NJ Cannabis Media -
January 4, 2019

Planning now for no cap on licenses

Written by Marc Schwarz
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How does a future with an unknown quantity of Class 4 Retailer licenses affect business plans today?

That’s a situation those wanting to enter New Jersey’s potential adult-use cannabis and expanded medical marijuana industry – as well as the lawyers advising them – are trying to figure out.

Of the many revisions to the New Jersey Cannabis Regulatory and Expungement Aid Modernization Act (S2703/A4497) which would legalize personal use cannabis for adults, one that has a large impact is the removal of a cap on the number of licenses to be issued.

An earlier draft of S2703 called for a maximum of 218 licenses. The version passed through committee in November struck out specific breakdowns of how many and where the licenses would be awarded – at least two licenses per legislative district; 40 at large licenses; and a maximum of 98 medical licenses – and replaced it with the following language:

Establishing the number of cannabis retailers: (a) Assuming there are sufficient qualified applicants for licensure, the commission shall issue a sufficient number of Class 4 Retailer licenses to meet the market demands of the State, and giving regard to geographical and population distribution.

What does this mean for potential applicants?

“I look at it this way. When there’s no cap, they’re really telling us they’re going to produce as many as are needed based on demand,” says Robert DiPisa, co-chair of the Cole Schotz Cannabis Group. “No one really knows what the demands are going to be or not be. It’s really speculative.

“What I’m telling my clients is, we’re still going 100 miles an hour. You still want the first licenses that are coming because when you get close to the end and then all of a sudden they close the books, you don’t want to be left out when there are no licenses left.”

For Bill Caruso, the managing director at Archer Public Affairs, the lack of a statutory cap allows for flexibility.

“We don’t know whether this will lead to more licenses or less. The regulatory structure is more nimble. That number can grow or shrink based on the demand,” he says.

That also gives the state and the regulatory commission the ability to make adjustments along the way.

“I’ve been very much engrossed in the racial and social justice side of this debate,” Caruso says. If the goal here is to allow for more licenses to go to small minority-owned, women-owned and veteran-owned businesses, I think the ability to have a regulatory commission helps from the constitutionality standpoint of the legislation. And it allows for the nimbleness of the process, to be able to say we need more of these types of licenses and less of these types of licenses.”

That “nimbleness” may become most apparent with regard to the micro-business licenses which allow businesses to operate on a smaller scale. The current language calls for 10 percent of adult-use licenses to be set aside for micro-businesses.

“That’s going to be the most competitive market,” DiPisa says, adding that most of the calls he receives are concerning micro licenses. “There’s more there for the New Jersey resident who wants to break into the industry.”

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