What To Expect – Opening a Dispensary in NJ
NJ is legalizing recreational marijuana. Several bills are making their way through the legislature, which Governor Murphy said he will sign.
We aren’t sure yet, what the final licensing process will officially entail. However, by examining the regulations in other legal states and by looking at the NJ MMP, we can get an idea of what the NJ application process might look like.
At the NJ Cannabis Symposium, experts recently discussed these expectations of NJ’s future licensing process:
Get Your $2M ready.
In order to apply for a dispensary license, you must prove that you have a capital sufficiency of at least $2M. You might not plan to spend all two million on the opening, but you must prove access to it.
Expect to spend more than any other industry.
If you do win a license in NJ, be prepared to pay more in taxes than any other industry.
Cannabis businesses are extremely expensive to run. Not only because the industry endures expensive banking, regulatory, and security issues, but also because cannabis businesses cannot claim business expenses.
Dispensaries pay excessive federal taxes on gross revenue as opposed to net.
Licensing fees can also be expensive. The Pennsylvania dispensary license is currently $200K every two years.
Expect Competition – Licenses Will Be Limited
Not only will licenses be expensive, but they may also be extremely limited in NJ.
One of the bills in the legislature restricts dispensaries to only 80 in the entire state. Which is ludicrous considering there are more than 80 bars within one square mile of Hoboken, NJ.
Strictly limiting licenses will make competition fierce, and may open the door to corruption and discrimination.
Expect “A Cavity Search”
If you apply for a dispensary license–prepare for audits–extensive audits of all of your personal & business records.
The panelists from the NJ Cannabis Symposium recently compared the auditing process to a proctologist exam and said to, “expect a cavity search.”
Past bankruptcies and arrests could be a problem. The current NJ MMP dispensary process asks if anyone has ever “been arrested” (Hello discrimination, what happened to innocent until proven guilty?)
If you apply for a license, expect everyone on your team to be audited.
You Team Is Important
A solid team is essential to the dispensary process.
If you’re serious about this industry, and you haven’t begun assembling your team (attorneys, investors, horticulturists, etc.) you are way behind schedule. Start assembling a team now.
Most states have a two-year residency requirement.
Of course, you’ll need to prepare a standard business plan but with a dispensary license application, several other types of plans must also be included.
A detailed operations plan will be expected as well as a security plan, including details of the facility build-out and placement of security cameras.
Dispensary applications must also include detailed quality assurance plans including testing procedures.
Make sure your plans are adequate because there will be fierce competition. To get a better idea of the licensing process, research and review the licensing process of other states.
The NJ cannabis industry is expected to be a $1B industry. Much bigger than Colorado. However, NJ’s licensing process is also expected to be much stricter than Colorado and filled with cannabis-related challenges.
Interested in learning more about NJ’s cannabis industry? Check out the NJ Cannabis Symposium.