TRENTON — The state Cannabis Regulatory Commission (CRC) has added three new categories of license for recreational cannabis: wholesaler, distributor and delivery service. So far, it has approved 81 new licenses.
During a meeting June 30, CRC Executive Director Jeff Brown said the commission has received about 1,200 applications for recreational cannabis licenses and that 850 had received an initial review.
“Staff are moving through these as quickly as possible,” he said.
The CRC issues “cure letters” for applications that are incomplete, giving the applicant the opportunity to provide missing information. Brown said the CRC has been issuing more cure letters than approvals.
“We’re going all hands on deck over the summer here, as I’ve said to the staff, ‘it’s the summer of licensing,’” he said.
Brown said the commission has been seeing a number of applications attesting a priority designation as a social equity business or a diversely owned business without proof or certification. He said applicants do not need to rush their applications but they must be complete. He advised applicants to first “get their ducks in a row.”
As of June 9, the CRC had issued 148 conditional licenses, including 92 cultivator licenses, 45 manufacturer licenses and 11 recreational retail licenses. Of that, 54 applicants are for social equity businesses whose owner has past cannabis convictions or lives in economically disadvantaged areas in the state.
Brown said 97 percent of licenses that have been issued have been conditional. A conditional license is a provisional license that gives applicants more time to get property or municipal approval.
The CRC voted to approve 81 new conditional licenses, which included 22 cultivators, 11 manufacturers and 48 retailers statewide.
The CRC’s fiscal year 2023 budget will total $17 million, up from $10 million this year. The commission’s staff has increased from six persons to more than 50, according to Brown.
He said the CRC is in the process of finalizing guidance that would be effective immediately on issuance that would outline to employers the steps they can take to protect their right under the law to have a drug-free workplace and the ensure their employees are not using cannabis while at work.
According to CRC Vice Chairman Sam Delgado, a social equity excise fee from cannabis sales is required to be deposited into the Cannabis Regulatory Enforcement Assistance and Marketplace Modernization Fund. He said 15 percent of that revenue is required to be dedicated to a subaccount known as the Underage Deterance and Prevention Fund.
“The social equity excise fee is a per-ounce flat fee assessed on all cannabis cultivated and sold in the Garden State recreational cannabis market,” he said.
The fee was set at one-third of 1 percent of the average retail price of cannabis, Delgado said.
In April, the CRC set the initial fee at $1.10 per ounce. He said the CRC estimates the social equity excise fee will bring in about $191,250 before the end of fiscal year 2022 based on April through June.
“We also estimate $3.5 million in fiscal year 2023,” Delgado said.
Covering the three new license categories, wholesaler, distributor and delivery service, CRC chief counsel Chris Riggs said a wholesaler can purchase cannabis or cannabis products from another wholesaler, cultivator or manufacturer for the purpose of resale to another wholesaler, manufacturer or retailer.
“They can store and warehouse cannabis and they can transport usable cannabis and cannabis products to a wholesaler, manufacturer or retailer,” he said.
A Class 3 wholesaler cannot cultivate or package cannabis on their own, produce or manufacture cannabis products and they cannot sell cannabis or cannabis products or paraphernalia directly to a consumer, Riggs said.
He said distributors can transport usable and unusable cannabis between cultivators and manufacturers and transport it between other cannabis establishments and they can possess and engage in temporary storage of usable and unusable cannabis as necessary to carry out their transportation activities.
A Class 4 distributor cannot cultivate, manufacture or package cannabis or cannabis products, sell cannabis or cannabis products or paraphernalia directly to consumers and they cannot purchase or resell cannabis products, Riggs said.
He said a Class 6 delivery service, based on a purchase order from a consumer, can obtain cannabis items and paraphernalia and related supplies from a cannabis retailer to deliver to a consumer.
“They can transport that usable cannabis and cannabis products directly to a consumer and they can return unsold usable cannabis products and paraphernalia back to its originating cannabis retailer,” Riggs said.
A delivery service cannot cultivate, package or manufacture cannabis products or sell cannabis products to other cannabis businesses or store cannabis or cannabis products at their administrative office.
By JACK FICHTER/Sentinel staff