New Jersey Approves First Set Of Rules For Marijuana Market: What To Know

NEW JERSEY — A state board tasked with creating regulations that will guide and shape the new cannabis market in New Jersey has hit an important benchmark on the road to recreational sales.

The New Jersey Cannabis Regulatory Commission (CRC) approved the first set of rules for cultivation, manufacturing and sales of recreational cannabis in the state, opening the way for businesses to apply for licenses.

These regulations include language on the specifics of the application process, as well as community safety and social equity within their 160 pages. Regulators approved the full set of rules at a Thursday meeting, which brings them to the doorstep of accepting and reviewing business applications.

Gov. Phil Murphy said in a statement that he was "pleased" with how quickly the board — which held its first meeting in April — was able to get the regulations out the door.

"The regulations adopted today reflect the CRC’s commitment to transparency and social equity," Murphy said.

"Prioritizing applications from women and minority entrepreneurs, from business owners living in economically-disadvantaged communities, and from small business owners will ensure the market grows the way we envisioned – in a way that is socially equitable and reflective of our state’s diversity."

These rules "address barriers to entry that have plagued some cannabis markets across the country," officials said.

Among the ways in which state regulators are trying to right those wrongs is by having cheap application fees, which can be as low as $100, and by creating "flexible application requirements" for microbusinesses and people applying for conditional licenses. (More on what the rules set in place below.)

The state will also prioritize applications from "certified minority-, women-, and disabled veteran-owned businesses, and from applicants who live or will operate in one of several designated Impact Zones or economically-disadvantaged areas."

New Jersey isn't the first state to attempt to right past wrongs when it comes to aiding areas that were most impacted by the drug war.

Illinois rolled out a program for "Social Equity Applicants" when the state's recreational cannabis law went into effect on Jan. 1, 2020, and the Cannabis Control Commission of Massachusetts set up a similar program.

Still, proper implementation of the new rules in New Jersey could have the intended effect.

"The rules will help create a market that is competitive, diverse, and that puts our core values of equity and safety first," said CRC Director Jeff Brown.

To this point, those concerned with the social equity element of the cannabis market rollout are accepting of what's been put forward, as many of the points of emphasis are similar to the ACLU of New Jersey's "Baseline Cannabis Justice Plan".

The new rules also formalize municipal powers when it comes to accepting and limiting cannabis businesses, and address concerns about how the industry markets to those under 21.

Local municipalities have until Aug. 21 to put a ban on marijuana businesses into effect, but if they do, the regulations allow them to lift the ban at any point.

In addition to the full plan, the CRC released a 9-page summary of key takeaways from the first set of rules. The highlights include:

• Consumers over the age of 21 can legally buy and possess up to one ounce of cannabis, or an equivalent amount of cannabis products. It is illegal for anyone under 21 to purchase or possess cannabis.
• The rules establish three types of cannabis businesses: social equity businesses, owned by people who have past convictions for marijuana offenses or who live in "economically disadvantaged" parts of New Jersey; diversely owned businesses, which are minority-owned, woman-owned, or disabled veteran-owned and properly certified as such with the state; and impact zone businesses, which are located in, owned by, or employ residents of "impact zones," or areas with a large population, high unemployment or high level of crime or arrest relating to marijuana.
• These three businesses will be prioritized in the licensing process, meaning their applications will be reviewed before other applicants.
• The state will try to limit marketing of cannabis products to only those 21 and older, and will also limit the additives that can be added to products, which is something the state is "learning from the vaping crisis in 2019." The use of marketing tools like cartoons, trademarked images, candy or anything that "may be attractive to children" is prohibited under the law.
• Applications will be reviewed as they come in, on a rolling basis, which the state hopes will provide business owners "timely access" to the market as it develops.
• Initial license fees start as low as $100, with annual fees ranging from $1,000 for a microbusiness to $50,000 for a cultivator with 150,000 sq. ft. of cultivation capacity.
• The rules formalize municipal powers, allowing towns to determine if a business can operate within their city limits, and giving decision makers the ability to limit hours of operation, the number of licenses allowed in, and whether to enact a two-percent transfer tax on any sales. Municipalities can also have a say in which applicants seeking to open in their town will be awarded a license.
• Municipalities cannot ban deliveries of marijuana products into their towns, however.

Though these initial rules have been set, there is still more work to do for regulators.

Officials said that these rules will be in effect for at least one year, allowing the licensing process to begin. Now, the CRC "will begin examining the needs of distribution and delivery service businesses and preparing for the acceptance of applications."

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