ROI-NJ has reached out to a number of service providers who have made it their business to help entrepreneurs in the section.
Read on to get insights on some key questions and concerns, such as:
- A key factor to get a license;
- A part of the process a newcomer won’t think of.
And then there’s:
- How has the industry’s slow start in the state hurt it — or helped it?
- How do you see the industry changing in the next 12 months?
Like we said: You’ve got questions, our insiders have answers.
Ren Cicalese III
CPA, associate partner
Alloy Silverstein Accountants and Advisors
Robert E. Schiappacasse
Co-chair
Sills Cummis & Gross Cannabis Industry Practice Group
Jason K. Gross
Co-chair
Sills Cummis & Gross Cannabis Industry Practice Group
What aspect of the cannabis industry does your firm specialize in (compliance, growth, distribution, etc.)?
Ren Cicalese III
We look at our role as advisory, as this industry has challenges that are different from all other industries. Alloy Silverstein has been working with cannabis businesses in all verticals of the industry, from planting the seed, all the way through retail sales. Having an accounting firm that understands the impact of how you set up your entity, navigating 280E and the challenges of setting up payroll in an industry that has not yet received federal approval will make a big difference in the success of your new business.
Robert E. Schiappacasse
We represent clients in cannabis-related transactions and litigations. We are well-versed in the medical and adult-use cannabis industries and the associated laws and regulations. Our areas of experience include: corporate and commercial transactions; mergers & acquisitions; corporate formation and business licensing; fund formation and investment management; state (New Jersey Cannabis Regulatory Commission) licensing; state and federal regulatory; branding and intellectual property protections; commercial licensing agreements; banking and financial compliance; real estate law, including zoning and land use; environmental law; litigation and insolvency; secured creditor issues; employment law; and tax law.
Can you tell us something someone new to industry needs to know — that they probably haven’t thought of?
Ren Cicalese III
If you’re thinking about getting involved in the cannabis industry, it’s important to realize that it takes deep pockets to run the businesses. Regular expenses are one thing, but the current tax law limits deductions on the business income. As a result, the income tax being paid on cannabis businesses is much higher than most people expect. Also, the licensing process takes a very long time, so you must have patience.
Jason K. Gross
The New Jersey Economic Development Authority is about to roll out a Cannabis Equity Grant Pilot Program that will provide funding for cannabis businesses. It is available to conditional and annual New Jersey adult-use license holders and will provide grants of $250,000. These are not loans and do not need to be repaid.
Give us one factor that is key to getting a license.
Ren Cicalese III
When you’re applying for a cannabis license, it’s important to have all of your paperwork in the proper order. If the New Jersey Cannabis Regulatory Commission finds that your application doesn’t include the required information, they will put your license on pause until you provide what they are asking for. This will delay the decision on your license application.
Robert E. Schiappacasse
Obtaining ‘site control’ over real estate is critical to getting a cannabis license. Site control means, generally, exclusive rights to a proposed location for a cannabis business and can be demonstrated by lease or deed or similar documentation. In determining the right location, it is important that the applicant identify a municipality that has not ‘opted out’ of the cannabis industry and that local zoning set-back and other requirements are met. While New Jersey’s adult-use licensing process does allow applicants for conditional licenses to initially defer site control until later in the process, it still remains the most critical element for ultimate success.
How do you see industry growing/changing in next 12 months?
Ren Cicalese III
Over the next year, I expect to see more small businesses getting license approvals. When the state first started allowing recreational cannabis, it gave licenses to multistate operators to ensure the growth of the industry. Now that we’re two years into legalization, smaller businesses should get their seat at the table.
Jason K. Gross
Exciting times are ahead of us. There will be many more adult-use retailers opening up. We will hopefully see the beginning of a licensed delivery program so that customers do not need to travel to dispensaries if they are not able to do so, or just prefer the convenience of delivery. We may even begin to see cannabis lounges.
How has the slow start helped or hurt the industry?
Ren Cicalese III
The New Jersey cannabis industry got off to a slow start, but I think that has actually helped. There’s no doubt there is a significant amount of demand for cannabis products. By starting slow and limiting the number of licenses available, the state ensured that the market wouldn’t be flooded with inexperienced operators. This has helped the industry bloom into what it is today. As the industry matures, I expect we’ll find more small businesses with licenses that allow the industry to blossom into something great for the state’s economy.
Robert E. Schiappacasse
We all wish the industry was moving quicker, but we are excited that the state and various municipalities are devoting resources to make sure the industry progresses in ways that benefit all involved. The state has been deliberate in its approach to adult-use cannabis in order to protect patients by ensuring that they have sufficient access to cannabis products. That is a worthwhile cause. It is true that adult-use operators and customers have had to wait a bit longer (and in some areas of the state are still waiting for the number of retail locations to meet demand). On the positive side, the longer wait time has enabled applicants more time to prepare and learn from the legacy operators what works and what doesn’t.
Give us your elevator speech: Why should someone hire your firm?
Ren Cicalese III
Alloy Silverstein has been partnering with small and midsized businesses for over 60 years. We are a firm focused on providing our clients with top-of-the-line service and the record proves it, as we are a five-time recipient of the Best of Accounting award for client service excellence.
Jason K. Gross
Sills Cummis & Gross is no stranger to the dawn of a newly regulated industry. As one of a few law firms involved at the outset of the legalization of gambling in New Jersey, we understand the political, business and legal challenges clients will face. In that spirit, we work both to understand the regulatory framework and to guide our clients to maximize the benefits and protections available under existing and proposed laws and regulations.
