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Firing Up
As New Jersey bears witness to an emerging cannabis industry, local experts analyze what has been established to both contextualize and anticipate what comes next.

by Carly Murray

New Jersey’s emerging cannabis industry has seen a number of successes thus far, reaching milestones like surpassing $2 billion in sales since 2018 and dispensary locations recently skyrocketing past 100 listings on the New Jersey Cannabis Regulatory Commission (NJ-CRC) directory. According to the commission, $1.3 billion of sales are attributed to the recreational market that came to fruition in April 2022, with the remainder derived from the medical market.

But the industry’s expansion is just getting started. New Jersey has played a prominent role in spearheading both medicinal and recreational cannabis on the East Coast, largely due to the regulation, legislation, establishment of careers and educational programs contributing greatly to the industry’s development. However, costs, restrictions and municipalities’ discretion have prevented the landscape from imitating long-established markets in early-adopter states like Colorado or California. Those marijuana pioneers, among others, have significantly lower prices, higher product potency, more options and fewer barriers to entry for breaking into the field.

“I have this conversation with clients every day,” says Seth R. Tipton, Esq., a partner at Florio Perrucci Steinhardt Capelli & Tipton LLC. “If you're doing any type of fundraising, or any type of predictive modeling to figure out what you need, how much you need and how you're going to pay for it, the fundamental thing that goes into that planning is predicting the price of flower, which dictates the price of everything that's going to be made in the market. The price is still relatively high compared to other markets. For example, I was just in Massachusetts and Rhode Island speaking to growers there, and their prices are substantially lower than New Jersey's—almost too low, frankly, to support their market. Jersey’s is still pretty high; it will come down. More growers are coming online. The other side of the coin on this is that there's an assumption in the public that every license issued from the CRC is going to become an active license—and that's just not the case. They've issued over 1,000 licenses. I think the failure rate, unfortunately, on those licenses is going to be quite high in the next couple of years.”

New Jersey’s dispensaries aren’t yet filled with drinks and confections, nor is there an easy way to compare options or handle money. While the state’s dispensaries typically do extend an elevated customer-service experience, they are comparable to pharmacies with a focus on structure and security. Of course, both versions have their pros and cons: New York, for instance, seems to have a number of weed stores rivaling its amount of Starbucks locations, but there isn’t an easily accessible directory or information distinguishing those with genuine THC products versus less effective options like Delta-8.

Competition can be an asset, as businesses may find success in creative incentives, bespoke experiences or, at this stage, unique products. The potential for expanded cultivation in The Garden State may improve the market from all perspectives.

“Part of the reason for the high prices of legal cannabis in New Jersey is the multiple regulations that are required before the product is put out for sale: The marijuana must be grown organically, it must be tested and the contents labeled accurately, it must be packaged appropriately, and the entire facility must meet very rigid security requirements,” says Ken Wolski, RN, MPA, Executive Director of the Coalition for Medical Marijuana—New Jersey, Inc. “I, for one, am OK paying the price for the New Jersey legal cannabis because I know exactly what it is that I am getting and putting into my body. This was never possible with the legacy market. As the cannabis industry expands in NJ, competition may bring the prices down somewhat. Federal descheduling of marijuana should help with prices, but it is not certain that the DEA will even reschedule marijuana anytime soon. But the real need is for insurance coverage for medical cannabis, so patients can just pay a copay amount, say $15 for it. And, of course, a home-grow option.”

While meticulous oversight has built the cannabis market in New Jersey to this point, a common sentiment from customers and professionals is that they wish it could be more laissez-faire. Sheila M. Mints, chair of Cannabis Law and Healthcare Practices at the law firm Capehart Scatchard, explains that another consistently rigorous process for cannabis professionals is maintaining security.

“Security is expensive,” she says. “There really have not been any issues that I'm aware of in terms of robberies or anything like that, but at least it's potentially a problem. I mean, it's a cash business and they have cannabis on site. It does make it kind of attractive, like a jewelry store. But, there are pretty stringent security requirements at the CRC level, and then the municipalities tend to overlay with their own requirements.”

These conversations are integral to an optimistic future for the cannabis industry. Perhaps a testament to this is the increase in cannabis courses implemented at local higher-education institutions, preparing the next generation for careers that didn’t exist even five years ago.

“I've been a teacher for New Jersey Cannabis Certified,” Tipton begins. “We have been teaching that course for three years now at community colleges throughout the state. The idea is to help students to find a way into the industry by learning the basics of the heavily regulated field, the cannabinoid system, the science behind it, and all these elements to give them a leg up in the application process. Like any new emerging market, getting in at this point gives the opportunity for these people to take over leadership positions in these companies. Every single dispensary cultivator manufacturing facility is going to require management level positions.”

In the recent past, programs across the country taught schoolchildren that marijuana is a dangerous gateway drug, or that usage is a common source of peer pressure. These misconceptions have been dispelled, but they still persist on a federal level.

“It seems like people who grew up in the United States and have gone to high school and college, presumably, or have partaken themselves at some point in their lives would realize that it's not the boogeyman. This isn't 1930 and it's not Reefer Madness,” Mints affirms. “What we really provide when we talk to municipalities is education, not just about cannabis, but about the way we sell. …We really guide people and explain exactly how we do business and how regulated it is. We have very, very robust security checks before somebody is able to walk into a dispensary.”

Mints adds that many of the cannabis professionals she has worked with would like to see federal legalization, expanding the scope of products and minimizing legal persecution by allowing transportation across state lines, acknowledging that wide-scale change starts at home. The second objective Mints points to is a streamlined municipal process, rather than allowing regulations to differ among towns.

These divergent and vigorous guidelines often lead aspiring business owners to the “gray market.” In avoiding applications, excessive fees, licensing, security requirements and more, they are able to offer customers attractive attributes that are still pending among established dispensaries. These include delivery options, lower prices, larger product quantities and the full gamut of options. It is a bit paradoxical, as this is a method some have dipped into to secure the funding needed to open a registered, fully legal business.

With all of these elements in discussion for the recreational marijuana market, there is still much to be desired in the longer-established medical marijuana market. Once again, federal prohibition and persistent misconceptions place medical consumers at the discretion of their cannabis providers, a bottleneck that some experts point to as being another area that needs to change in order for a still-young industry to flourish.

“The physician gatekeepers charge patients fees to access NJ’s Medicinal Cannabis Program. These fees can be in the range of $150 to $200 per visit and are required to be paid in cash by the patient. Further, the physician determines how often the patient must be seen each year and charged for visits,” explains Wolski. “There are only 1,038 providers out of the 27,000 licensed physicians in the state that have registered with the CRC to participate in the MCP. This speaks to the lack of information—ignorance—in the physician community about the Endocannabinoid System [ECS].”

That discovery, Wolski notes, could be crucial in helping to better understand the benefits of marijuana and further exploring its holistic, medicinal effect on the human body.

“I have followed the discovery of the ECS since 1993. It is quite remarkable that an entirely new system in the human body would be discovered in our lifetime—a system that interacts with all the other systems, and whose role is to promote homeostasis,” he continues. “This system details the cannabinoid receptors that exist in every organ of the human body and explains why marijuana is effective for such a wide range of diseases, symptoms and conditions. Researchers say that the ECS may play a role in all human diseases. Yet, sadly, the ECS is not yet taught in most medical schools or nursing schools. Textbooks need to be rewritten; anatomy and physiology classes need to have their curricula updated. There is much work to do as this new science emerges. The ensuing years will enhance and enlarge our understanding of the role of cannabinoids in the human body.”

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Published (and copyrighted) in South Jersey Biz, Volume 14, Issue 4 (April 2024).

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