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A Milestone Year for New Jersey’s Cannabis Industry

As 2023, the first full year of a legal recreational market in our state, comes to close and we look forward to 2024, we reflect on a milestone year for the cannabis industry in New Jersey. Exciting progress has been made, but like all industries in their infancy, we faced our share of challenges, too.

 

Looking Back at 2023

This past year, the NJCTA welcomed five new members to our Association: Holistic Solutions, Green Thumb Industries (GTI)/RISE Dispensary, Camden ApothecaryNoire Dispensary and most recently, Inclusion Gourmet. These diverse members, encompassing a mix of multi-state operators and small, women- and minority-owned businesses, are all valued additions to the NJCTA and have contributed to our goal of supporting our nascent industry’s operators by advocating for rules and regulations that ensure a level and equitable playing field. Reflecting on 2023, I take pride in acknowledging the multiple significant victories achieved by our Association.

 

In September 2022, I testified before the Assembly Committee for Financial Institutions and Insurance about damaging effects that Section 280E of the IRS Tax Code has on legally operating cannabis businesses. Then, I followed up earlier this year with an op-ed highlighting the negative impact of 280E on New Jersey’s cannabis industry. After years of the NJCTA’s relentless advocacy, and with the legislative leadership of Assemblywoman Annette Quijano and State Senator Troy Singleton, on May 8, Governor Phil Murphy signed Bill A-3946/S-340 into law, decoupling Section 280E from the state’s tax code and marking a historic moment for our state’s cannabis industry. With this action, New Jersey’s licensed cannabis operators, big and small, are now able to deduct common business expenses on their taxes like any other legal enterprise operating in the state, providing a more economically viable environment.

 

As anticipated, our state’s legal cannabis marketplace expanded this year, with 350 annual licenses awarded (208 of these were conversions from conditional to annual licenses). However, slow approvals continued to plague the industry. Many aspiring cannabis entrepreneurs were forced to wait on their facility’s final operational approvals for up to 10 weeks after receiving approval from CRC compliance staff. These delays brought some entrepreneurs dangerously close to bankruptcy before their businesses were able to generate their first dollar of revenue. These delays are intolerable and stand in stark contrast to our neighboring state, New York, where operational approvals often take less than 48 hours after compliance sign off on a facility. Shortening this time frame continues to be a top priority for our Association.

 

Moreover, the NJCTA advocates for faster employee badging timelines, a process originally designed to be completed in 7-10 days but instead often leads to weeks, and sometimes months, of waiting. During the Covid-19 pandemic, the NJCTA worked closely with regulators to implement an expedited onboarding waiver process. This allowed businesses to conduct background checks, permitting self-certification for employees while state background checks were in progress. Due to ongoing delays, the NJCTA has requested the reinstatement of the expedited process by the CRC to alleviate strain caused by these delays. Additionally, our members are intentionally looking to hire employees that have been impacted by the War on Drugs, but background checks on these individuals take up to six or seven times longer than others – sometimes more than three months! For operators with urgent hiring needs, this creates a negative bias where the hiring manager is discouraged from hiring those with a record because of how long their background check might take. Addressing these issues in 2024 is crucial for fostering a more inclusive industry so legacy market participants can benefit from opportunities in the legal market.

 

Expanding product choices has been a core mission for the NJCTA since the first set of rules was adopted in 2021. During our years of regular meetings with the Coalition for Medical Marijuana - New Jersey, we’ve consistently heard the desire for an expanded range of edibles, driven by various factors including patients’ needs to consume discreetly. Throughout these years, the NJCTA has actively advocated for this cause with the CRC. Midway through this year, we were pleased when Commission staff recognized and helped push this change forward. This positive decision signified the industry’s progression and maturation and marked a major victory for patients and consumers alike.

 

Education is another key component to fulfilling our Association’s mission. The NJCTA is proud to have sponsored a scholarship for Rutgers Law School’s Certificate in Cannabis Law and Business that provides young aspiring professionals with education on the rules and regulations of New Jersey’s legal cannabis industry. We are excited to continue our support of this program as well as other educational programs offered in the state. Furthermore, we look forward to continuing our successful “Business Builder Series,” the NJCTA’s social equity-driven webinar series that draws in dozens of new and aspiring entrepreneurs and applicants with the opportunity to hear directly from veteran cannabis industry experts. 

 

In a busy year, we still made time to gather and address pressing issues. In April, the NJCTA held its first-ever networking event, bringing licensed awardees and aspiring professionals together with our members to discuss optimizing wholesaling outcomes and best practices. We also sponsored a happy hour following NECANN in Atlantic City, and, just recently, our “Safer Cannabis in Your Municipality” reception at the New Jersey League of Municipalities brought together mayors, governing body members and local officials to discuss the dangers of unregulated intoxicating cannabinoids. At the reception, we shared a municipal toolkit with attendees and overviewed our white paper, which offers insights for the New Jersey State Legislature as they consider legislation to close the loophole in the Farm Bill and safeguard the public from the potential harm of these unregulated products.

 

Moving Forward into 2024

While the third quarter of 2023 witnessed a continued increase in cannabis sales, New Jersey’s regulated industry still lags other states, even those with smaller populations than our 9 million residents. For all of 2023, our market will have almost $800 million in total sales, when adult use and medical sales are combined. That is a far cry from the $1.2 billion in sales that Missouri experienced in its first 12 months after adult use sales began and the expected $1.1-1.3 billion that Maryland will have once their recreational market hits its first birthday. Both states have smaller populations of 6 million. We can and must do better, and that includes confronting the issues facing the industry head-on.

 

·         For a truly safe, accessible and equitable industry, the licensing challenges and delays for new operators must be addressed in a timely fashion.

 

·         The NJCTA will continue to advocate for enforcement on the illicit market and educate consumers on the benefits of buying legal cannabis from licensed dispensaries.

 

·         We will continue to support the Coalition for Medical Marijuana - New Jersey and their efforts around homegrown cannabis for patients. The NJCTA firmly believes the legalization of home growing will expand patient access and improve care. Providing patients with the option to cultivate their own cannabis allows for the customization of strains and control over the cultivation process to create a product that treats an individual’s specific medical needs.

 

·         The NJCTA remains committed to effectively conveying to legislative stakeholders the profound impact that SAFER Banking and the rescheduling of cannabis can have on New Jersey businesses. These moves at the federal level have the potential to ignite huge positive momentum in our industry.

 

Our members look forward to working collaboratively with all industry stakeholders, including the CRC, newly licensed operators and the New Jersey State Legislature. The NJCTA is proud to continue laying the groundwork that will allow our industry to be successful so all seeking a long-term career can achieve their goals and dreams. We will continue to promote greater social equity in New Jersey so that our industry can reach its full potential and help right the wrongs of decades of failed drug enforcement policies. We head into 2024 excited by its tremendous potential and encourage all those interested to reach out to learn more about our mission. Have a safe and Happy New Year!

 

Todd Johnson is the executive director of the New Jersey Cannabis Trade Association (NJCTA), which is comprised of the state’s permitted medical and adult-use cannabis operators with the shared mission to ensure the legal cannabis marketplace is not only safe, accessible and affordable, but also equitable and just.

 

Todd is also a co-founder of Community Greenhouse, a mission-driven cannabis company with plans to open a dispensary in Newark, NJ, in 2024.

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