In Philadelphia’s South Jersey suburbs, 40 of 100 municipalities have opened their doors to cannabis businesses within their borders under New Jersey’s legalization law, which was signed in February and allowed towns to ban marijuana businesses ― but not the delivery of cannabis to residents.
The number of towns allowing cannabis businesses is expected to grow. Some of the 60 that opted out, such as the city of Camden and Bellmawr, did so by an August deadline to gain more time to write local regulations but intend to allow at least some of the law’s six types of cannabis businesses.
Some local New Jersey officials, including in Camden, have expressed enthusiasm for the arrival of the recreational cannabis industry as a way to spur local commerce. Statewide, the industry is expected to quickly reach $1 billion in sales, boosted by Pennsylvanians trekking across the Delaware River. Medical cannabis has been allowed since 2010.
“There is an opportunity to move the city in a different direction, to build and stimulate the economy using this legislation as a leverage tool,” Dwaine Williams, Camden’s affirmative action officer and a member of the Cannabis Ad Hoc Committee, told Camden City Council during a Sept. 7 hearing.
It is not clear when New Jersey’s recreational marijuana sales will start. The Cannabis Control Commission issued preliminary regulations on Aug. 19 but missed a Sept. 18 deadline to begin accepting applications. The commission has scheduled an Oct. 13 webinar to answer questions from municipalities and applicants.
“I don’t mind the delays because that means people get more educated, people who have unanswered questions have time to research,” said Nichelle Pace, chair of the Camden Cannabis Committee and vice president of the Camden Business Association.
New Jersey’s recreational cannabis legalization law was designed to ensure that people of color as well as those who have past convictions for marijuana offenses or who live in economically disadvantaged areas have a fair shot at getting into the newly legal industry after a decades-long prohibition that disproportionately hurt Black people.
Despite those efforts, experts say it won’t be easy for small-time entrepreneurs or even experienced sellers in the illegal market ― now often called the traditional or legacy market — to break into legal cannabis because hiring lawyers and consultants to get through the licensing process doesn’t come cheap.
The six types of licenses under New Jersey law are for cultivators, manufacturers, wholesalers, distributors, retailers, and delivery services. Within those categories, there are standard licenses and licenses for microbusinesses, which are limited to 10 employees and other restrictions.
The Cannabis Regulatory Commission, led by a former lawyer for the ACLU of New Jersey, has said it will prioritize such applicants, and those from areas with high unemployment or large numbers of marijuana arrests.
Another feature of New Jersey’s legalization effort designed to level the playing field for small-business applicants is the creation of conditional licenses. That gives an applicant approved by the cannabis commission 120 days to find a town and a property where the business can locate.
With a conditional license in hand, an applicant might be able to attract money from investors or “a town might roll out the red carpet because it wants a winner as opposed to an applicant,” said William Caruso, managing director at Archer Public Affairs, a lobbying firm.
Some towns have taken pains in their ordinances to foster racial diversity in the industry.
Willingboro, a majority-Black township in Burlington County, wanted to increase the chances that its residents could benefit from starting a marijuana business there by offering discounts on the local fee structure, said Samantha Whitfield, a township councilwoman.
The township has high application fees — up to $60,000 — but allows “a reduction in fees if you are a resident of the municipality, if you employ residents within the municipality, and also if you are a Black- or a minority-owned business, [and] if you are a woman-owned business,” Whitfield said.
The same rules apply to annual licensing fees.
Mount Holly’s ordinance goes even further, eliminating the township’s annual licensing fee entirely if criteria are met.
In Moorestown, at least two of the four licenses allowed in the township must be awarded to microbusinesses.
“What we really want to do is support entrepreneurs to get in this business and give a chance to the small business to take off,” Mayor Nicole Gillespie said.
In addition to setting local fees, declaring which and how many of the six types of licenses will be allowed in a municipality, the ordinances do what is typical for local laws.
They lay out where cannabis businesses are allowed to open, how big their lots much be, how far they must be from a church or school, what hours they are allowed to operate, how much parking they need, and regulate signs (no cannabis imagery allowed on buildings).
Getting through that thicket is not going to be easy for small-time applicants.
Unless an applicant is aiming at one particular town to apply in, finding the ordinances for a wide range of towns is a laborious process requiring checking each one — or paying for an expensive service.
The first screen for an entrepreneur is whether the town even allows cannabis businesses, said Paul P. Josephson, a partner in the Cherry Hill office of Duane Morris LLP.
“Then you have to find a landlord who is willing to rent to you. If the landlord has a bank, the bank generally will not let them rent to you. You have a very limited number of properties that you can go into, and then you have to hope that you have enough parking to serve the need,” he said.
“It’s not easy for anybody, and those who come to the table with fewer resources absolutely are at some disadvantage,” Josephson said, acknowledging the effort New Jersey has made to help applicants who don’t have $100,000 to start.
The ACLU of New Jersey wants the state to do more to ensure that the people most harmed by the enforcement of cannabis prohibition have access to the money needed to start a business in the sector, said Ami Kachalia, an ACLU campaign strategist.
The ACLU is advocating for the New Jersey Legislature to appropriate $100 million for a Social Equity Cannabis Fund, housed in the Cannabis Regulatory Commission, to provide grants or low- or no-interest loans to disadvantaged applicants.
“Access to capital is a key part of any business getting off the ground and being successful, and that includes cannabis businesses,” Kachalia said.