With the last big company-owned dispensary selling adult recreational marijuana in New Jersey to open this year in Fort Lee, smaller operators like Salvatore Piazza contend the state must now focus on helping folks like himself, the so-called little guys trying to enter the nascent cannabis industry.
Its embarrassing for the CRC (New Jersey Cannabis Regulatory Commission) that even though were so deep into it that all the state has are these multi-state operators, said Piazza, alluding to the giant national companies that have set up shop in the Garden State and own and operate all 21 stores selling adult weed.
As he spoke, Piazza, 28, stood in front of the wooden frame of what could be the first cannabis micro-business cultivating/manufacturing facility in the state, called Full Tilt Labs, in Ewing Township.
After getting all necessary permits to begin construction on the 9,000-square foot building, Piazza broke ground three weeks ago. Full Tilt Labs is completely family-owned and operated. Theres three owners: Piazza, his mother and father.
About a month ago, Piazza completed interviews with a state CRC investigator and said he was told Full Tilt Labs would likely be on the commissions Dec. 2 meeting agenda for annual license approval.
Piazza is among the few the less than 20 percent of all conditional license winners expected to meet all state requirements to convert to an annual license. Piazza said an annual license means youre here for the long haul and eager to contribute to the industrys future in New Jersey. Keep up with the latest on legal weed in New Jersey. Add your email here.
But the numbers dont bode well. Over 800 conditional licenses have been awarded by the CRC so far, and just 18 annual licenses.
Well be in a supply constraint in the state of New Jersey for at least three or four years, said Piazza of having so few stores selling adult weed. Im a realist. I really understand the numbers. The demand in New Jersey is huge. This is a really great state for cannabis, but you have to start getting people online, especially people like myself, a craft cultivator.
While the big multi-state corporations that either owned or acquired facilities already selling medical marijuana in New Jersey easily expanded to selling adult weed at the same stores, its been anything but quick and easy for smaller operators like Piazza.
Industry experts warn if more smaller cannabis cultivators and manufacturers dont get licensed, it will be very difficult for New Jerseys buddying industry to get to the next level and meet consumer demand.
New Jersey will not be able to expand its existing adult-use market until more annual licenses are distributed so that new operators can come online, said cannabis attorney Robert DiPisa of Hackensack-based Cole Schotz in an email to NJ Advance Media.
DiPisa said the state is going to need to focus more on getting licenses into the hands of smaller operators and hand out conditional and annual licenses. He noted that so far, New Jersey has a low rate of converting smaller operators who have conditional licenses to the more permanent annual license status that allows them to begin operating.
The launch of adult weed sales at Ascend Fort Lee in a former Staples store on Nov. 17 is considered the last store owned by a cannabis company with a national footprint and millions of dollars a year in annual revenue to open this year, according to the CRC.
Industry experts maintain that the easy part is done since all eight national companies now in New Jersey had the political connections and capital to offer recreational marijuana quickly. They contend its no coincidence that the multi state operators, commonly called MSOs, got a head start from the CRC and now own and operate all 21 stores offering adult weed.
A customer looks at marijuana products at Ascend Fort Lee on launch day of adult weed on Nov. 17, 2022. The dispensary is the last one owned by a national cannabis company to open this year in New Jersey. John J. LaRosa | For NJ Advance
John Fanburg, co-chair of the cannabis practice at Brach Eichler in Roseland, sees a cannabis industry dominated by national companies headquartered in other states as counter to the intent of New Jerseys 1 -year old legal weed law inviting players of all stripes and incomes to enter the recreational marijuana world.
The downside to an MSO is to what extent are the local New Jersey residents those who have been disenfranchised by the war on cannabis for many years do they really have a chance to make their mark and be part of this new business and industry? said Fanburg. Are these smaller operators being squeezed out?
We need to see more micro-businesses, and at the same time, we need to see more enforcement to try to drive out the unregulated black market industry to allow these businesses to grow and thrive, said Fanburg. And we have to be very careful of not creating too much of a high economic burden because the product (the smaller operators) are selling cant be more expensive than the black market. Otherwise, the black market will continue to thrive.
In response, CRC Executive Director Jeff Brown said the nearly year-old state agency charged with regulating the new industry is trying to give these smaller players a chance.
The focus from day one has been to establish a competitive, consumer-driven market that is underpinned by opportunity and equity, Brown said in an email to NJ Advance Media.
He said while the state cannabis legalization law made that process faster and easier for companies already selling medical marijuana to expand into recreational weed sales, our focus has always been on getting local, small business operators into the marketplace.
But easier said than done, said Edmund M. DeVeaux, President of New Jersey CannaBusiness Association, considered the states Cannabis Chamber of Commerce. DeVeaux said access to capital has been a challenge for historically disadvantaged communities even when traditional sources of capital were available.
Being in the cannabis industry further complicates the situation as there are now fewer options to choose from, said DeVeaux. Real estate is a concern as less than half of the states municipalities have opted to allow cannabis operators in their borders.
The licensing process must prioritize annual licenses to counter the potential lag in getting those intended Jersey-based operators up and running, added DeVeaux. Moving to award annual licenses also would go a long way in recognizing the hardship many annual license applicants face by maintaining leases and other forms of site control.
Five of the eight heavy hitter companies that set up shop in New Jersey Ascend, Verano, Curaleaf, AYR and TerrAscend have each reached the three-store maximum under the states cannabis law. The five companies combined account for 15 of the states 21 stores.
The other three firms GTI, Acreage and Columbia Care own the other half dozen stores with two apiece. It they choose, these three firms can still each open one more store but that would only take the states store count to 24 to serve a population of over 9 million residents.
A sign for Ascend Fort Lee as the dispensary at 461-469 West Street launches recreational marijuana sales on Nov. 17, 2022.John J. LaRosa | For NJ Advance
Brown said the anticipated 2023 launch of The Cannabis Academy, operated by the Business Action Center and funded with revenue from the social equity excise fee on cultivators, will generate new programs to help home-grown entrepreneurs. He said the agencys approval of 18 annual licenses at the boards Oct. 27 meeting was just the start.
That is only the tip of the iceberg as far as license approvals, but the pace at which the market continues to expand depends on the ability of awardees to implement their business plans, municipal approval processes, applicants access to locations and capital, and other market factors that affect every kind of business start-up, said Brown. Get politics news like this right to your inbox with te N.J. Politics newsletter. Add your email below and hit “subscribe”
A recent trade report warned that New Jersey has the fewest number of stores to support a population of its size among the states that have legalized recreational marijuana.
Piazza, the Ewing operator hungry to make his mark from the town he was born and raised, said he knows why an annual license from the CRC is eluding so many of his brethren.
Its been a waiting game requiring persistence, fortitude, and not the least, money, to stick out. New Jerseys Medicinal Marijuana Program stalled from expanding after disqualified applicants sued in 2019 and a judge prohibited the state from awarding new medical cannabis licenses for two years.
New medical licenses werent awarded until late last year, but these operators have yet to become operational. This is why New Jersey has only 23 medical dispensaries owned by a dozen multi-state operators that service the approximately 117,000 registered medical marijuana patients.
Piazza first applied in 2019 and was among those who sat in limbo for two years waiting to apply for a conditional license. He received a conditional license in June of this year and applied for an annual license two months later. He said he has spent close to $300,000 on legal and engineering fees to navigate the complicated municipal approval process and estimates he will need at least another $1 million to get Full Tilt Labs retrofitted and ready to open.
Its not cheap, said Piazza. Theres no one thats going to give you money. Its very cut-throat.
Piazza is lucky. His family owns and operates a landscaping and snow removal business on the same three-acre property with Full Tilt Labs. Without the income from the family business to cover the cannabis start-ups significant costs, Piazza said he would not have gotten this far.
The CRC needs to listen to these micro-businesses and all the challenges they face in trying to get an annual license, said Piazza. The conditional (license) approval really gives people false hope. The time allotted to submit an application for an annual license is not enough to get all those things (the CRC) requires.
He added that the CRC needs people like us who care about the plant and are really trying to produce something of a higher quality to give consumers something better to enjoy.
All eight major cannabis companies in New Jersey are vertically-integrated, meaning they grow and sell their own product, which some argue further limits smaller operators like Piazza.
They dont have to pay anyone for it, said Piazza. They know exactly what they are going to produce and how they will sell it. Theyve cut out the middleman, which is me.
If Full Tilt Labs is approved for an annual license on Dec. 2, it will then be up to the CRC to come out for a site inspection to determine when Piazza can turn the lights on. Piazza can then begin to plant his first harvest.
Im hoping by February, he said. Then by June I hope to have harvest and product on the shelf by mid-June. That all depends if the CRC gets us to that finish line.
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Suzette Parmley may be reached at sparmley@njadvancemedia.com or follow her on Twitter: @SuzParmley