Now that the last big company-owned dispensary selling recreational marijuana to adults in New Jersey opened this year in Fort Lee, smaller operators like Salvatore Piazza say the state needs to help people like them get into the new cannabis business.
“It’s embarrassing for the CRC (New Jersey Cannabis Regulatory Commission) that even though we’re so far into it, all the state has are these multi-state operators,” said Piazza, referring to the big national companies that have set up shop in the Garden State and own and run all 21 stores selling adult marijuana.
As he talked, Piazza, who is 28 years old, stood in front of the wooden frame of Full Tilt Labs in Ewing Township. This could be the state’s first micro-business that grows and makes cannabis.
Piazza started building the 9,000-square-foot building three weeks ago, after getting all the necessary permits. Full Tilt Labs is owned and run by a single family. Piazza, his mother, and his father all own it.
About a month ago, Piazza met with a state CRC investigator and said he was told that Full Tilt Labs’ annual licence would likely be approved at the commission’s Dec. 2 meeting.
Piazza is one of the few—less than 20% of all winners of conditional licences are expected to meet all of the state’s requirements to switch to an annual licence. Piazza said that an annual licence shows that you plan to be in the business for a long time and want to help it grow in New Jersey.
But it doesn’t look good from the numbers. So far, the CRC has given out more than 800 conditional licences and only 18 annual licences.
“We’ll be in a supply constraint in the state of New Jersey for at least three or four years,” said Piazza, because there are so few stores selling adult weed. “I’m a realist. I have a good grasp of numbers. The need is very big in New Jersey. This is a great state for marijuana, but you need to start getting people online, especially craft growers like me.
Big multi-state companies that already owned or bought stores in New Jersey that sold medical marijuana found it easy to start selling pot to adults at the same stores.
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However, it has been anything but quick and easy for smaller businesses like Piazza.
Experts in the industry say that if more small growers and manufacturers of cannabis don’t get licences, it will be hard for New Jersey’s budding industry to grow and meet consumer demand.
In an email to NJ Advance Media, cannabis lawyer Robert DiPisa of Cole Schotz in Hackensack said, “New Jersey won’t be able to grow its existing adult-use market until more annual licences are given out so that new operators can start up.”
DiPisa said that the state “is going to need to focus more on getting licences into the hands” of smaller operators and give out conditional and annual licences. So far, he said, New Jersey has a low rate of changing small operators with conditional licences to annual licences, which are more permanent and let them start working.
The CRC says that Ascend Fort Lee, which started selling weed to adults on Nov. 17 in a former Staples store, is the last store owned by a cannabis company with a national presence and millions of dollars in annual revenue to open this year.
Industry experts say that the easy part is over because all eight national companies in New Jersey had the political connections and money to start selling recreational marijuana quickly. They say it’s not a coincidence that the multi-state operators, or MSOs, got a head start from the CRC and now own and run all 21 stores for adults since the statewide launch on April 21.
John Fanburg, the co-chair of the cannabis practice at Brach Eichler in Roseland, thinks that a cannabis industry dominated by national companies based in other states goes against the purpose of New Jersey’s 1 1/2-year-old legal weed law, which is to let people of all backgrounds and incomes join the recreational marijuana world.
Fanburg said, “The problem with an MSO is that it’s not clear how local New Jersey residents, who have been left out of the cannabis war for many years, will be able to make their mark and be a part of this new business and industry.” “Are these smaller businesses being pushed out of the market?
Fanburg said, “We need to see more micro-businesses, and at the same time, we need to see more enforcement to try to get rid of the unregulated black market industry so that these businesses can grow and thrive.” “We also have to be careful not to put too much of a strain on the economy, because the product that the smaller operators sell can’t be more expensive than on the black market. If not, the black market will keep going strong.”
In response, CRC Executive Director Jeff Brown said that the state agency that has been in charge of regulating the new industry for almost a year is trying to give these smaller players a chance.
“From the beginning, the goal has been to set up a competitive, consumer-driven market that is based on opportunity and fairness,” Brown told NJ Advance Media in an email.
He said that even though the state law that legalised cannabis “made it faster and easier” for companies that already sold medical marijuana to sell weed for recreational use, “our focus has always been on getting small businesses into the market.”
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But that’s easier to say than to do, said Edmund M. DeVeaux, President of the New Jersey CannaBusiness Association, which is the state’s Cannabis Chamber of Commerce. DeVeaux said that poor communities have always had trouble getting access to capital, even when traditional sources of capital were available.
“Being in the cannabis business makes things even more complicated because there are now fewer options,” said DeVeaux. “Real estate is a problem because less than half of the state’s cities and towns have decided to let cannabis businesses operate there.
“Annual licences must be given top priority in the licencing process to make up for the possible delay in getting those planned Jersey-based operators up and running,” DeVeaux said. “Moving toward giving out annual licences would also go a long way toward recognising how hard it is for many people who want annual licences to keep leases and other forms of site control.”
Ascend, Verano, Curaleaf, AYR, and TerrAscend, five of the eight big companies that set up shop in New Jersey, have each reached the three-store limit set by the state’s cannabis law. 15 of the 21 stores in the state are owned by the five companies.
The other six stores are owned by GTI, Acreage, and Columbia Care, each of which has two. If they want to, each of these three companies can still open one more store, but that would only bring the total number of stores in the state to 24 for a population of more than 9 million people.
Brown said that when The Cannabis Academy opens in 2023, which will be run by the Business Action Center and paid for with money from the cultivators’ social equity excise fee, new programmes will be made to help home-grown entrepreneurs. He said that the agency’s decision on Oct. 27 to approve 18 annual licences was just the beginning.
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“That’s just the tip of the iceberg when it comes to licence approvals,” said Brown. “The rate at which the market continues to grow depends on the ability of awardees to carry out their business plans, municipal approval processes, applicants’ access to locations and capital, and other market factors that affect every kind of business start-up.”
A recent trade report said that, of the states that have legalised recreational marijuana, New Jersey has the least number of stores for its population.
Piazza, an Ewing operator who wants to make a name for himself in the town where he was born and raised, said he knows why so many of his peers can’t get an annual licence from the CRC.
It’s been a game of waiting that’s taken patience, strength, and, not least, money to stick out. The Medicinal Marijuana Program in New Jersey couldn’t grow because some applicants who didn’t qualify sued in 2019, and a judge said that the state couldn’t give out new medical cannabis licences for two years.
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Late last year was the first time that new medical licences were given out, but these operators have yet to start working. This is why New Jersey only has 23 medical dispensaries, which are owned by a dozen people who run businesses in more than one state. These 23 dispensaries serve the 117,000 people who have registered to use medical marijuana.
Piazza applied for the first time in 2019 and was one of the people who had to wait two years before they could apply for a conditional licence. In June of this year, he got a licence that was only good for a few months.
Two months later, he applied for an annual licence. He said he has spent close to $300,000 on legal and engineering fees to get through the complicated city approval process. He thinks he will need at least another $1 million to get Full Tilt Labs fixed up and ready to open.
“It’s not cheap,” said Piazza. “No one is going to give you any money. It’s a very tough race.”
Piazza is lucky. On the same three-acre property as Full Tilt Labs, his family owns and runs a landscaping and snow removal business. Piazza said that he would not have made it this far if he hadn’t been able to use money from the family business to pay for the start-up costs of his cannabis business.
“The CRC needs to hear what these small businesses have to say about how hard it is for them to get an annual licence,” Piazza said. “The conditional approval of the licence gives people a lot of false hope. The time you have to apply for an annual licence isn’t enough to get all of the things that the CRC needs.”
He also said that the CRC “needs people like us who care about plants and really want to make something better so that people can enjoy it more.”
All of New Jersey’s eight biggest cannabis companies are vertically integrated, which means they grow and sell their own product. Some people say this makes it harder for smaller companies like Piazza to compete.
Piazza said, “They don’t have to pay anyone for it.” “They already know what they’re going to make and how they’re going to sell it. They’ve skipped over me, the middleman.”
If Full Tilt Labs gets an annual licence on December 2, it will be up to the CRC to do a site inspection to decide when Piazza can turn on the lights. Then Piazza can start planting his first crop.
He said, “I hope by February.” “Then, by the middle of June, I hope to have harvested and sold my goods. All of that will depend on whether or not the CRC gets us there.”
