Cannabis Business in New Jersey

The Status of the Cannabis Industry in New Jersey

The New Jersey cannabis industry generates $60-$75 million in sales every month.

• Recreational sales account for 86-89% of all sales
• Over 200 licensed recreational (Personal-Use) cannabis business operate in NJ

The state of New Jersey receives $3-$4M in tax revenue from recreational cannabis sales every month.

Medicinal cannabis in New Jersey accounts for 11-14% of the total cannabis sales across the state. Key statistics:

• ≈ 70 thousand medical patients
• ≈ 5 thousand caregivers
• ≈ 1.5 thousand medical providers
• ≈ 40 licensed medicinal cannabis businesses.

Unlike personal-use cannabis, medicinal cannabis in New Jersey is not subject to taxation, which results in the savings of 6.625% for medical card holders.

Types of Cannabis Businesses

Cannabis industry includes its core businesses, which are actually dealing with the plant, and the businesses that are supporting the core cannabis business, by providing services and tools to keep it going.

Cannabis-Touching Businesses in New Jersey

“Plant-touching business” refers to any business that is in direct contact with the cannabis product. Due to this fact, and the current issues with federal legality, such businesses must follow a stringent set of laws and require licensing.

New Jersey issues licenses to the following types of cannabis-touching businesses:

PERSONAL USE CANNABIS BUSINESSES (established under the Cannabis Regulatory Enforcement Assistance, and Marketplace Modernization Act)

• Class 1 Cultivator
• Class 2 Manufacturer
• Class 3 Wholesaler
• Class 4 Distributor
• Class 5 Retailer
• Class 6 Delivery Service
• Testing Laboratory

MEDICINAL CANNABIS BUSINESSES

• Cultivating
• Manufacturing
• Dispensing

Ancillary Cannabis Businesses in New Jersey

All businesses that work in support of the industry and the cannabis-touching businesses are referred to as the “Ancillary Cannabis Businesses”. Here are some examples of the ancillary cannabis businesses and what they do as part of their service:

• Physical Security: Security firms provide vital services like designing and implementing surveillance systems, guard services, and access control for cannabis businesses to ensure compliance with state regulations and protect high-value inventory.
• Accounting: CPAs knowledgeable about the industry help cannabis companies manage complex financial records, navigate the tax implications of cannabis regulations, and ensure accurate financial reporting for compliance. Most accounting firms also offer the services of a fractional (part-time) CFO.
• Legal: Law firms specializing in cannabis law assist with business licensing, regulatory compliance, intellectual property, mergers and acquisitions, and litigation to ensure companies operate within state and federal laws.
• Marketing: Marketing tools that are specifically designed for the industry help cannabis businesses build brand awareness, reach consumers, and navigate the tight advertising restrictions imposed on the cannabis industry.
• Insurance: Cannabis-related businesses face unique risks, and insurance companies offer specialized policies to cover everything from general liability, to crop coverage, and theft.
• Payment Processing: As most traditional payment processors avoid this industry due to legalities, finding a solid payment processor is among the top concerns for every business in this niche.
• Banking: Financial institutions that offer banking services to cannabis businesses, such as business accounts and loans, help overcome the industry's limited access to traditional banking.
• Real Estate: Real estate consultants help cannabis businesses find appropriate and compliant locations for operations, navigating zoning laws and real estate regulations.
• Software: Software solutions, such as inventory management and compliance software, are critical for cannabis companies to ensure regulatory compliance and streamline operations. Artificial Intelligence business analysis tools are becoming the golden standard of the industry.