Some people have complained it took too long for the state to create a marketplace for the sale of cannabis for recreational use, finally approving seven companies earlier this month.
Now that such sales are allowed — they began Thursday morning at 13 dispensaries across the state — some may be wondering if those who have not been approved to participate have missed out on what is expected to be a booming sector.
Not so, said a team of cannabis experts contacted by ROI-NJ.
John Pellitteri (Grassi), Guillermo Artiles (McCarter & English), Lee Vartan (Chiesa Shahinian & Giantomasi), Charles Gormally (Brach Eichler) and Sean Linde (Withum) all stressed this is a long game.
Pellitteri, the Cannabis Practice leader at Grassi, said there will be plenty of room in this market.
“It’s still very early on, and the market in New Jersey will be very large,” he said.
Like others, Pellitteri stressed the depth of possibilities.
“Licenses were originally only available to existing license holders who were looking to expand into recreational,” he said. “Now, a whole new round of licenses is available.
“Retail and manufacturing are excellent opportunities. Cultivation could be challenging because of the higher levels of capital required. We advise our clients who are getting into a new cannabis venture to plan strategically for every detail before they even apply. Understand the rules of the location they are planning to operate in and assemble their team very early on.”
Artiles, chair of the Cannabis Practice Group at McCarter & English, agreed.
“It’s not too late to get involved,” he said. “While the state has been at it for some time, everyone should be playing the long game here. Cannabis is going nowhere, regardless of politics, so everyone with the requisite skillset and interest should do their due diligence and get involved.”
Vartan, co-chair of the Cannabis Law Group at CSG, said those on the outside should not necessarily rush to get in. Go slow and explore all the possibilities, he advised.
“There is presently an open license period for would-be cultivators, processors and retailers,” he said. “Now is the time to consult with an attorney and figure out how the application process works and the best form of application.
“The (Cannabis Regulatory Commission) really has done a laudable job of streamlining and simplifying the application process relative to the 2018 and 2019 processes.”
Gormally, co-chair of the Cannabis Practice at Brach Eichler, said those looking to join the sector need to do their homework — and understand the market still is being set.
“I would hope that anyone interested has educated themselves during the long run-up to opening this market that there are many entry points for folks interested in cannabis business,” he said. “There is still plenty of time to do so, especially since licenses are not in a fixed number and some forms of licensure have not even opened up yet.”
That’s why those participating today are not necessarily ahead of the game forever, said Linde, the Cannabis Practice co-leader at Withum.
“Applicants pioneering the state’s process first undoubtedly have the opportunity to be first to market, but by no means will this be a golden ticket,” he said.
“Alternatively, it will not create a significant barrier to those looking to jump into the market at a later time. In mature market states, some of our most successful clients are those that entered the industry years after the first recreational sale. Also, a caution to those first to market is the state’s legal tax framework includes a 33% excise fee on the average retail price per ounce for the first nine months of legal sales.”
Read more from ROI-NJ:
- Will long wait for sale of cannabis for recreational use hurt state? Our experts say ‘No’
- Solid support for cannabis sales (in person and in polls) as recreational market opens
- Op-Ed: State police chiefs seek ‘safety-sensitive employee’ exclusion to cannabis law
Gormally agreed. There are no sure things in this market — other than the fact that there remains plenty of risk.
“The cannabis business has all of the risk attendant to any new business venture, plus the added risk that a change of federal law, where it is currently still illegal, would significantly change the cannabis playing field,” he said. “One needs to have a broad band of risk tolerance, facile business plans and models, and hopefully a unique brand or product that will help you to capture the consumer. It certainly is not too late, but know what your plan of attack is and have a Plan B if things change.”