The New Jersey Economic Development Authority’s $10 million state-funded Cannabis Equity Grant program is focused on supporting businesses and startups in the recreational cannabis industry and ensuring that communities that were adversely impacted by the War on Drugs have equitable access to the industry.
The pilot program aims to give $250,000 to 24 entities that have a conditional or annual license, have obtained site control over their real estate and have municipal approval.
Is your business eligible? This week, the EDA launched an Eligibility Assessment Tool for the first phase of the program.
The goal of the Joint Ventures Grant is to support businesses that do not need technical assistance but that still have carrying costs and capital issues associated with converting their conditional license to an annual license. Eligible applicants must have formed their business after March 9, 2020, and employ 50 or fewer full-time employees.
Eligible uses for the Joint Ventures Grant include expenses such as rent and mortgage payments, payroll and independent contractors, utilities, legal, accounting, marketing and more.
The Joint Ventures Grant will allocate a total of $6 million in funding to the 24 entities. Each $250,000 Joint Ventures Grant will be disbursed in two rounds, with the first allocation in the amount of $100,000 occurring upon the execution of the grant agreement. The second disbursement of $150,000 will occur once the grantee receives its annual license and demonstrates that it utilized the first disbursement for eligible costs.
The first phase of the Joint Ventures Grant ($250,000) is the largest of its kind in the nation — with 40% of the funding reserved for qualifying social equity applicants primarily characterized as those who have previous cannabis convictions or live in economically disadvantaged areas. Additionally, 5% of the total program funding is reserved for businesses located in Impact Zones, which are areas targeted based on previous levels of marijuana arrests, population, unemployment rates and additional socioeconomic factors.
Applicants who are not eligible for the Joint Ventures Grant may qualify for Phase II of the program, which will launch later this year.
The Phase II grant in the amount of $150,000, the Seed Equity Grant, is solely for applicants who meet the New Jersey Cannabis Regulatory Commission’s criteria for social equity and have obtained a conditional license but have not secured the real estate or municipal approval (defined as a resolution from governing body or letter of support from the municipal executive and land use/planning/zoning approval) and need assistance in converting their conditional license to an annual license. Additionally, all applicants who do not qualify for the Phase I grant will be connected to training and other programmatic resources.
EDA CEO Tim Sullivan said the program aims to ensure access to what will be a very big industry.
“By 2025, the cannabis industry is expected to contribute approximately $2.4 billion to New Jersey’s economy,” he said. “However, access to capital remains a significant barrier to entry, particularly for people of color.
“NJEDA is thrilled to take the first step in ensuring that businesses that have been historically and intentionally locked out of funding opportunities have access to the capital needed to participate in this growing industry.”
Tai Cooper, the EDA’s chief community development officer, said the program will have great impact.
“Through NJEDA’s work, I’ve witnessed firsthand the transformative impact that access to capital can have on New Jersey small businesses and startups, especially those owned by people of color,” she said. “Cannabis entrepreneurship opportunities can play an integral role in building and returning wealth to individuals and communities that have been significantly harmed by the criminalization of cannabis.
“NJEDA recognizes that this pilot grant program alone will not address all of the barriers to entry for small businesses and those who have suffered unfairly as a result of the War on Drugs, which is why it is the first in a series of initiatives aimed at increasing equity and access to this industry.”