modeling, investment decks, and real-time strategies that help their clients secure licenses and launch successful cannabis businesses. Click here to contact the Point7 Group.
- Kaufman Zita Group
The Kaufman Zita Group specializes in New Jersey cannabis applications, and offers business partner matching, team building, and organizational guidance for cannabis operators of all experience levels. Click here to reach out to the KZG team.
- 3C Comprehensive Cannabis Consulting
The 3C team have helped hundreds of clients in 17 countries, 34 U.S. states, and two U.S. territories so far. And they can’t wait to help applicants secure their legal cannabis licenses. With 3C’s help, you will receive executive guidance, proven pitch decks and brilliant financial models that can help secure investors. Project timelines, management support, and financial strategies are also available, as well as application drafting, editing and submission.
Click here to get help from the Comprehensive Cannabis Consulting team.
