WHAT IS CREAMMA?
“The New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act” (CREAMMA), enacted on February 22, 2021, legalizes personal use quantities of cannabis for adults 21 and older, subject to State regulation. The Act concerns the development, regulation, and enforcement of activities associated with the personal use by expanding the scope and duties of the Cannabis Regulatory Commission (CRC) to regulate the licensing and operations of adult-use cannabis businesses.
What is the New Jersey Cannabis Regulatory Commission ("CRC")?
The CRC consists of a five-member panel, appointed by NJ Governor Phil Murphy, charged with overseeing and regulating the licensing and operations of cannabis businesses.
What is a micro-business?
A micro-business is a cannabis business subject to certain size and operational restrictions. To qualify as a micro-business, a cannabis business must meet the following criteria:
- Employ 10 or fewer employees;
- Possess 1,000 or fewer cannabis plants;
- Operate and grow in an area of 2,500 square feet or less;
- Acquire 1,000 pounds or less of usable cannabis per month;
- Acquire for resale 1,000 pounds or less of usable cannabis;
- Acquire for retail sale 1,000 pounds or less of usable cannabis;
- The owner(s) must each be current residents of New Jersey, and have resided in New Jersey for the past two years;
- More than half of the owners, directors, officers, and employees must be residents of the municipality (or neighboring municipality) where the business will be located;
- No person with financial interest or decision-making authority for a licensed cannabis establishment, whether or not a micro-business, can hold financial interest in a micro-business.
What is vertical integration?
The combination or co-location of two or more of the activities of cultivation, manufacturing, and dispensing at one location.
Is there forced vertical integration in New Jersey?
No, there is not forced vertical integration in New Jersey.
Is there a residency requirement to obtain a cannabis license in New Jersey?
No, there is not a residency requirement to apply for and obtain cannabis licenses in New Jersey.
How many NJ cannabis licenses will be granted to micro-businesses?
At least 10% of the total licenses for each class of cannabis establishment will be issued to micro-businesses, and at least 25% of the total licenses will be issued to micro-businesses.
Can a micro license convert into a full license?
Yes, there will be a procedure established to convert a micro-license to a full license, which is not subject to the size and operational limitations imposed on micro-businesses.
What is a conditional license?
The CRC is authorized to issue a "conditional license" whereby applicants need not immediately comply with every regulatory requirement for a full license. Essentially, a conditional license issues after a shortened application process. Thereafter, the licensee has a 120-day period (extendable up to 45 days at the discretion of the commission) to satisfy the conditions for full licensure.
When will the cannabis licensing application period open?
On August 19, 2021, the CRC adopted initial rules and regulations for the recreational cannabis market. Licensing applications will be accepted within 30 days after the initial rules and regulations have been adopted. Accordingly, the application submission process is expected to open soon.
What types of licenses may a cannabis business seek?
There are six classes of licensed operators:
Can you apply for more than one license at a time?
For the first 24-month period following enactment of CREAMMA, a licensed cultivator, manufacturer, wholesaler, distributor cannot also be a licensed retailer. Further, a cultivator or manufacturer may only hold two licenses at a time. This is subject to change after the initial 24-month period.
How many grower/cultivator licenses will be issued?
37 grower/cultivator licenses will be issued during the first two years of legal sales. This limit does not apply to micro licenses.
How long will a cannabis license be effective for?
A cannabis license will be effective for one year, with an option to renew.
How much does the licensing application cost?
Applicants will need to pay 20 percent of the license application fee at the time of submitting the application and the remaining 80 percent only upon approval of their application. Total fees will range from $500 - $2,000. The effective fee schedule can be found here. Bearing in mind that, ultimately, total costs will depend on numerous factors (type of license you are applying for, whether you buy or lease property, the size and location of real estate, application and licensing fees, professional and legal fees, and others).
Can a dispensary sell medical and adult-use?
Authorized adult treatment centers (ATCs) at the time of CREAMMA's enactment will be able to hold both medical and adult-use licenses if the entity can certify that it has enough supply to meet its medical cannabis patient demand.
How will the NJ cannabis licensing scheme bolster social equity?
The CRC will prioritize cannabis licensing applications from certified minority-, women-, and disabled veteran-owned businesses. The CRC will also prioritize business licensing in impact zones (zones negatively impacted by poverty, unemployment, or past marijuana enforcement), applicants residing in impact zones for at least three years, and businesses employing residents of impact zones.
All licensing fees, penalties, and tax revenues will go into the "Cannabis Regulatory, Enforcement Assistance and Marketplace Modernization Fund", to be partially allocated to investments in impact zones.
What are Reasons that the Department will Reject Applications? (not exhaustive)
- The applicant fails to deliver the application by the submission deadline.
- The applicant is not an eligible applicant as defined in "Eligibility"
- An applicant submits more than three applications or submits more applications than they are eligible to submit, in which case all applications may be rejected.
- An application is submitted in a manner other than that specified in the RFA.
- The applicant fails to include required information or fails to include sufficient information to determine whether an RFA requirement has been satisfied.
- The applicant fails to follow the application instructions or presents information requested by this RFA in a manner inconsistent with the instructions of the RFA.
- The applicant provides misleading or inaccurate answers.
- The applicant states that a mandatory requirement cannot be satisfied.
- The applicant's response materially changes a mandatory requirement.
- The applicant fails to respond to the Department's request for information, documents, or references.
- The applicant fails to include any signature, certification, authorization, or stipulation requested by the RFA.
- The applicant initiates unauthorized contact regarding the RFA with a state employee or official.
How Can Applicants Prepare Now For the Upcoming Adult-use Cannabis License Application Cycle?
The first step in preparing for your cannabis license application is to retain a cannabis business attorney.
Among other things, they will guide you through the steps of securing real estate, obtaining local approvals, developing your security plan, environmental impact plan, and quality control plan.
Why a Cannabis Business Attorney is Important
The lawyers at Leaf Legal, P.C. provide comprehensive and experienced legal counsel to New Jersey cannabis businesses in all aspects from the ground up to make sure clients are able to safely navigate New Jersey's adult-use cannabis program with an in-depth understanding of all integral elements of licensure and running a compliant business.
By understanding the complexities of New Jersey's licensure procedures, the attorneys at Leaf Legal, P.C. are able to diligently guide clients towards establishing cannabis businesses. Leaf Legal, P.C. is fully equipped to assist your legal needs in New Jersey's rapidly expanding licensing and regulatory scheme. Contact the attorneys at Leaf Legal, P.C. to request a free consultation.