CPA, National Cannabis & Hemp Practice leader
I give cannabis companies the advice I give anyone: Conduct research into the business; know the federal, state and local laws. Understand the licenses and permits — for cannabis, these requirements are critical and the opportunities for them may be limited. Prepare a business plan analyzing the market, competitions and trends. Decide on a structure. Create measurable goals and metrics. Cannabis companies have issues that other businesses may not have to pay particular attention to but are critical, including — banking, credit card processing, payroll and insurance. Most importantly: Engage professionals who can help navigate through the legal and accounting needs of the industry.
Three more crucial questions about cannabis in N.J. … and answers from our experts:
- How do you serve those in the cannabis industry?
- What is a barrier to entry — or an issue most people don’t think of — that needs to be addressed to play in this space?
- What’s something else we should know about doing business in the cannabis space in New Jersey?
Guillermo C. Artiles
Chair, Government Affairs & Cannabis practice groups
McCarter & English:
For the adult-use market, license applicants should be focused on their organizational structure, financial capacity, and creating or reinforcing local relationships.
John D. Fanburg, Esq.
Managing member and co-chair, Cannabis Industry Practice
Brach Eichler LLP:
Financial backing will be key to those entering the new cannabis industry in New Jersey. Significant investment will be required in security, packaging, transportation, wholesale and retail sales, and real estate. Real estate acquisition and renovations will be required before any first retail sale occurs.
Victor J. Herlinsky Jr.
Co-chair, Cannabis Industry Practice Group
Sills Cummis & Gross P.C.:
Given continuing regulatory issues revolving around cannabis, it would be advisable for those wishing to enter the market to proceed cautiously. The soon-to-be-approved Cannabis Commission still needs to be set up with staff and regulations. There are inherent delays in any new organization, and regulatory issues could compound this. The difficulty in acquiring alcohol liquor licenses in New Jersey could be a preview of what the cannabis license market could be like. This being said, regulatory barriers on entry will ensure that the licenses will be valuable once attained. The problems of too many licenses associated with markets such as Colorado and Oregon will not occur here in New Jersey.
John V. Pellitteri
CPA, partner, Cannabis Practice leader
Grassi Advisors & Accountants:
While voters in New Jersey and other states approved the legalization of marijuana during the 2020 elections, we are still awaiting the enactment of specific laws that mandate how the industry will be regulated on the state level. But, it is never too early to start planning your entrance into this market sector. Gather the team you want alongside you, understand your local tax laws, identify the subsector you want to enter (e.g., cultivation, manufacturing, retail) and explore your options for capital raising, business entity structure, real estate and other major decisions.
Daniel Pierre, Esq.
As we eagerly wait for the bill and corresponding regulation for recreational use, those looking to be involved in the cannabis industry need to consider these three points: First, determine which of the six licenses you want. As of now, there are restrictions on how many licenses an applicant can have within the first two years of the law’s effective date. Second, develop an experienced application team. Licenses will be awarded to applicants based on their relevant skills and qualifications. Third, find the right municipality. Priority will be given to those applying in towns of impact zones.
Co-chair, Cannabis Law Practice
Chiesa Shahinian & Giantomasi P.C.:
The next few months will see the regulatory regime and processes governing the future of both medicinal and recreational cannabis in New Jersey take real shape. Once the legislation is signed by Gov. Phil Murphy, the state will undoubtedly move quickly to scale up and grow the industry to meet demand — likely issuing subsequent competitive rounds of RFAs for additional licenses. My suggestion to interested parties: If you haven’t already, now is the time to begin assembling your operational and advisory teams and pounding the pavement to secure a willing host community.