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At its meeting on Nov. 9, New Jersey’s Cannabis Regulatory Commission released the 2021 Personal Use (Recreational) Notice of Application. As announced during the meeting, the CRC will begin accepting adult-use applications commencing Dec. 15. Specifically, as of that date, the CRC will begin accepting license applications for cultivation, manufacturers, and testing laboratories, and 90 days later, on March 15, 2022, the agency will begin accepting adult-use license applications for retailers.

Continuing its promotion of disadvantaged businesses, the Notice of Application included significant highlights related to the priority of applications for scoring purposes. Essentially, applications will be accepted on a continuous rolling basis and will be prioritized for review, scoring, and approved in the following order:

Social Equity Businesses Applicants

Diversely Owned Businesses Applicants

Impact Zone Businesses Applicants

License Applicants receiving bonus points for collective bargaining agreements, project labor agreements or residency

All other applicants

Moreover, priority will be given to conditional license applications over annual license applications, and microbusiness applications will be prioritized over standard cannabis business applications in every category. Additionally, bonus points are awarded for applicants who have:

In-State collective bargaining agreements

Out of state collective bargaining agreements

Project labor agreements for facilities

Project labor agreements for associated projects

New Jersey residency of at least 5 years.

Based on the foregoing pronouncements, the most competitive applicant would be a Conditional Social Equity Microbusiness applicant that has or is seeking to enter into a collective bargaining agreement, has a project labor agreement for the buildout of its facilities and has an owner who has been a New Jersey resident for at least five years.

The recreational adult-use program afforded some much-needed consideration to the aspect of equity. New Jersey’s recreational program touches on this point through social equity, impact zone and diversely owned business licenses. However, the diversely owned business licenses are imperative as they afford classes of groups with a history of discrimination against them with some much-needed reprieve. Essentially, New Jersey’s rules allow disadvantaged groups such as minority-owned, woman-owned, and disabled veteran-owned businesses to benefit in the license application process by earmarking a percentage of all licenses issued for disadvantaged groups. According to the rules, at least 15% of licenses are to be awarded to minority-owned businesses, while another 15% are set to be awarded to women and disabled veteran-owned businesses. Building on its promotion of minority, women and disabled veteran owned businesses in the cannabis space, on Oct. 18 Governor Murphy signed into a law a measure that eases restrictions on ownership and investment in medical cannabis dispensaries, provided they are owned by minorities, women or disabled veterans.

This new law allows investors to own an interest of up to 35% in up to seven dispensaries as long as the dispensaries are certified by state regulators as being owned by minorities, women or disabled veterans. This new law should incentivize investors to support more diverse businesses by allowing the investor to have ownership of more than one cannabis dispensary; however, the law does keep in place the cap that limits a single entity to holding only one dispensary, cultivation and manufacturing permit in most instances.

Another unique aspect of New Jersey’s carefully curated plan allows a special benefit for microbusiness licenses. A microbusiness is a subcategory of licenses that have a smaller footprint than a standard cannabis business in terms of operations, capacity and quantity of product as well as limiting such businesses to having not more than ten employees.

Microbusiness license applicants are afforded priority over standard cannabis business license applicants and do not count toward any limitation on the number of cannabis business licenses issued by the CRC. According to the law at least 25% of all licenses will be issued to microbusinesses and at least 10% of the total licenses issued for each class will be issued to microbusinesses. Thus, New Jersey’s plan for equity is unique because it is not aimed at stifling growth or impeding development. Rather, quite the opposite – it expands growth by allowing opportunities to members of disadvantaged communities and builds in a capacity to respond to equity concerns moving forward.

Additional highlights of the notice of application include a pass/fail scoring model. If an application has been deemed complete, it will receive full points. In contrast, an incomplete application will receive no points and be rejected with an opportunity to cure and resubmit, which means that all measures, except for bonus point categories, must receive scores to move forward. Bonus points only count toward priority, and they do not count toward the score necessary for license approval.

The next step is for the CRC to release the online application forms, the lists of Economic Disadvantaged Areas zip codes and Impact Zone municipalities.

Peter Kelly is a partner at Fox Rothschild in Princeton. Vijay Choksi is of counsel at the firm. [/vc_column_text][/vc_column][/vc_row]