The right way, not right away: Q&A with Cannabis Commission Chair Houenou on how she hopes industry will develop

Dianna Houenou was named the chair of the Cannabis Regulatory Commission last November. Gov. Phil Murphy said she was the right person at the right time to lead the state’s effort to create a marketplace for recreational marijuana use — a marketplace Murphy and all those involved say they want to be equitable, fair and inclusive of all communities.

Nearly three months later, the hopes for a quick resolution regarding the rules and regulations surrounding the industry have stalled. Everyone involved still is confident the state will expand its current medical marijuana program to include recreational use. The voters, after all, overwhelmingly approved this idea. No one, however, is quite sure when it will happen.

Houenou isn’t fazed. She told ROI-NJ the delay is just part of what will be a long road to a vibrant industry.

“I am prioritizing getting this done the right way, rather than getting this done immediately,” she said.

Getting it done the right way involves two things:

1. Ensuring racial justice, righting the wrongs that have harmed underserved communities;
2. Ensuring that communities of color have an equal opportunity to participate.

Houenou is passionate about both issues.

“We are going to be building something new for New Jersey, a regulated cannabis industry — and that will come with some uncertainties,” she said. “But we shouldn’t shy away from those uncertainties. We should be leaning into the space and embracing the opportunity to turn the page on our past failed policies that have resulted in blacks being three times more likely to be arrested for marijuana offenses than whites — and stand something up that gives them meaningful opportunities for people of color to take part in this new industry.”

Houenou admits that is easier said than done.

“Fears of out-of-state operators or fears of having an industry that continues to be dominated by white men of affluence are very real fears,” she said. “And, unless we approach this with intention, and dedication, both could happen.

“I think the ways that we try to mitigate that risk — and the way we avoid having an inequitable industry in New Jersey — is by taking a careful approach. We need to make sure that we are lowering barriers to entering into the industry. We need to make sure that we are fostering a robust marketplace that has a lot of operators, not just a select few, because what we have seen from other jurisdictions is that increasing the number of

operators and businesses that are active can actually help drive down prices.

“That is what can facilitate equitable access to the cannabis products, as well as providing more opportunities for jobs and ownership opportunities.”

Providing that access is not easy in an industry where there is a significant financial barrier to entry. Houenou is well aware of this challenge, too.

“This is a persistent issue,” she said. “And this is really where creativity is needed. We’ve got to be willing to try really bold, new and innovative ideas.

“We’re going to have an office that is dedicated specifically for promoting inclusion in the marketplace, inclusion by people of color, and women and disabled veterans.”

Houenou said entrepreneurs need to understand the economics of the industry are about more than just growing and selling.

“The most expensive operations are the ones that are plant-touching businesses,” she said. “But there are a whole host of ancillary businesses available that don’t directly touch the plant that our communities can really take part in. We’re talking about developing (information technology) and security solutions and developing other business services, like photography or delivery services, that don’t necessarily require some of the same large capital startup costs that a cultivator or manufacturer has to face.

“I’m hopeful that we’ll have a wealth of ideas to choose from and to really get us started in tackling some of these deeper issues that are that are, really, honestly, harder to address.”

These issues, Houenou said, will not be solved overnight.

“I think it’s also really important for us to remember that what we’re doing here also has to be viewed in the broader context,” she said. “The war on drugs was a decades-long effort, and we are not going to be able to undo the harms of that in a year, or even in a few years. Because, as we know, the impact of the war on drugs was extended well beyond just the criminal justice system and beyond cannabis.

“I think that, for folks who are eager to see some of these harms repaired and some of these wrongs righted within the cannabis industry, (they) have to remember that it’s not going to happen overnight. And, still, it’s just one piece of a much broader criminal justice reform, and racial justice and economic justice work that is needed to actualize healing and the restoration of people and communities.”

Houenou spoke with ROI-NJ about all of the business challenges facing the industry. Here’s a look at more of the conversation, which has been edited for space and clarity.

ROI-NJ: If there’s one positive takeaway from the delayed start of recreational use, it’s this: New Jersey has more time to study what has — and hasn’t — worked in municipalities that have made cannabis more widely available. How much has this helped the state?

Dianna Houenou: I think this is the right kind of perspective — talking about it from the ‘lessons learned’ aspect of things, because we have been able to learn a lot. There are a dozen other jurisdictions that have gone through this process, and there’s a really strong network of regulators across the country that are open to information sharing. Having that resource is really valuable.

ROI: Give us an example of some the things you have learned?

DH: Start with the regulations around the actual products that are available. New Jersey had spent a lot of time talking about edible products and how to deal with edible products: Should we allow them or should we not — and how do we sufficiently allow edible products in a way that protects public health and public safety and keeps it out of reach for children? We have been able to look to other states that have developed specific regulations to make sure that a product that has THC is not confused for products that you can get at the grocery store.

ROI: This leads into the pharmaceutical side of cannabis, an area where New Jersey — with its rich pharma heritage — should benefit. Is that the case?

DH: Yes and no. There was a lot of conversation earlier on about how pharmaceutical companies have been involved in the industry. But, I will say that some pharmaceutical interests were not supportive of cannabis. There was a perception that making medical cannabis available was going to take away from a reliance on opioids, which we know has a real detrimental effect. So, not all pharmaceutical interests were on the side of legalization.

I think we really have a chance now to really highlight how this can be a benefit for everyone here. And we encourage pharmaceutical companies to get serious about helping launch this industry and doing it in a responsible way.

ROI: Let’s talk about opportunities with the real estate needs associated with logistics and infrastructure. Is this the best way for municipalities to get involved in the industry. And, if there’s movement on the federal level, wouldn’t New Jersey — with its location — be in prime position for warehousing and distribution, as we have proven to be with e-commerce?

DH: We have lots of opportunities here and lots of infrastructure that can help support the growth and the building of this new marketplace. There are some towns that are all on board — they’re excited about participating in launching the cannabis economy. Other municipalities, not so much. They’re still kind of holding onto what I hope to be the dying relics of the way we think about the war on drugs, and might not be as welcoming to prospective businesses that want to be involved in warehousing cannabis products, or even growth or manufacturing cannabis.

So, we still have a long way to go. But I’m really excited to be sitting down and doing this work.

And, it’s important to note that interstate commerce is uniquely in the jurisdiction of the federal government. As New Jersey sets up its regulated cannabis industry, you’re right — we do have a wealth of resources here that makes make us well-situated to have a strong cannabis economy. But, we would need the federal government to take action to allow for interstate commerce of cannabis products before we can start talking about how New Jersey plays a role in distribution within the regional cannabis market.

ROI: Let’s move to licensing. There have been some major issues involving licenses for those looking to get into medical marijuana. What is the timeline on that — and do you think it will be an issue when licensing for recreational use is rolled out?

DH: A lot of people are very eager for licensing to get up and running and for the regulated industry to get started. And, certainly, I am, too. But, it’s not going to happen overnight. Right now, we are in a place where we’ve got limited number of medicinal marijuana operators who we first have to make sure that we are protecting patient access and have enough supply of products to meet the demand on the patient side, and we’re just not there yet. Then, we’ll be talking about opening this up for broader personal adult use.

To get to that point, we have to make sure that the commission is appropriately staffed up and up to speed on the needs and the intricacies of the medicinal space, and what we’re going to be doing in the adult-use space. And then, we’ve got to really hit the pavement and be active in community engagement, so that the communities know who we are, what we’re about and what our vision is.

ROI: Talk to the people who are thinking about getting into this industry. What would be your advice to them?

DH: You can do a number of things. You certainly should familiarize yourself with the basic laws and the basic requirements of applying for business and operating a business. But, more than that, there’s a whole lot of networking that’s involved. There are a number of events that are catered toward cannabis entrepreneurs, where people are making a lot of tremendously helpful connections. You need to find people who are going to help supplement your strength and your knowledge.

Let’s say you’re a chemist, and you want to open up a manufacturing business. You might not have the best knowledge about real estate and what your facility needs are actually going to be. You should find somebody who has some experience in real estate and commercial development. I think those are some of the basic things that people should striving for.

ROI: Let’s jump ahead to a year from now — where do you see the Cannabis Regulatory Commission at the start of 2022?

DH: I hope we’re still having conversations about what it means, what we need to launch a responsible cannabis industry.

It’s going to be imperative for us to be willing to learn and try new things, but also to revisit anything that we’ve already put in place through laws and regulations that isn’t working out the way that we want it to. I hope that we’re going to have a robust public education component to our application outreach strategy. And, I hope that we have applicants who take seriously the social responsibility that comes along with operating a business in this kind of space.

This is a space where people of color, specifically black communities, were historically criminalized, and their lives were derailed for what we’re about to do. I hope that we have an industry where the players and operators take stock in that and really rise up to the challenge of being responsible businesses and helping right the wrongs of the past.

And I would love to add one last thing: Even the most mature American market in legalized cannabis, Colorado, is still only about 6 years old. So, we’re all learning. It’s going to be an ongoing learning process, where we’re constantly trying to assess the work that is being done and identify areas of improvement so that we can continuously advance the ball toward justice.

Expecting perfection in one small cannabis area in six years compared to the decades-long war on drugs is a little bit unrealistic.