How to Launch a Cannabis Business In New Jersey

A version of this post first appeared in the Cannabis Law Journal: New Jersey Requiring Insurance Plan for License Applications

Big changes are underway in The Garden State as cannabis regulations make room for more businesses to operate legally. This post reviews the new legal landscape and what it takes to launch a cannabis business in New Jersey.

New Cannabis Regulations in New Jersey

As in most states, the new cannabis regulations in New Jersey are long-awaited. That said, the New Jersey Cannabis Regulatory Commission currently issues licenses for medical and recreational cannabis business operations in New Jersey, including: 

• Growing cannabis plants
• Storing cannabis and cannabis products
• Making cannabis products
• Transporting or delivering cannabis and cannabis products
• Selling cannabis and cannabis products
• Testing cannabis and cannabis products

The Commission began accepting applications for the following two Classes on December 15, 2021:

• Class 1: Cultivators 
• Class 2: Manufacturers and Testing Laboratories

On March 15, 2022, the Commission started accepting applications for one more Class of cannabis business, which is:

• Class 5: Retailers, Dispensing, and Delivery

According to the Commission, all Classes must submit their license applications online at http://www.nj.gov/cannabis. There is no deadline for applications. Although the Commission hasn’t set a limit on how many cannabis business licenses are available statewide, it has established that it will only issue 37 Class 1 (cultivators) licenses before February 22, 2023. 

Also, the Commission has the right to update regulations at any time. If there are any updates or changes, the Commission will announce them at a public meeting, post them on their website, publish them in the New Jersey Register, and email them to the Commission’s entire mailing list.

Requirements for Business License Applicants in New Jersey

Launching a cannabis business in New Jersey comes with a handful of requirements. License applicants must review and comply with the requirements listed on page 17 in the Notice of Application document. Applicants can download this PDF directly from the Official Site of the State of New Jersey (linked in the previous section). 

These qualification requirements will dictate applicant priority, with 1A the highest scoring and 10B the lowest. Testing laboratory license applications will be rated in priority group 1A. After the scoring process, the Commission will grant final approval based on the priority system. Still, scoring high depends on a few factors that we review later.  

Conditional License Application Scored Measures

Other mandatory application requirements exist for all applicants, such as your legal name and primary address, a complete Entity Disclosure Form, a waiver of liability, and plenty more. In addition to many of these standard requirements, each business type has its requirements, such as zoning approval and evidence of local code compliance. Applicants can find all criteria on the Notice of Application Acceptance. 

While Classes 1, 2, and 5 must navigate different application requirements, every type must score 100 points for approval on the Conditional License Application Scored Measures. Here’s a shot from the actual Notice of Application PDF outlining these specific requirements:

Source: Notice of Application Acceptance for Personal Use Cannabis Licenses

Insurance Considerations for New Jersey Cannabis Companies

According to the Conditional License Application Scored Measures, part of the application requirements considered is the plan for businesses to obtain liability insurance. This requirement might be challenging for new applicants who don’t have insurance, but there’s a solution.

Letter of Commitment vs. COI

Here’s the thing; cannabis companies shouldn’t purchase insurance before the Commission formally approves them for a license. If this is your game plan, we encourage you to reconsider your route. Of course, you must have a plan for liability insurance to avoid getting docked ten points on your score. 

At AlphaRoot, we have been providing our prospects and current clients vying for New Jersey licenses a “letter of commitment.” It states, “AlphaRoot LLC and our carrier partners have engaged (Company) and discussed their insurance needs. In the event that (Company) is awarded the license with the city, we will work on (Company) behalf to obtain the necessary quotes and limits outlined by the city of (City) (State) as evidenced by a (Company) certification of insurance.”

Additionally, the referenced insurance quotes include the following lines of coverage:

• Commercial General Liability
• Products Liability
• Property
• Workers’ Compensation

Our goal is to put our clients and prospects in the best position to be awarded a license. It doesn’t make sense to have insurance in place before you even know if you will receive a license — but the application requires a plan for liability insurance. It might seem like a Catch-22; however, a letter of commitment is a fantastic alternative for companies that don’t have insurance in New Jersey and can’t provide a COI.

Protecting your cannabis company can seem confusing; however, we’re a full-service insurance brokerage working with carriers worldwide to offer you the best coverage possible. We’re here to help! Please reach out to us today by emailing [email protected] or calling 646-854-1093 for a customized letter of commitment or learning more about your cannabis insurance options.