The New Jersey Economic Development Authority launched a pilot program that will provide grants of up to $250,000 to entrepreneurs who seek to establish themselves in the state’s legalized cannabis marketplace.
Under the newly created Cannabis Equity Grant Program, up to $10 million in state funding will be made available to help startups with early-stage expenses, such as regulatory fees, rent, utilities and wages, as well as technical training, NJEDA announced Dec. 21.
To be eligible for a grant, businesses must meet certain criteria, which include holding a conditional cannabis license, employing 50 or fewer workers and forming after March 2020.
Sixty percent of the initial round of grants will be disbursed to qualifying social equity applicants, such as those who have previous cannabis convictions or live in economically disadvantaged areas.
The state also said it will waive the $1,000 application fee as a way to encourage participation in Impact Zones, which are communities that have high levels of marijuana arrests, unemployment rates and other socioeconomic factors.
The remaining funding will be allocated to all entities that have secured municipal approval and site control over their business’ real estate space.
In New Jersey, entrepreneurs face several challenges in entering a market that is expected to be valued at more than $2 billion a year by 2026. Along with high start-up costs and access to capital, prospective business owners are up against more established, multistate operators with years of experience and more resources at their disposal.
NJEDA Chief Executive Officer Tim Sullivan reaffirmed the state’s commitment “to building a thriving and inclusive cannabis sector that maximizes opportunities for underserved communities and people impacted by the War on Drugs.”
“This program is a major step toward that goal. We look forward to continuing to partner with the Cannabis Regulatory Commission to advance additional programs to support entrepreneurs in this rapidly developing sector,” Sullivan said.
“We realize how important it is to empower cannabis businesses, many of which have faced barriers to accessing financial capital in the past,” said NJEDA Chief Community Development Officer Tai Cooper. “Communities that suffered unfairly during the criminalization of cannabis need the chance to benefit from new entrepreneurial opportunities created by cannabis legalization and regulated sales. We want to see these opportunities extended to those businesses that will help fill storefronts, warehouses, and other commercial properties that closed their doors during the pandemic and bring new jobs to communities where there is the greatest need.”
The announcement comes a few days after the New Jersey Cannabis Regulatory Commission reported $116.5 million in recreational cannabis sales between July and September of this year, a 46% increase over the period from late April – when the adult-use marketplace opened – through June.
Moving into 2023, the CRC, which regulates the industry and oversees licensing, has said it wants to see more local, small business owners participate in the market.
CRC chair Dianna Houenou said the board “has from the beginning understood that if we want New Jersey’s cannabis market to reflect the diversity of its residents, and if we want to ensure that it is inclusive of groups that bear the scars of prohibition, then designated access to capital would be essential for some applicants.”
“We have been working with several partners in and outside of state government to identify sources of the capital cannabis entrepreneurs need. We are grateful that it is our own state Economic Development Authority that is stepping up to meet some of that need. I am thrilled to see this program become a reality and I look forward to seeing its substantive impact leading to cannabis entrepreneurs opening for business,” she said.
As part of an ongoing effort to help provide a pathway, Gov. Phil Murphy signed legislation in June allowing the NJEDA to offer financial assistance to qualifying, licensed small businesses.
In a statement following the Cannabis Equity Grant Program’s launch, the governor said it will “help aspiring small business owners meet startup expenses in a pivotal sector within our state’s ever-growing economy.”
“Most importantly, the program will erode considerable barriers to access for communities of color, which this program will help to equip with the resources they need to not just enter, but thrive, in this exciting new industry,” he added.
Senate President Nick Scutari, D-22nd District, one of the bill’s primary sponsors, said, “This program can have a positive impact by supporting diversity in New Jersey’s cannabis industry during its formative stages. As the market continues its successful growth, these grants will help provide more opportunities to a greater number of operators in a larger number of communities to participate.”m