New Jersey will have to wait a bit longer for sales of recreational cannabis to begin.
In a surprise move, the Cannabis Regulatory Commission, the state regulator for the fledgling industry, tabled plans on Thursday to allow existing medical operators to sell recreational marijuana. The vote was unanimous.
Separately, however, the commission approved 68 conditional licenses for cannabis cultivation and manufacturing businesses, the first recreational licenses to officially be approved by the commission.
The CRC agreed the existing medical cannabis operators, known as alternative treatment centers, were not ready to expand into the recreational market. Among the concerns were access to cannabis for existing patients, supply issues, social equity and even labor agreements.
“It is clear that we are not quite ready to open up the adult use market in New Jersey,” Commissioner Maria Del Cid-Kosso said. “Our medical patients are our priority and we would like to prevent, to the extent possible, any supply of shortages, long wait times and other safety concerns that may impact the municipalities in which these dispensaries are located.”
CRC Executive Director Jeff Brown said he’s looking to work with the alternative treatment centers to prepare them to be “turnkey ready to launch [recreational sales]” by the commission’s next meeting. The commission on Thursday evening announced a “special meeting” for April 11.
Brown said “a few” of the eight alternative treatment centers seeking to expand to recreational sales “are definitely there on supply with another cohort very close to being there.” Total supply in the medical cannabis market has expanded by 80,000-square-feet in the past six months, he said.
A “best case scenario” from the CRC projects the recreational market undersupplied by around 100,000 pounds, assuming a low initial demand, Brown said. Those projections assume 4 ounces per year per consumer among New Jersey residents and one ounce from people coming in from bordering states.
“The overall [cannabis supply] in the market is still far under supplied from where New Jersey needs to be to support a vibrant medicinal cannabis and recreational market,” Brown said.
The CRC is sending recommendations to the alternative treatment centers on “patient access and minimum inventory levels,” Brown said, which could include exclusive patient hours and telephone lines if patients can’t access dispensaries.
The commission wants the alternative treatment centers to commit to the recommendations to ensure no disruptions to patient access to cannabis, which the CRC has said is paramount in launching the recreational market. Another option includes exclusive home delivery options for medical cannabis patients.
The CRC is also seeking commitments from the alternative treatment centers to make a “good faith effort” to hire those with prior marijuana convictions and those from economically disadvantaged areas. Cannabis businesses are required to do so per regulations, Brown said, and he suggested periodic reporting on progress to meet the equity goals. Social equity in cannabis has been a recurring theme in legalization and business efforts.
Thursday’s decision to delay expansion was met with mixed reactions.
New Jersey Cannabis Trade Association, which represents the state’s alternative treatment centers, said it was “disappointed” by the news. The New Jersey CannaBusiness Association lauded the CRC saying that “doing things correctly was more important than doing things quickly.”
Separately, the commission approved 68 conditional cultivation and manufacturing licenses for new cannabis businesses — the first recreational licenses approved by the commission. Conditional licenses are preliminary awards that still require awardees to prove they have obtained a business location and municipal approval before they can get full licensure.
“It’s important to disclose this first round because this is a historic action that this commission is prepared to take,” Brown said. “These are the first, the very first recreational licenses that this commission is going to issue.”
Gov. Phil Murphy had promised to legalize recreational cannabis for adult use within 100 days of taking office in 2018, an effort met with protracted disagreements in the Legislature on how to implement legalization. Voters then overwhelmingly approved a constitutional amendment in 2020 allowing residents to use and sell cannabis. Murphy ultimately signed a legalization bill in February 2021.
Last month, the governor said the recreational cannabis market could come within a matter “of weeks.” The state is still expecting cannabis sales to start somewhat soon, with budget documents projecting just over $4 million into the state’s general fund from recreational cannabis sales.
During an appearance on News12 just after the CRC’s vote, Murphy maintained that sales would start soon.
“This remains to be a matter of weeks,” he said. “I can’t tell you how many are on what day, but I think they’re very close.”