The New Jersey Cannabis Regulatory Commission adopted the initial rules the New Jersey market will operate under last Thursday, and we’re getting a top shelf breakdown.
Jennifer Cabrera leads New Jersey efforts for Vicente Sederberg, one of the nation’s leading marijuana regulatory affairs practices. Ahead of a webinar she’ll be hosting this week on the topic, she shared her initial thoughts on the rules for New Jersey’s forthcoming legal cannabis market.
The talk started with some of the things that might cause some headaches in the early going. One is a restriction on operating a business under a “Doing Business As.” This means that multistate operators who have branded their dispensary operations from state to state wouldn’t be able to use the name of their dispensary chain unless that’s what it said on the permit.
“You can’t use, display, advertise or operate under an alternate name, including but not limited to a DBA, and you can’t hold yourself out to be an entity operating under that name,” Cabrera said. “So a lot of LLCs are like, ‘Cannabis New Jersey Holdings LLC,’ but they want to do business as Jenny’s Joints. That’s not going to work. So does that mean the name of their dispensary needs to be Cannabis New Jersey Holdings LLC?”
Will New Jersey operators will be able to put the names that they’ve spent time and money creating on the packaging of their product?
“This provision suggests they can’t,” Cabrera said. “It’s not 100% clear to me that’s what the commission wants to do because elsewhere they do ask about what your DBA name is. But it means that it’s going to be a huge headache for a lot of companies that have put effort into trademarking the name, and building a brand that they won’t actually be able to operate under [the rules].”
Cabrera speculated the impact it would have on New Jersey’s existing medical cannabis operators as they work to transition to the recreational marketplace. “Does that mean they can’t have adult-use dispensaries using those DBAs? It doesn’t make a whole lot of sense,” she said.
Another wild ruleset within the Jersey market is edibles. Don’t expect weed brownies to take off any time soon.
“They don’t want anything that resembles or is food,” Cabrera explained. “Even though the regulations don’t make this clear, the summary indicates you can’t have any brownies or cookies. That would be too much like food. They don’t say it, but it’s not clear that you could sell chocolate bars. They want everything that’s edible or an ingestible, as they call it, to be vitamin-like. Like a nutritional supplement, and packaged and produced in that way. But completely crazy, it also means that like in New York, where you have companies doing infused dinners for instance, that sounds like it wouldn’t be kosher in New Jersey, or all the consumption areas that retailers are really planning on getting off the ground in New Jersey.”
With the DBA situation and edibles as examples, it’s fair to wonder who wrote the regulations. We asked Cabrera what the stakeholder process looked like to provide input to regulators. She said there certainly had been extensive public comment at commission meetings over many months in the build-up to the release.
“Other than the public meetings, there wasn’t a whole lot of transparency into who they were talking to, or how they were deciding,” Cabrera said. “Like the rules on edibles and on DBAs, this is from the commission’s brain.”
From there, the conversation turned towards the more positive aspects of the new rules. New Jersey regulators have the benefit of learning from all the mistakes of their predecessors in other states when creating the program. While this doesn’t mean it will be perfect, it’s fair to think those lessons of others contribute to the process as each new state comes online. But for some places, they’re convinced only they know how to regulate marijuana properly.
Cabrera pointed to New Jersey’s Social Equity Program as a major highlight of the state’s legalization rollout. While the program will, of course, provide a head start in the industry to the communities hit the hardest from the war on drugs, this next part will likely have many social equity operators who lost a ton of cash just sitting on properties very jealous.
“So the idea is that if you don’t have site control, and you’re not as far along and getting municipal approval, you can still get state-level approval and get that stuff taken care of later,” Cabrera said. “So they’ve tried to create a program that does incorporate smaller businesses which is great.”
The idea here is if the licensing process hits hiccups and delays, social equity applicants won’t burn all their money on rent for empty buildings. This lesson was learned the hard way from Los Angeles where a well-intentioned program hit many speed bumps, draining equity applicants’ already limited resources in the process leading to situations where they had to take in new money as they waited for a permit.
Cabrera also spoke to how extensive the separate microbusiness licensing aspect of things was, but admitted it would be hard for those small operations to be competitive in the marketplace due to the restrictions they’re required to operate under.