Grassi Advisors & Accountants
CPA, partner, Cannabis Practice leader
The sale of cannabis for recreational use finally is here. Did the long delay help the state or hurt the state when it comes to establishing itself in the business of cannabis?
“While many people in the industry would have liked to see it happen much sooner, it’s more important to get it right. New Jersey developed a sustainable program that covers a lot of the important issues that the sale of cannabis impacts, including social equity. In the short term, there was definite impatience in the industry. But, in the long run, I don’t think it will be an issue. Better to get it right the first time around. And better late than never.”
For those just getting interested in getting into the cannabis business space, whether it be growing, distributing or selling, is it too late? What would you advise someone who is looking into a venture today?
“Absolutely not. It’s still very early on, and the market in New Jersey will be very large. Licenses were originally only available to existing license holders who were looking to expand into recreational. 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.”
Do you think the regulations will create an equitable market, one where underserved communities have a fair chance to succeed, as Gov. Phil Murphy has wanted from the beginning? If not, what rules/regulations would you add to meet this ideal?
“I am optimistic that the state’s social equity goals will be achieved. Their intentions were good, and they have taken all the right steps. Two headwinds that the state will face when trying to help the industry thrive are the lack of banking and other financing options available to cannabis businesses, as well as the high state taxes caused by Code Section 280E, which prohibits cannabis companies from deducting business expenses and utilizing other business tax strategies. These are two huge obstacles that cannabis business owners face in any state.”
Give us one more thought on the cannabis industry in New Jersey?
“New Jersey has the chance to be a leader on the East Coast, in terms of cannabis sales and market share. The way the state has taken the social equity position and put it at the forefront sets them apart from a lot of early pioneers, particularly their focus on equitable distribution of licenses in underserved communities.”