New Jersey’s recreational marijuana market is beginning to sound like a gold rush.
There’s a reason for that.
Last month, the Cannabis Regulatory Commission approved rules for recreational marijuana, laying out the first steps for what could become a billion-dollar-a-year industry in the state.
While the five-member body focused on efforts to bring minority- and women-owned businesses into the new cannabis market for adults, the existing businesses growing and selling to medical marijuana patients have a definite head start.
That includes early entries like The Botanist, which began as Compassionate Care in Egg Harbor Township in the first round of state licenses, and newcomers like Healing Essentials, which has purchased a property on South Pomona Road in Galloway Township and has big plans for a cannabis cultivation center once the next batch of state licenses for medical marijuana are approved.
“It could happen this afternoon or it could happen in December,” said Lloyd D. Levenson, an attorney for the owners of Healing Essentials.
On Indian Trail Road in the Goshen section of Middle Township, the Massachusetts-based cannabis company Insa is in the same boat, waiting for a state license that was set to be approved in 2019. That company also plans to grow for the medical market at a new facility on the site of a former seafood processing plant.
There are also plans for cannabis cultivation in a former Press of Atlantic City building on Washington Avenue in Pleasantville, and there’s a sign on the window of a storefront on New York Avenue in Atlantic City promising that a medical cannabis site called Be. will open soon.
That’s a few blocks from The Botanist medicinal cannabis location on the Boardwalk.
“There is now a defined route for medical cannabis operators to enter the adult-use market,” said Michael McQueeny, an attorney with the New Jersey Cannabis Trade Commission, an organization of cannabis license holders.
Existing dispensaries, known in New Jersey as alternative treatment centers, will be able to expand into the recreational market if they can show there will be enough cannabis for medical patients.
“They have to demonstrate that the medical community is taken care of first and foremost,” said Edmund DeVeaux, the president of the New Jersey CannaBusiness Association, a group he described as the Chamber of Commerce of weed in New Jersey.
In approving the rules for the new market, members of the Cannabis Regulatory Commission insisted that recreational sales not cause shortages in the medicinal market.
That’s only right, said DeVeaux.
The dispensaries will also have to pay a conversion fee, ranging from $300,000 to $1 million, depending on the size of the operation.
“They can make the transition, but there’s a price to do it,” DeVeaux said. He called the fees appropriate and consistent with what has been done in other states.
The 12 current license holders will have to show not only that they have enough cannabis to supply their current customers who have medical marijuana cards, but that sales to other adults will not impact the statewide supply for the medicinal market.
A 2019 state report found that the existing medical marijuana facilities struggled to keep up with rising demand as the number of patients grew.
“As we’ve been painfully aware, New Jersey is in need of more product and more dispensaries,” DeVeaux said.
Lawsuits stalled a plan to add 24 medical marijuana licenses in 2019. Some local businesses have applications for licenses in that round but do not know when the next step may come. Applicants say they were told all summer to expect a decision on the next round of licenses in the short term, but no announcement came.
“In fact, we’re hearing now there’s no timeframe,” said Steve Reilly, the co-owner and one of the founders of Insa of Easthampton, Massachusetts. The company plans to grow and sell marijuana for the medical market in Middle Township.
The project has support from local officials and an agreement of sale for the former La Monica plant but can’t take the next step until the company has a license.
“We feel like we have a really good application. There’s a good story to tell in Middle Township,” he said. “We’re ready to go immediately as soon as we hear about licenses.”
Once construction is complete at the site, the plants will take time to grow and will need to be tested before any sales if there is a successful first harvest.
“You could be four to six months before you have something that you can sell,” Reilly said.
Mid- to late
fall for retail?
The Healing Essentials property is within the zone where Galloway officials voted last month to allow cannabis production and sales.
Frank Miraglia, the majority owner and manager of Healing Essentials, is a Navy veteran and lifelong resident of New Jersey. Other owners of Healing Essentials include Michael Rabbia and Nicholas Masterpol, operators of Safe Alternatives, a medicinal cannabis facility in Maine.
According to DeVeaux, the existing medical marijuana license holders in New Jersey have been expanding their operations. He could not say all of them would move toward the recreational market but said the existing companies likely will be the first to offer legal cannabis sales to adults.
That could come soon, he said.
“I think we can begin to see adult-use purchases by mid- to late fall,” DeVeaux said.
The state has targeted February 2022 for the start of retail sales, according to staff with Acreage Holdings, a multi-state group that owns The Botanist in Egg Harbor Township and on the Atlantic City Boardwalk.
Brian Sickora, Acreage Holdings’ general manager for New Jersey, indicates they are ramping up production for the recreational market while continuing to supply patients.
“Currently, we are significantly expanding our cultivation facilities in order to meet the additional demand and continue to supply exceptional, consistent products for all consumers in New Jersey,” Sickora stated in an email.
Attempts to contact the owners of Be. were unsuccessful. There are three Be. medical cannabis locations in New York state, owned by Citiva, a subsidy of the national cannabis company iAnthus.
In Cumberland County, Columbia Care has a dispensary on Delsea Drive in Vineland and recently opened another in Deptford. The company has dispensaries in 13 states and the District of Columbia.
The rules approved in August by the Cannabis Regulatory Commission aim to ensure small operators a path into a potentially lucrative business dominated by large-scale companies. That includes low applications fees and special licenses for microbusinesses, with a stated goal of making sure minorities, women and veterans have a chance to own businesses in the new market and that communities hit the hardest by the war on drugs reap benefits from legal cannabis.
In a prepared statement, the Cannabis Trade Commission welcomed the state rules.
“Our operators are hopeful that these new rules create not only a safe and prosperous marketplace for all, but also one that is fair and equitable. As for NJCTA, we will continue to prioritize placing patients, and now consumers, first, by expanding and addressing access and affordability for all New Jersey residents,” it reads in part. “To achieve this, NJCTA plans to continue its engagement with trusted stakeholders statewide, and to work with the CRC to ensure that this is an industry that is reflective of New Jersey as a whole.”
Just because the companies sell to the recreational market does not mean the medical market will go away, DeVeaux said. He expects New Jersey to phase out the sales tax on sales for those with a medical marijuana card.
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