7 Facts About Obtaining a Cannabis License Under New Jersey's Adult Use Legalization Bill

Tomorrow at noon, you can watch the New Jersey Assembly Appropriations Committee review the New Jersey Cannabis Regulatory and Expungement Aid Modernization Act. The Cannabis Regulatory and Expungement Aid Modernization Act legalizes recreational marijuana, expedites expungement proceedings for persons previously convicted of cannabis crimes, and creates the Cannabis Regulatory Commission to oversee the recreational and medical marijuana industries.

The proposed legislation is progressive in that it prioritizes applications for New Jersey residents who live in an economically and socially disadvantaged areas, or persons who utilize union labor. The bill also allocates a certain percentage of licenses for New Jersey residents who are (1) minorities, women or disabled veterans, (2) within certain income ranges, and (3) who want to operate an micobusiness.

The Commission will have six months to adopt initial rules, and thirty (30) days after the adoption to accept applications. Permanent rules must be adopted the following year. The legislation creates a regulatory framework for creating four (4) classes of licenses to serve as a grower, processor wholesaler or retailer. Initially, New Jersey will establish a process to quickly issue conditional licenses. Conditional licenses will account for thirty-five percent of the each class, and persons applying for a conditional license must have a plan for complying with all local and state rules. Persons applying for full licenses must be in compliance with all local rules and regulations prior to the Commission’s approval of the license.

Seven (7) things that you should know about the legislation includes:

  • The legislation priorities applications of persons who has resided in an impact zones for three years prior to submitting an application, and those who intend to use union labor. Impact zones must have a population of at least 120,000 people; ranks in the top third of New Jersey cities for small possession arrests in the year preceding the bill taking effect; a crime index of 1000 or higher, and whose unemployment rate is ranked in the top 15% in New Jersey.

  • The legislation creates an Office of Minority, Disabled Veterans, and Women Cannabis Business Development that is responsible for creating policies and procedures for certifying minority, disabled veterans, and woman owned businesses including the formulation of a social equity program designed to ensure that persons from economically and socially disadvantaged communities receive at least 30% of the new recreational retail licenses and 30% new of the medical cannabis licenses. The Office would also be responsible for ensuring that at least 15% of the licenses are provided to minority, disabled veterans or women owned certified cannabis businesses.

  • The legislature requires that 35% of the licenses for each class would be conditional licenses be granted to a significantly involved persons who are New Jersey residents for two years prior to the submission of the application, and the person’s wages during this period must not exceed $200,000 a year or $400,000 a year if filing a joint return. The significantly involved person must own at least 5% of an investment interest or a group of people who own at least 20% and has the authority to make controlling decisions.

  • The legislation requires that 10% of the licenses in each class or 25% of the overall licenses would be designated for microbusinesses. Microbusiness licenses may only be held by persons who have been residents of New Jersey for two years prior to the date the application is submitted. The microbusiness license can also be a conditional license.

  • Local municipalities may elect to prohibit cannabis establishments or certain activities. Local ordinances prohibiting cannabis activities that were adopted prior to the bill’s enactment are null and void. Cannabis activities will be allowed in cities that fail to adopt an ordinance within six (6) months of the Commission’s adoption of the initial rules.

  • The bill authorizes indoor and outdoor consumption areas.

  • A state sales tax of 5.375 percent will be charged on the retail sale of recreational cannabis items. This tax is in addition to the current sales tax of 6.625 percent. Local municipalities may adopt an ordinance to charge an additional 2 percent sales tax on recreational cannabis.