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August 27, 2018

Dept. of Health completes Q-and-A postings

Written by Marc Schwarz

The New Jersey Department of Health posted answers to the 530 questions it received on its website concerning the application for the six new Alternative Treatment Center licenses it will issue this fall.

The final of the three batches was posted Aug. 20.

Here are some of the issues addressed:

  • Section III of the RFA states that “Individuals and entities with a 25% stake (in the form of debt, equity, or other financial relationship) in any of the currently permitted ATCs, or entities responsible for the management of currently permitted ATCs” are ineligible to apply. a. What constitutes a 25% stake in the currently permitted ATCs given that they are non-profit corporations? b. Is a trustee or officer of a currently permitted ATC precluded from being a principal, investor, director or officer of an applicant? c. If so, will the DOH accept an application in which the trustee or officer of a currently permitted ATC agrees to fully divest his or herself of a his or her relationship with the currently permitted ATC, contingent upon the applicant being chosen to proceed in the permitting process? “As the potential applicant notes, 25% means any individual or entity that maintains debt, equity, financial relationship or any other interest of an existing ATC that equals or exceeds 25%. Board members, trustees, and officers of non-profits would be considered to have an interest in that non-profit. Regarding the last question, contingent divestment of a relationship with an existing ATC will not be accepted by the Department.”
  • Is an applicant required to disclose a criminal violation on his or her Personal History Disclosure that was expunged by judicial order? “If your criminal conviction was expunged by a court of competent jurisdiction, then disclosure of the conviction is not required. If you have questions regarding an expungement, you should consult an attorney.”
  • What are the minimums and maximum amount of square footage that N.J. is looking for in a facility? “There are no minimums or maximums.”
  • What exactly is meant by market diversification? Is the state looking for additional product lines or forms of medical cannabis? Or is the state looking for more diversity among producers? If looking for more diverse producers, does this bar existing out of state producers from applying? If not barred, are existing producers or associates or employees of existing producers allowed to enter into joint ventures to seek a new license? “The Department is seeking diversity in all aspects of the operation, including but not limited to products, producers, and location. There is no residency requirement for applicants. Refer to pre-application conference materials for additional information.”
  • Regarding what type of products applicants can propose – questions were asked about the possibilities of oils, capsules, vape cartridges and edibles. “Pursuant to N.J.S.A. 24:6I-7, an alternative treatment center may package and directly dispense marijuana to qualifying patients in dried form, oral lozenges, topical formulations, or edible form, or any other form as authorized by the commissioner. Edible form shall include tablets, capsules, drops or syrups and any other form as authorized by the commissioner. Edible forms shall be available only to qualifying patients who are minors.”
  • Can a person be part of two different applications? Example: Bob is a member/owner of Company A. Bob is also a member/owner of Company B. Are both Company A and Company B permitted to apply for a license if Bob is a member of both companies? If so, is it also okay if both Company A and Company B are applying for a license in the same region? “Any entity currently holding a permit issued by the Department to dispense medicinal marijuana, including affiliates, is not eligible to participate in this RFA. Individuals and entities with a 25% stake (in the form of debt, equity, or other financial relationship) in any of the currently permitted ATCs, or entities responsible for the management of currently permitted ATCs are also ineligible to apply. If you are eligible to apply you may be involved in one or more applications.”
  • Can ownership/funding of the licensed business be transferred to another corporation which is wholly owned by the original applicant corporation?  “An ATC permit is not assignable or transferable without Department approval, and it shall be immediately null and void if the alternative treatment center ceases to operate, if the alternative treatment center’s ownership changes or if the alternative treatment center relocates. Refer to N.J.A.C. 8:64-7.5 (b)”
  • Regarding Criterion 2, Measure 1, Point 3, which allocates 20 points towards the “residency of owners, board members, officers and managers,” is New Jersey residency preferred and the only means of receiving all 20 points is to have all owners, board members, officers, and managers be residents of New Jersey? “New Jersey residency is not the only means of receiving the full 20 points. Rather the goal of this measure is to assess ties to the community and history of community involvement.”
  • Can applicant partner with an existing ATC license holder to acquire sufficient supply? Can that ATC license holder be outside the region in which distribution would take place? “The Department may allow for sales between ATCs, with Department approval.”
  • Should we be granted a license, how do we legally source our seeds/clones to begin our operation? What kind of options do we have? “There are no Department of Health regulatory requirements as to how to source seeds or clones to begin operations.”
  • It’s tough to find real estate that qualifies in a densely populated state. Given the challenges will the Department allow two applicants to apply to one address without disqualifying both applicants? If so, how will it work if one applicant wins or if both score in the top 2 in the region? “Two applicants may apply with the same address. If site control does not break the tie, then the selection committee shall give the award to the applicant that best expands access to current qualified patients.”
  • What is the difference between “Provide cost-effective medicinal products to qualified patients and their caregivers” and “Ensure their proposed products are affordable to the patient population” and “Applicants are encouraged to submit proposed/sample pricing information?” “Cost-effective is a measure looking at how applicants intend to keep prices down in relation to the rest of the market. Affordability is looking at what sort of market research the applicant has done and whether or not their products will be affordable. Proposed sample pricing information is one way to support this explanation.


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