- The State of NJ has issued 308 adult use cannabis licenses to new operators
Reality Check: The New Jersey State Cannabis Regulatory Commission (“CRC”) has issued ZERO adult use cannabis licenses that actually allow new operators to be in business growing or selling cannabis. Those 308 “licenses” issued are only Conditional Licenses, requiring a separate conversion process to an Annual License before a business can legally operate to grow or sell cannabis. And to date, the CRC has issued ZERO annual licenses to new operators through conversions or otherwise. The only businesses legally growing or selling adult use cannabis in NJ are a handful of previously licensed medical marijuana operators, known as Alternative Treatment Centers or ATCs, that have “expanded” from medical only to also include adult use sales. - The State of NJ is making good progress on reviewing new license applications.
Reality Check: The CRC has consistently missed its own guidelines on turn around times for license application review. The CRC’s own guidelines call for a 30 day target for Conditional License application review (N.J.A.C. § 17:30-7.2 (c)), and a 90 day target for Conversion and Annual License application review (N.J.A.C. § 17:30-7.9 (c)). The CRC has only gotten through some Conditionals in a 90 day window, and not all of them at that. As ZERO Annuals or Conversions have been approved, and some have been submitted as long ago as December 15, 2021, some applicants have waited 257 days and counting without a decision from the CRC. Furthermore, because the CRC has to give priority to Conditional applications ahead of Conversions or Annuals regardless of when the applications are submitted, when the CRC receives more new Conditional applications than it can review, its Conditional application backlog grows and it never has the resources to review Conversions or Annuals. This Conditional backlog currently exits and is growing in NJ. - The NJ CRC’s top priority is equity in establishing the adult use cannabis market.
Reality Check: Bowing to pressure from the NJ Legislature to get any sort of adult use sales underway, the CRC clearly prioritized ATC expansion over getting new social equity or diversity license applicants approved to actually operate businesses. The ATC expansion process has not suffered under the delays that the rest of the applicants, including social equity and diversity business, have endured. While the CRC ‘s Executive Director, Jeff Brown, often says equity is a priority, you’d never see it in the currently operating adult use marketplace. - The main bottleneck for new cannabis businesses in NJ is the local municipalities.
Reality Check: There are over 100 local support resolutions on the books from municipalities for Conversion and Annual license applicants. The CRC has not disclosed the number of Conversion applications received, or the number of verified complete Annual License applications received, but it’s a safe bet most of these applications have the needed local support resolutions approved. Hence, it’s primarily the CRC review and approval delays that are the bottleneck for new cannabis businesses to get up and running. - The NJ Adult Use market is a robust and growing alternative to the illicit black market
Reality Check: The average price of an eighth of an ounce (3.5 grams) of weed in the existing adult use market is ~$60, vs ~$35 on the illicit black market. Given the oligopoly of 8 companies currently operating alone in the adult use market (all ATC’s), it’s no surprise that legal supply vs demand is keeping legal weed prices well above the going black market rate. Unless and until the NJ CRC gets way more new businesses operating by addressing the new licensing issues, the illicit black market will continue to be a more attractive alternative to price sensitive buyers.
Tag: njcrc @newjerseyCRC @presidentscutari
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The CRC has yet to award anyone from New Jersey an annual license to operate in the new recreational cannabis industry. A handful of ATCs have been allowed to expand from medical only to include recreational sales, but all of those expanded ATCs are owned by large, out of state corporations doing business in multiple states (a.k.a. MSOs).
Despite the CRC touting the number of new conditional licenses issued, businesses are not permitted to legally operate with a conditional license! To operate, you need to have a conditional conversion or annual license application approved.
And the CRC isn’t reviewing existing conditional license applications fast enough to ever get around to reviewing its lower priority conditional conversion or annual license applications.
Because the CRC gives priority to reviewing conditional license applications, regardless of time in, over conditional conversion and annual license applications, a conditional license application submitted today jumps ahead in the review queue of a conditional conversion or annual license application submitted months ago. If the CRC is not reviewing conditional license applications faster than new conditional license applications are being submitted, an insurmountable backlog of conditional license applications to review will continue to grow. In that scenario, the CRC will never get to approving the lower priority, but earlier submitted, conditional conversion or annual license applications.
At the CRCs current pace of application review, that backlog is large and most recently growing, not shrinking.
That portends that at its current pace, the CRC will never get around to reviewing and issuing anyone a conditional conversion or annual license required to operate.Here is the evidence, provided in the data the CRC reports as part of every one of the Executive Director’s Recommendation on Conditional License Application memos it issues every time it recommends new conditional licenses for approval at each of the public CRC meetings:
Summary and analysis of new license application, approval and cure data from CRC 
Waterfall Chart Showing New Applications vs Approvals & Returns for Cure 
Trend line for Backlog of Conditional License Applications awaiting Approval or Return for Cure The CRC made some progress and reduced the unreviewed conditional license application backlog during the period between March 31 and June 9th. Unfortunately, that forward progress didn’t last, stopping after June 9th. The backlog went from of 181 conditional license applications that have not completed review to a backlog of 188 between June 9th and July 17th, the most recent period of data provided.
Until the backlog gets entirely cleared and the line in this chart gets to zero, except for a few possible social equity applicants, conditional conversion and annual license applications won’t be reviewed, and new operational businesses won’t enter the New Jersey legal cannabis market.
This would represent a failure on the part of the CRC to live up to its own mission of creating a legal cannabis industry based first and foremost on equity.
Here are some solutions the CRC could implement to remedy this:
- Substantially increase the pace at which application reviews are completed, perhaps by adding additional staff or prioritizing license review ahead of ATC expansion.
- Change the review priority such that conditional conversions and possibly annual license reviews that have already applied are given higher priority than new conditional applications submitted in the future.
- Create “application windows” that allow all license type applications to be reviewed ahead of any application type submitted in a subsequent window.
- Announce an upcoming closure to the new conditional license application window.
We urge the CRC to take the necessary corrective actions to remedy the lack of conditional conversion and annual license applications reviewed and be able to truly deliver an outcome that delivers equity to the New Jersey Recreational Cannabis marketplace.
- Substantially increase the pace at which application reviews are completed, perhaps by adding additional staff or prioritizing license review ahead of ATC expansion.