How to Open a Cannabis Dispensary in New Jersey

Types of Dispensary Licenses in New Jersey

In New Jersey, there are six types of licenses for recreational purposes established by the CREAMM Act. If you’re applying for social equity, ensure signing this attestation. The licenses for recreational cannabis business are as follows;

Class 1 Cannabis Cultivator

Authorizes cultivation of recreational cannabis. The fee structure is as follows;

• Microbusiness: $1000
• Standard Business (Tier I-TierVI): $5000-$50,000

Class 2 Cannabis Manufacturer

Authorizes manufacturing of recreational cannabis products. The fee structure is as follows;

• Microbusiness: $1000
• Standard Business: $20,000 (up to 10,000 sq. ft.), and $30,000 (for 10,000+ sq. ft.)

Class 3 Cannabis Wholesaler

Authorizes storing, selling, and transferring of recreational cannabis products between cannabis cultivators, wholesalers, or retailers. The fee structure is as follows;

• Microbusiness: $1000
• Standard Business: $10,000

Class 4 Cannabis Distributor

Authorizes transportation of cannabis items between cannabis cultivators, manufacturers, or retailers. The fee structure is as follows;

• Microbusiness: $1000
• Standard Business: $3000

Class 5 Cannabis Retailer

Authorizes purchasing of cannabis from licensed cultivators, manufacturers, or wholesalers and selling to consumers in a recreational retail store. The fee structure is as follows;

• Microbusiness: $1000
• Standard Business: $10,000

Class 6 Cannabis Delivery

Authorizes delivering a consumer’s recreational cannabis purchases from the retailer to that buyer. The fee structure is as follows;

• Microbusiness: $1000
• Standard Business: $3,000

Note: The Cannabis Regulatory Commission isn’t accepting applications for medical cannabis dispensaries or businesses as of yet. You can check for updates here.

Conditional Adult Use Retail Dispensaries (CAURD) License in New Jersey

As you must be aware, CAURD is a temporary license that gives applicants 120 days to find a site, secure municipal approval, and apply for conversion to an annual license.

A CAURD license in New Jersey authorizes you to begin building out operations for the cultivation, manufacture, dispensing, wholesale, distribution, or delivery of recreational use cannabis while working towards meeting the requirements for the required annual license.

Note: Every license has specific requirements regardings compliance or specialized cannabis insurance. So, it’s best to keep the requirements of your desired licenses in check.

Understanding the Cannabis Market in New Jersey

Application Process for a Dispensary License

Usually, the application process for cannabis dispensary licenses in New Jersey includes the following steps:

1. Initial Preparation: Gather all the information and documents needed to prepare the application, including company strategies, financial records, security plans, and ownership details.
2. Application submission: A well-written application contains all the relevant information and is accurate and thorough. A completed application will increase your chances of receiving the license and shorten the waiting period, so keep that in mind.
3. Background checks: To guarantee compliance with state laws, candidates and important members of the dispensary’s staff will go through extensive background checks. This could include a fingerprint, proof of residency, proof of property ownership or owner consent, etc.

Timelines for Obtaining a License

While the New Jersey cannabis authorities haven’t specified a time period for a cannabis dispensary license, it takes several months between initial application and final issuance of license on average.

The total time your applications take to process depends upon several factors, such as the completion of your application, the type of license you’re applying for, and more.

Typically, a conditional license application takes less time (3 to 6 months) than the annual license (6-12 months) applications. Your application may also take longer to process if there’s a backlog of applications.

Once you’re awarded the license, get your cannabis business registered with New Jersey’s Department of Revenue and Enterprise Services (DORES) within 15 days before starting operations.

Financing and Business Plan for a Dispensary

Starting a dispensary in New Jersey requires a solid business plan and adequate financing. If you’re looking for secure financing options, you must establish a solid business plan that aligns with the interests and policies of your investors.

Types of Financing Available

• Self-Funding
• Traditional Business Loans
• Private Investors
• Cannabis-Specific Lenders

Importance of a Solid Business Plan

It is no secret that your success and growth in New Jersey’s cannabis market heavily rely on your business plan. If your business plan has efficiently included your dispensary’s mission, vision, target market, advertising and marketing plans, and financial projections, it has everything that an investor would want to know before partnering with your firm.

A successful business plan demonstrates the viability, and potential profitability of the venture with regard to the local market, making it an additional reliable investment for lenders.

Risk Management Plan

Almost all financing options require you to establish a risk management plan that goes side by side with your business plan.

No business comes without risks, especially in a volatile industry like cannabis. Investors, lenders, equity firms, or any financing solution you choose need to ensure that their investment will be worthy. A risk management plan helps ensure that by maintaining security, preventing diversion, managing inventory, and complying with state and local laws.

When you’re at it, don’t forget to buy specialized cannabis insurance to cover any financial or reputational losses that may occur. Cannabis insurance makes businesses appear customer-centric and focused on long-term sustainable growth.

Market Research and Location for a Dispensary

New Jersey is a lucrative state, especially in terms of recreational cannabis, as proven by January-March 2023 sales. Still, you must consider several factors if you’re aiming for maximum profitability, such as population demographics, proximity to target customers, accessibility, and zoning regulations.

Location Requirements for a Dispensary

The New Jersey Cannabis Regulatory Commission (CRC) has established some zoning regulations to ensure that dispensaries are located in safe and accessible areas and that they do not pose a nuisance to neighboring businesses or residents.

Some of the location requirements for cannabis dispensaries in New Jersey include:

• Dispensaries must be located at least 1,000 feet from schools, playgrounds, and other sensitive locations.
• Dispensaries must be located within walking distance of public transportation.
• Dispensaries must be visible from public roads.
• Dispensaries must be located within a buffer zone of at least 500 feet from other dispensaries.
• Dispensaries must obtain approval from the municipality in which they are located.

Note: For more info regarding zoning laws, check the CRC page for any updates.

Insurance Requirements for a Dispensary in New Jersey

While the New Jersey Cannabis Regulatory Commission doesn’t require any specific insurance, it is still a good idea to cover your business against all potential liabilities and risks by obtaining adequate insurance coverage. Common types of insurance that dispensaries may require include:

• General liability insurance
• Product liability insurance
• Property insurance
• Workers’ compensation insurance
• Cyber liability insurance
• Directors and officers’ liability insurance

1. Site Inspections: Since a business can only apply for one dispensary license or use CAURD licenses, New Jersey’s Cannabis Regulatory Commission inspects the site you choose before awarding a permanent license.
2. Approval and Licensing: If the application meets all requirements and passes the necessary checks and inspections, the Cannabis Regulatory Commission of New Jersey then issues the dispensary license.

Here are a few useful resources from the State’s website that can help you craft the perfect application:

• Application Guide
• Application Platform Demo (Video)
• Step-by-Step Cannabis Business Navigator
• Webinars
• 10 Ways to Prepare to Submit Your Application
• MSA FSA Need to Know

Required Documentation for a License

If an application reaches the CRC’s office incomplete, they receive a Cure Letter that allows them to fix errors or complete their application. If you want to save time and effort, ensure that you already have all the documents you need.

Generally, the following documents are required for a cannabis dispensary license:

• Personal History Disclosure
• Entity Disclosure Forms
• Signed Affidavits, Releases, and Waivers
• Social Equity Business attestation
• Business Plan
• Financial Plan
• Security Plan
• Compliance Plan
• Other documentation, as required by the CRC

Note: Check out the CRC’s application acceptance for all information regarding eligibility, required documents, fees, and more.