New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act Analysis — Growers

Interested in becoming a recreational cannabis grower in the State of New Jersey? The following analysis of the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act will give you the information you need to get started.

Recreational cannabis growers in the State of New Jersey will be required to obtain a Class 1 Cannabis Grower License.

The New Jersey Cannabis Regulation Commission will have the power to issue Class 1 through Class 6 licenses. Class 1 Cannabis Grower licenses will be granted for the premises at which the cannabis is grown or cultivated. Class 1 Cannabis Grower License applications are not yet active, but the Legislature has outlined some requirements.

The company must have at least one “significantly involved” person who has resided in the State of New Jersey for at least two years as of the date of application. This person must have a financial interest and decision-making powers in the company.

There will be a criminal and background check for any officer, director, or employee of the company. The State legislature has indicated that they will not take into consideration state or federal convictions involving cannabis or cannabis resin. Any other person with a financial interest who also has decision-making authority must be 21 years of age or older.

No background checks will be required for individuals owning less than five percent (5%) equity in the company, or for groups owning collectively less than twenty percent (20%) equity in the company.

There will initially be a hard cap on the number of Class 1 Cannabis Grower Licenses permitted by the State. The number of licenses to be permitted is not yet clear.

The New Jersey Cannabis Regulatory Commission is expected to determine the maximum amount of issuable licenses by Q2-2021. The maximum amount of licenses will then be subject to change from time to time based on revenue and demand.

At least ten percent (10%) of these licenses will be granted to microbusinesses.

In order to be considered a Microbusiness, your business must meet all of the following requirements: 1) One-hundred percent (100%) of the ownership interest of the microbusiness held by current New Jersey residents who have resided in the state for at least the last two consecutive years, 2) at least fifty-one percent (51%) of the owners, directors, officers, or employees of the microbusiness shall be residents of the municipality in which the microbusiness is located (or in a municipality bordering the municipality in which the microbusiness is located), 3) the microbusiness must not employ more than ten (10) employees, 4) the grow space must not be greater than twenty-five hundred (2,500) feet horizontally by twenty-four (24) feet vertically, 5) the microbusiness must not possess more than one thousand (1,000) cannabis plants each month (Cannabis plants held by the microbusiness for transportation purposes will not be subject to the one thousand (1,000) plant limit). 6) any owner, director, officer, or other person with a financial interest and decision-making powers in the microbusiness shall not hold a financial interest in any cannabis establishment, cannabis distributor, or cannabis delivery service, 7) any owner, director, officer or other person with a financial interest and decision-making powers in any cannabis establishment, cannabis distributor, or cannabis delivery service shall not hold a financial interest in any microbusiness, 8) microbusiness may not sell or transfer a Class 1 Cannabis Grower license, AND 9) microbusiness must comply with any other regulations established by the Cannabis Regulatory Commission.

A microbusiness may have a larger grow space if they are part of a larger premises that is owned and operated by a cannabis grower who is not a microbusiness, so long as the businesses share physical facilities for business operations and only the microbusiness grows cannabis in their designated grow space.

At least thirty-five percent (35%) of these licenses will be Conditional Licenses, defined as a temporary license that will allow a company more time to fully comply with State requirements while still lawfully acting as a cannabis grower.

The Cannabis Regulation Commission will adopt rules restricting the size of both immature and mature plant grow canopies.

The commission may regulate 1) the number of immature cannabis plants that may be possessed by a Class 1 Cannabis Grower licensee, 2) the size of the canopy a Class 1 Cannabis Grower licensee uses to grow immature cannabis plants, AND 3) the weight or size of shipments of immature cannabis plants made by Class 1 Cannabis Grower licensee.

The Commission will limit the size of mature cannabis plant grow canopies for both indoor and outdoor grows.

The Commission will adopt a tiered system where the permitted size of a cannabis grower’s mature canopy is allowed to increase in size upon licensure renewal.

The New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act grants the Cannabis Regulatory Commission power to adopt various rules and regulations.

The Cannabis Regulatory Commission will adopt rules that 1) provide for an annual review of Class 1 Cannabis Grower licenses, 2) establish application, licensure, and renewal fees for cannabis growers, 3) require cannabis to be tested in accordance with state regulations, 4) require applying cannabis growers to submit a report describing the applicant’s electrical and water usage, AND 5) require the cannabis grower to meet public safety standards and industry best practices.

Every licensed cultivation facility must permit the State to make both scheduled and unscheduled visits in order to obtain random samples of cannabis items. These items will be transported to cannabis testing facilities for inspection and testing to certify compliance with State safety and potency standards.

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