Want to get into the cannabis business? Study up on regulations and start building connections now, experts say, because once it’s legal, it’ll almost be too late.
New Jersey CannaBusiness Association President Scott Ruder led a panel discussion featuring an accountant, a lawyer and a security expert Tuesday morning. They discussed how to prepare for New Jersey’s potential legalization of adult-use cannabis.
More than 100 guests attended the panel, held at the Imperia in Somerset, to glean valuable information they might wish to apply in the event that they jump into the industry.
“If you have all sorts of retailing experience in other non-cannabis businesses and you sense that you’re going to be able to jump to the cannabis industry as a retailer, you’re going to want to get to know folks who are going to end up becoming your partners, who are maybe going to get processing licenses, and you can grow your team that way,” said Daniel McKillop, chair of Scarinci Hollenbeck’s cannabis law group.
Beyond business connections, connecting with local members of government is also important.
“If you have an idea of where you want to set up shop, make those connections with the head honchos of the municipality. Mayors, board council members, whatever you got. Take them out to lunch and sell yourself, ‘why is this a good idea?’” said Jim Minninger, corporate security specialist at Viridis Security Group.
Throughout nearly two decades of career police work, Minninger told the crowd he “kicked down many doors” and arrested people on marijuana-related charges. That was before deciding for himself that it wasn’t all bad after meeting a family whose daughter used cannabis to address severe medical issues. Connecting with the local government also means connecting with law enforcement, he said.
“Police chiefs have a bunch of concerns. Not only is it going to bring this stoner crowd in, but is it a security risk, is it going to be a target for robbery? Say hey, ‘we’ve got these great security regs that we are doing everything we can to mitigate an event from happening here.’ Let them help you, and let them feel like they’re helping you,” he said.
Obeying the laws means learning the regulations. As regulations aren’t yet set in stone, interested parties can look to other states to get a feel for what the regulations will look like. One common regulation in the legal cannabis space is that cultivation, processing and dispensary facilities are prohibited from operating in close proximity to schools.
“One horror story – a guy that we work with got a location, got a building to put his facility in, spent tons and tons of money with buildouts, and then they were within 1000 feet of a school,” recounted Minninger.
John Pellitteri, partner at Grassi & Co. CPAs, noted that state regulations aren’t the only ones business owners will need to school themselves on.
“You’re also going to deal with local planning and zoning boards. The local officials will still have a say, and don’t forget, too, that there are still those towns that are opting out and trying to stay out of the cannabis world,” said Pellitteri.
And of course, cannabis is still illegal on the federal level. Therefore, according to Scarinci & Hollenbeck’s McKillop, adherence to state law becomes even more important.
“In advising clients about the federal-state conflict, it’s illegal under federal law; but what that means is, you better be complying with every single semicolon of state law, because that’s your saving grace,” he said. “You’re going to be able to say, ‘We’re in strict compliance with every single regulation that our state has put out in the industry, and as such, because of state’s rights issues, we are allowed to conduct this business within the boundaries of New Jersey.’”
The federal illegality throws a wrench in banking, as most federally chartered banks won’t work with money from cannabis. Pellitteri recommends banking with state-chartered banks and credit unions. When the NJCBA first applied for a bank account, the trade association was denied even though they never touch the plant.
“The second time we went in, we got the bank account, but three months in we got the certified letter that said ‘thank you but no thank you,’” NJCBA’s Rudder said. “Now we’re in a bank, and it’s a small institution, but we have a bank and that’s a good thing.”