Marijuana Business Magazine August 2019

Marijuana Business Magazine | August 2019 132 For information about cannabis regulations in other markets, order the Marijuana Business Factbook at mjbizdaily.com/factbook. Main measures MMJ business regulations State tax requirements Sampling of state licensing & application fees Senate Bill 119 Year passed: 2010 The initial state law allowed for only 12 vertically integrated dispensaries, though only six are in operation, and stand-alone wholesale cultivation operations were not allowed. The first two dispensaries in each of the three regions of the state (northern, central and southern) were required to be nonprofits. Dispensaries undergo an intensive application and registration process and are subject to numerous regulations, including those covering recordkeeping, cultivation limits, security and hours of operation. The limits on allowable forms of marijuana are some of the most restrictive in the country, and the requirement that all products contain no more than 10% THC is considered overly restrictive and onerous. The state health department has proposed loosening several restrictions, including a repeal of the 10% THC limit, doubling the purchase limit to 4 ounces and allowing patients to register at more than one dispensary. The latest medical marijuana expansion plan would expand the state’s licensing system to allow stand-alone cultivation, processing and dispensing beyond the existing vertically integrated system. The state has a 6.625% sales tax on medical marijuana transactions. Nonprofit dispensaries are not currently exempt because they do not qualify for 501(c)(3) status. Application Vertically integrated ATCs: $20,000 License Vertically integrated ATCs: $20,000 per year   What to watch In early July, the New Jersey Department of Health announced it would issue up to 24 new medical marijuana permits, including both stand-alone and vertically integrated licenses. The stand-alone permits will include five cultivation licenses and 15 dispensary licenses spread across the three regions of the state. The proposal also includes one additional vertically integrated license per region and one “at large” vertically integrated license. Applicants may seek up to three stand-alone licenses but can apply for only one per region. Applicants for vertically integrated licenses may submit only one application. The state will accept applications through Aug. 21 for dispensary licenses and Aug. 22 for all others. New Jersey’s Legislature was widely anticipated to legalize adult-use marijuana during the 2019 session. Experts believe the issue will be featured at the ballot box in 2020 if the Legislature does not agree on a decision sooner. Experts believe the primary hurdle is that the issue would need to be introduced as a constitutional amendment rather than as a new law—and amending a constitution is typically more difficult than changing a law. Market AtA Glance | New Jersey After a slow launch in response to relatively strict guidelines, New Jersey’s medical marijuana system has enjoyed recent growth. In March 2018, the state expanded the list of qualifying conditions by five conditions, including chronic pain, anxiety and migraine, and added opioid-use disorder in January 2019. These actions helped the patient count to nearly double over 15 months, reaching 49,000 as of early July 2019. The state’s health department predicted in its most recent biennial report that patient counts could reach between 127,000 and 197,000 by January 2022. While proponents were disappointed by the New Jersey Legislature’s inaction on legalizing adult-use cannabis, expansion of the medical system is still on the table. Strong growth and the identification of patient access as a barrier to further growth played a role in two medical marijuana expansion bills working their way through the Legislature during the 2019 session. Two competing proposals—one announced by Gov. Phil Murphy and the other passed by the Assembly Appropriations Committee—would have expanded patient access and business opportunity in the state by adding up to 108 licenses for stand-alone cultivators, processors and dispensaries across three regions of the state. This is particularly notable considering the state’s current licensing structure allows for only 12 vertically integrated operators. As of press time, the health department was moving forward with a proposal to issue up to 24 new licenses, including one cultivation license under 5,000 square feet of canopy space to encourage craft-scale business development. – Maggie Cowee

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