John D. Fanburg of Brach Eichler. – File photo
The most recent request for proposals by the New Jersey Department of Health‘s Division of Medicinal Marijuana portends not only an enhanced marketplace for both patients and providers, it exhibits the sophistication of Gov. Phil Murphy’s administration fulfilling its mission of creating a mature marijuana market in New Jersey.
The 25 new licenses are also the best opportunity yet for New Jersey entrepreneurs to gain an equal footing with their out-of-state peers in creating successful business plans under the program. The Murphy administration also left itself in a position to control the quality of participants in the program by offering only 25 new licenses, as opposed to the previously discussed 108. If there is a great depth of demand from patients and a population of qualified prospective providers, the administration can always continue to expand the market.
It’s good for business
The last round, which attracted nearly 150 applications for six licenses, definitively eliminated companies without substantial prior experience, which left New Jersey-based applicants out of the running. Now that the largest companies already received licenses, the more than 144 unsuccessful applications from the last round have a head start on this cycle of licensure.
The existing 12 licensed entities required vertically integrated businesses, which disadvantaged local or smaller companies that frequently formed collaborative entities out of necessity to fulfill all the application requirements in previous rounds. This new application process offers 21 opportunities for entrepreneurs to apply for a specialized license, allowing the previous 144 unsuccessful applicants, and many more who were discouraged by the expansiveness of the previous cycle, to apply based on their expertise.
It’s good for consumers
The state will continue to select locations based on serving population centers. With 31 providers (19 new providers in addition to the current 12) throughout the state, anyone with a prescription should be within a half-hour drive, and many people within 10 minutes, increasing access to the estimated 300,000 New Jersey residents who need medical marijuana for chronic issues.
Dispensaries, like coffee shops, have innovative retail concepts and product differentiation. Under the expansion, the marketplace will bloom beyond the cigarette or pipe, which are often less popular options to edibles, vape, edible oils and THC pill form.
More suppliers will lead to more specific strains and better treatment options, as well as, presumably, more advantageous pricing.
How many applications for +/- 40 municipalities?
We expect that the New Jersey Department of Health’s request for applications for the next 25 licenses, due Aug. 22, will generate hundreds of applications.
The complexity is that each of those applicants will need a commitment from a municipality to welcome medical marijuana enterprises, and that is a shrinking rather than an expanding number. Many towns declined to participate in the last round — and opposition to any cannabis at all was solidified as a result of the politicking of the Adult Use (Recreational) Cannabis bills during this spring.
As a result of the six applicants chosen in the last round, the field is that much narrower. Look for only 25 or so municipalities to put out the welcome mat, and, while some will provide blanket endorsements, many of these will have a filtering process before endorsing specific applicants be cited in a dozen or more applications.
John D. Fanburg is managing member; chair, healthcare law; and co-chair, cannabis law, for Brach Eichler.
