Updated September 27, 2021
New Jersey hasn’t always been the most cannabis-friendly state in the US. While the Compassionate Use Medical Marijuana Act was signed into law on January 18, 2010, initial enrollment was small thanks to rigid limitations, high costs, and resistance from Governor Chris Christie. In 2011, New Jersey was even described as having the strictest medical marijuana law among the 16 states where it was permitted at the time.
Fast forward to 2020, when voters passed a statewide ballot measure to legalize recreational cannabis in New Jersey during the presidential election. You can expect recreational cannabis sales to be legal in the state soon, especially now that the Cannabis Regulatory Commission is formally up and running. This Commission is tasked with regulating the recreational cannabis market, as well as regulating licensing for new growers and dispensaries. With the recent release of newly adopted rules, the CRC has already taken a monumental step towards reaching people from communities that have historically been excluded from economic opportunities. The CRC has granted permission for individuals with prior convictions to apply for a license. Businesses are also permitted to work with re-entry programs to create job training opportunities for current or former prisoners.
If you’ve ever considered the idea of opening a dispensary, now’s a great time to put your plans into action. Here are the top considerations you should know to start a dispensary in New Jersey.
After establishing the first set of guidelines in early July, the New Jersey Cannabis Regulatory Commission (CRC) adopted the new personal-use cannabis rules on August 19, 2021. A date for beginning the application submission process has yet to be announced.
While there will be a cap on the number of licenses permitted, the only cap that is currently known is on the grower licenses. Statewide, cannabis grower licenses will be capped at 37 for the first two years. The CRC will not limit the number of microbusinesses that have significantly smaller operations. It is not yet known what the standard retail cap will be and there may be additional restrictions at the local county or city level. There is some good news for New Jersey residents that identify as one of the social equity designations. A mandatory 30% of all licenses and at least 25% of microbusiness retail licenses will be held for female, minority, and disabled veteran business owners, as well as businesses in low-income impact zones. The CRC has pledged to evaluate the number of approved licenses each year to ensure the demand for cannabis products is being met.
Don’t wait to start on your application. Applications can run hundreds or thousands of pages long. For standard licenses, you’ll need to submit proof of real estate acquisition, many planning documents, as well as articles of incorporation, approval from your local municipality, and a mockup of the security camera blueprint for your dispensary. The standard application fee is $400, plus an additional $1,600 if approved. The annual retailer licensing fee is $10,000.
If you are interested in operating on a small scale, a max of 10 employees to be exact, you may be eligible to apply for a microbusiness license. To be eligible, you must be a New Jersey resident who has resided in New Jersey for the past 2 years. Microbusiness fees cost half of standard license fees, however more than half of business staff, including management must live in or in the city next to where the business is located. The annual microbusiness licensing fee is $1,000.
The CRC has issued a shorter application version, giving retailers, distributors, growers, and cultivators the opportunity to receive a temporary permit. The Conditional Cannabis Business License is perfect for applicants that have identified a location but have yet to secure a lease or purchase agreement. Also, applicants that are still seeking municipal approval may apply. The conditional license is up to 120 days and can be extended for an additional 45 days. Applicants may apply for a standard or microbusiness license once they have met all requirements: you cannot begin to operate holding only a conditional license. The application fee for a conditional standard license is $200; the application fee for a conditional microbusiness license is $100. Once approved, an $800 fee is required for conditional standard licenses and $400 for a conditional microbusiness.
You’ll not only need to secure capital for the large application fee, but also for product, staffing, rent, security, and more. The good news is New Jersey’s new recreational law will help diversely owned and smaller businesses get into the market, so you won’t need to be rich to get a piece of the pie. Note: The CRC has set income guidelines for businesses seeking a conditional license. Still you should plan on having between $250,000 – $1 million to open a dispensary in New Jersey.
Because cannabis is still illegal at the federal level you will not have access to bank loans. In fact, you won’t be able to secure a bank loan for property if the intended use is for a cannabis business.
Most investment firms won’t fund start-up cannabis companies, so look to friends, family members, and your own savings account to secure capital first. There are also investment firms that specialize in funding cannabis companies that you might want to look into. Expect to list all your funding sources in your application.
Staffing for Cannabis
Before you open your doors, you’ll need staff members hired, trained, and ready to work. Expect fierce competition among cannabis dispensaries for knowledgeable and skilled candidates. The employees you hire should have excellent interpersonal skills for the customer-facing role but also a thorough understanding of the different strains, terpene profiles, and cannabinoid content for the products you sell. The importance of knowledgeable budtenders cannot be overstated.
When creating a hiring plan, you’ll want to factor in some time for background checks, budtender training, as well as training for your security protocols. Expect to pay anywhere from $12 to $16 per hour for this retail dispensary job.
Besides the customer-facing roles, you’ll likely also need to consider hiring an accountant, a custodian, security personnel, an HR person, and a marketing expert.
Vertical integration is not permitted in New Jersey, so you cannot produce and sell your own product. You’ll need to build relationships with cultivators, manufacturers, wholesalers or distributors that will provide you with cannabis products to sell in your new dispensary.
Hopefully, you already have some contacts in your network. Before you reach out, however, make sure you’ve researched the legal cannabis products you’re allowed to sell and which ones you’ll need to avoid in New Jersey. You should also consider your audience’s needs to determine what to stock for your market, whether that’s low THC products, high CBD strains, vapes, etc.
You already know that you’re entering an industry with a high standard for legal compliance. The cannabis industry is highly regulated in every state, and New Jersey will not be an exception to this rule. Do your due diligence and expect to satisfy stringent requirements that include background checks, age requirements, and location regulations. For your location in particular, you’ll have local zoning laws to comply with and will require proof of support from the city government before you’ll be able to get a license. You’ll need to be a certain distance away from school and daycare centers, church and religious worship locations, grocery stores, and stores selling alcohol.
It’s also important to note that some local municipalities within New Jersey have outright banned or restricted marijuana in anticipation of the pending legalization. You might find opening up a dispensary especially challenging or impossible in these areas.
How to Market Your New Dispensary & Stand Out
Just like with everything else in the cannabis industry, marketing and advertising are regulated and restricted. For example, the New Jersey Administrative Code includes restrictions on what you can put on the outside of your business and restricts advertising of pricing, as well.
Online advertising and marketing will be your best bet, so make sure you invest in digital marketing. Create branding and a website that will help your cannabis dispensary stand out from what will surely be a crowded market. Discover what you can and can’t post on paid media ads and social media before you jump the gun, learn how to create an influencer campaign, and don’t forget to advertise on Google My Business. To help improve customer retention and loyalty, you might want to consider creating a customer loyalty program, too. However you decide to promote your business, make sure you are following the CRC’s enforced privacy standards – no personal information can be tracked!
You might know the cannabis industry inside and out, but marketing might be a very different ballgame. If so, consider outsourcing your marketing needs to Mary Jane Marketer, a full-service cannabis marketing agency that can do it all from writing your application to launching your dispensary. Mary Jane Marketer also offers an online DIY bootcamp for those interested in learning how to write their own application. The New Jersey Recreational Cannabis Retail Application Bootcamp is open, learn more and enroll today!