N.J. will allow more legal weed companies to grow cannabis to boost slowly growing market

February 8, 2023 · NJ.com

With New Jersey’s legal marijuana market off to a slow start, state officials announced Wednesday they would eliminate the cap on the number of companies allowed to grow weed and make $10 million in grants available to people opening a cannabis business who have been convicted of marijuana offenses or come from poor communities.

The state Cannabis Regulatory Commission agreed to let lapse the 37-license limit on cultivators, a rule that would have expired later this month. New Jersey is nowhere near that number, with just 11 companies that grow both for the medicinal and adult-use market and another six that serve only the medicinal program, Commissioner Maria Del Cid-Kosso said.

New Jersey has 1 license per 197,000 residents, far below the national average of 1 license per 31,000 people, she said.

New Jersey also has the fewest number of operational licenses compared to 15 other states with legal weed markets, she said, recommending the commission remove the cultivator limit.

Officials from the state Economic Development Authority also addressed the commission to discuss how it intended to help people of color, people with prior marijuana convictions and people from economically disadvantaged communities enter the market, currently dominated by large, white-owned multi-state companies.

Tai Cooper, Chief Community Development Officer for the EDA, described how a $10 million pool of money would be distributed to aspiring entrepreneurs. One program offers technical assistance and a $150,000 grant to 24 social equity applicants who hold a conditional license but have not yet lease or bought property or secured local land use approvals. The other program offers a $250,000 grant but no technical assistance to an additional 24 conditional license holders who are “further along in the process,” she said.

Anyone can apply for the $250,000 grant program, Cooper said. But the EDA will set aside 40% of the grants for social equity applicants — people who had marijuana convictions or come from disadvantaged communities — and 5% for license holders who plan to operate in “impact zones,” and people who come from communities disproportionately affected by the War on Drugs, she said. The license holders will have some freedom on how the money is spent but the EDA will dole it out gradually and monitor expenses, she said.

The EDA will start accepting applications in late February or early March, Cooper said.

“This is exciting for our state,” Cooper said. “I have to give kudos to our governor for having the foresight to understand that social equity has to be at the center of what we are doing with the new programs.”

There is deep concern among social justice organizations and Black entrepreneurs that people of color — who were three times more likely to be arrested and convicted on marijuana offenses — are getting shut out of the market. During the meeting, Commissioner Charles Barker expressed disappointment that people of color and from neighborhoods hardest hit by marijuana arrests and convictions are not represented yet.

The issue of racial equity arose again during the discussion about how much money the state has collected in Social Equity Excise Fees.

Vice Chairman Sam Delgado, who chairs a committee on the fees, reported the state last year collected $214,482 in social equity fees, which are calculated based on one-third of 1% of the average retail cannabis price. For every ounce sold, at the average price of $455.56, $1.52 goes into the social equity fund, he said.

With the growth anticipated in the market, fees are projected to rise to $1.5 million this year, Delgado said.

Five public hearings seeking advice on how the money ought to be sent generated many suggestions that fell into four categories: economic and community development, criminal justice reform and reinvestment, workforce development and youth services, and public health, he said.

“Many members of the public stressed that cannabis revenue should not be used to fund criminal law enforcement and instead be targeted to community-based organizations,” he said.

The commission will share the recommendations with the governor and legislature, which have the final say on how the money is spent, Delgado said.

Barker said the amount collected is too low compared to the billions of dollars that had been spent by police enforcing marijuana laws that studies have shown meant harsher penalties for Blacks and Latinos. He cited a 2021 report by New Jersey Policy Perspective that found the state spent $11.6 billion over the past decade to enforce the drug war, or about $1.2 billion a year.

“It’s going to take significantly more money to realize the human and community investments that are necessary to provide restorative justice,” he said.

The commission also approved:

  • 49 conditional licenses for applicants who have 120 days to complete the local approval process, lease or buy real estate or meet other obligations to obtain a license to grow, sell or manufacture cannabis products for the recreational market.
  • Converting 11 conditional licenses to annual licenses, having completed the full application process.
  • 10 annual licenses to grow, sell or manufacture cannabis products.

There are 21 retail shops that sell cannabis products to registered patients and adults 21 and older, and six dispensaries that serve only registered patients.

Recreational weed sales, which began in New Jersey last April 21, generated $196.5 million from April through September, according to the most recent information from the commission. (Full Story)

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