A marijuana wholesaler license, also called a Class 3 license in New Jersey, is a legal certification that allows the holder to purchase or obtain, store, sell or transfer, and transport, marijuana products for resale or to other cannabis wholesalers or retailers. A marijuana wholesaler license does not allow holders to sell or transport marijuana products to consumers.
The New Jersey Cannabis Regulatory Enforcement Assistance and Marketplace Modernization Act (CREAMMA) requires persons interested in acquiring, storing, and transporting cannabis items to retailers to obtain wholesaler licenses. Per New Jersey Statutes Section 24:61-40), a marijuana wholesaler must obtain a Class 3 marijuana wholesaler license issued by the Cannabis Regulatory Commission (CRC) for the premises where marijuana items will be warehoused.
On August 29, 2021, the New Jersey Cannabis Regulatory Commission (CRC) voted to adopt the first set of rules (initial rules) that will guide the cultivation, manufacture, and sale of recreational marijuana in the state. The rules also paved the way for the opening of applications for cannabis business licenses.
The rules become effective immediately upon filing with the Office of Administrative Law and remain effective for a period of one year. The CRC will start accepting applications for marijuana business licenses, including wholesaler licenses at a date soon to be announced. Information on application procedures for the wholesaler license will be posted on the New Jersey CRC website when a Notice of Applications Acceptance has been issued. The Notice is expected to include:
Although the specific rules for applying for wholesaler licenses are yet to be released, the regulations released by the CRC in August 2021, contain some general guidelines for cannabis license applicants. Per the released rules, wholesaler license applicant entities:
Must include at least one owner who has resided in New Jersey for a minimum of 2 years, as of the date of the license application. A proof will be required that this individual and any other person with a financial interest who also has decision-making authority is over the age of 21. Wholesaler license entity applicants that include at least one owner legally living in New Jersey for at least 5 years as of the date of the application will receive bonus points.
Must have a valid Business Registration Certificate on file with the Division of Revenue and Enterprise Services in the NJ Department of the Treasury.
Apply for a license in a manner described under Section 18 of P.L.2021, c.16 (C.24:6I-35) of the New Jersey Statutes
An attestation signed by a valid labor organization stating that the applicant has signed a labor peace agreement with the labor organization
Meet the requirements of any guidelines or regulations adopted by the CRC
Must provide for each of these persons to undergo a criminal history record background check:
Each of these persons must consent to, or cooperate in, the securing of a check of criminal history record background information.
When determining whether a conviction on a person's criminal history record should disqualify an applicant for a wholesaler license, the CRC will disregard any conviction for a crime or offense involving a controlled dangerous substance that occurred prior to the effective date of P.L.2021, c.16 (C.24:6I-31) involving a controlled dangerous substance, controlled substance analog, or any similar indictable offense under federal law, New Jersey law, or other state's law.
Additionally, the CRC will disregard any other prior convictions, except those for conduct involving cannabis pursuant to P.L.2021, c.16 (C.24:6I-31), or under New Jersey law, or under any other state's law that is related to the qualifications, functions, or duties for which the license is required, and not more than 5 years from the conviction dates, completion of parole or probation, incarceration release, whichever is more recent.
When determining which indictable offenses are materially related to the qualifications, functions, or duties for which the license is required, the CRC will consider, at a minimum, any conviction for fraud, deception, or embezzlement, as well as any conviction for violating N.J.S.2C:35-6, employing a minor in a drug distribution scheme, or other similar indictable offense in New Jersey or other jurisdiction.
The newly published CRC rules also borrow the equity concept used by some other states in the United States in accepting and issuing licenses to cannabis license applicants. The rules address social equity by increasing opportunities in the cannabis industry for people from statutorily designated target communities. The CRC rules earmark three types of businesses that will receive priority review and approval in the application process:
Social Equity Businesses: These are businesses owned by individuals who have resided in economically disadvantaged areas of New Jersey or who have been convicted of cannabis-related charges in the past.
Economically disadvantaged areas are those areas that earn less than 80% of the state's average median household income; have health uninsured rates that exceed 150% of the state's health uninsured rate; and have poverty rates that exceed 150% of the state's poverty rate, as determined annually by the United States Census Bureau.
Diversely Owned Businesses: These businesses are owned by women, disabled veterans, and individuals categorized to be in the minority, and are certified by the New Jersey Department of the Treasury to be in one or more of the listed categories.
Impact Zone Businesses: Businesses located in the Impact Zone, owned by individuals from Impact Zones, or employ residents of Impact Zone. In New Jersey, Impact Zones are municipalities with large populations, high unemployment rates, or high numbers of crimes or arrests for marijuana.
Regardless of when they apply, persons in these three categories who apply for wholesaler licenses will have their applications reviewed before other applicants.
Applications for wholesaler license will be scored and reviewed based on a point scale, with the CRC determining the number of points, point categories, and system for point distribution. The CRC aims to complete a review for a Class 3 license application within 90 days of submission and, if approved, issue the license within 30 days after approval notice.
Yes. New Jersey municipalities are authorized to enact restrictions on wholesaler businesses and other cannabis businesses as they deem fit. The initial rules published by the CRC recognize the role played by New Jersey municipalities in regulating the nascent cannabis industry in the state. Although the CRC's rules provide the framework for operating the cannabis industry in the state, municipalities have the right to define how the framework unfolds in their jurisdictions. Wholesaler businesses in New Jersey will only be licensed by the CRC if they have received support from the municipalities by obtaining zoning approvals and have been verified to operate in accordance with any municipal restrictions.
Per New Jersey P.L. 2021, c.16, municipalities have the authority to regulate hours of operation, the number and types of licensed companies operating inside their borders, and whether to impose a 2% transfer tax on all cannabis-related transactions. They may also impose on cannabis companies any requirements or limitations that would apply to other sorts of businesses, such as mandating compliance with all applicable rules and ordinances.
Municipalities will also have a say in which applicants intending to operate in their jurisdiction will be granted a license by the Commission. Note that municipalities are not permitted to limit the delivery of cannabis products to consumers within their jurisdiction or to restrict the transportation of cannabis routed through their jurisdiction.
Municipalities that establish ordinances regulating or prohibiting cannabis businesses by August 21, 2021, may amend their laws at any time and inform the CRC if a cannabis business violates their regulations.
A New Jersey conditional cannabis License is a temporary license assigned as a Cultivator license, a manufacturer license, a wholesaler license, distributor license, retailer license, or a delivery license that authorizes the holder to legitimately act as a cannabis cultivator, cannabis manufacturer, cannabis wholesaler, cannabis distributor, or cannabis retailer within a limited period.
Yes. The CRC issues temporary wholesaler licenses to qualified persons through a shortened application process, allowing them to function in the same way as annual wholesaler license holders. The conditional wholesaler licensee, on the other hand, has a limited time to become fully licensed by fulfilling all of the remaining licensure requirements that were not requisite for the granting of the conditional license.
Per the CRC initial rules, an applicant for a conditional wholesaler license only needs to submit background (criminal) disclosure information, a business plan, and a regulatory compliance plan to the CRC to initiate license processing. If the application is granted, the applicant has 120 days to identify a suitable location, get municipal approval, and apply for the conversion of the conditional license into an annual license. The 120-day period may be extended upon request, but at the discretion of the CRC. Conditional wholesaler licensees who convert to annual licenses are not required to submit the parts of the application that require applicants to establish a prior experience in the regulated cannabis industry, per New Jersey regulation.
The following information must be provided, and the requirements met in order to complete an application for a conditional license:
If the application is approved, the CRC will issue a conditional license to the applicant, which is non-transferable for the duration of the license, no later than 30 days after giving notice of approval, unless the commission determines that the applicant is not in compliance with its regulations. An application may also be denied if a municipality has enacted a numerical limit on the number of cannabis establishments in their jurisdiction.
Conditional licensees may add new owners during the conditional licensing period, as long as the majority of the ownership in the businesses remains with the persons or entities eligible for the conditional licenses. Once prepared, a licensee may submit a conversion application, which requires the submission of a security plan, an environmental impact plan, standard operating procedures for the business, and a workforce development plan.
If the application is denied, the CRC will notify the applicant in writing of the specific reason for the denial, refund to the applicant 80% of the application fee submitted with the application, and provide the applicant with an opportunity for a hearing pursuant to the "Administrative Procedure Act."
According to the fee structure published by the CRC, a standard business license applicant will pay a $400 application submission fee, and a $1,600 approval fee. Submission fees are due when applications are submitted. Approval fees are due upon the CRC's approval for licensure to operate. Applicants who are denied approval for licensure are not required to pay approval fees.
It is not yet clear what the licensing and annual renewal fees are for wholesaler business owners. However, cannabis license fee structures in New Jersey are designed to account for the size of the business operations, the value or size of a business's estimated market share, and the cost to manage applications and enforce industry compliance. Note that every individual who works in or works with cannabis in a wholesaler cannabis business must register with the CRC to obtain Cannabis Business ID Cards. The fee for the ID card is $25 per year.
For conditional license applicants, the application submission fee is $200, while the approval fee is $800. The conditional conversion submission fee is $200, and the conditional approval fee is $800.
Application submission, approval, and licensing fees are non-refundable and must be paid at the designated time with a certified check or money order made payable to the "Treasurer, State of New Jersey."
According to New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act (CREAMMA), Cannabis wholesaler licensees may only hold Class 4 distribution licenses, allowing them to operate as cannabis distributors. Cannabis wholesaler licensees are not allowed to hold any other type of cannabis license in New Jersey.