June 4, 2019

CSG Law Alert: New Jersey Seeks Significant Expansion of Medical Marijuana Program, Issues RFA for Up To 108 Additional ATCs

On June 3, 2019, the New Jersey Department of Health (“DOH”) issued its latest Request for Applications (“RFA”) for applicants to operate up to 108 Alternative Treatment Centers (“ATCs”), commonly known as medical marijuana dispensaries, across the State.

This latest call for applicants differs significantly from the DOH’s July 2018 RFA in two notable ways:

1. Scale: The June 2019 RFA calls for up to 38 ATCs in the Northern region of the State, up to 38 in the Central region, and up to 32 in the Southern region – as opposed to the July 2018 RFA, which sought two ATCs across each of the State’s regions.

        While ambitious, this push aligns with what New Jersey Health Commissioner Dr. Shereef Elnahal has expressed on several occasions: the State’s medical marijuana program is currently suffering with supply issues and, while the six new license awardees that came from the July 2018 RFA process will aid greatly         in addressing this shortage once operational, an influx of 108 dispensaries will provide enhanced access and relief to the State’s medical marijuana patients – whose population has grown to more than 47,500 cardholders.

        2. Trifurcated Licenses and Varying Cultivation Endorsements: Three types of endorsements will be available for ATCs: cultivation (growing), manufacturing (processing) and dispensary (retail). In total, the Department will seek up to 24 cultivation endorsements, up to 30 manufacturing endorsements, and up         to 54 dispensary endorsements. The July 2018 RFA called exclusively for vertically-integrated businesses.

        Additionally, the DOH will allow for three types of cultivation endorsements, which vary by grow facility size – 5,000 square feet, 20,000 square feet and 30,000 feet. In doing this, the State hopes to create a more inclusive business environment for participation from small- and medium-sized businesses.

Permit application forms for ATCs will be available here on July 1 and will be due to the DOH on August 15. The award timeline will be contingent on the volume of applications received.

What To Do Now

A major lesson learned from the July 2018 RFA process: there are many dynamic, competitive cannabis businesses seeking to enter the New Jersey marketplace – as evidenced by the 146 applications the DOH received and had to meticulously evaluate in order to award six licenses. One can only imagine how many organizations will throw their hat in the ring this time around.

As I have said before on this blog, there are three key considerations I would provide to aspiring entrants to help stand out from the pack:

• Now is the time to begin planning for the application process – not July 1. (Kudos to those who have been pounding the pavement and proactively preparing for this moment over the course of the year.)

• Legal counsel and/or a general consultant will be integral to finding a willing host community, as well as a properly zoned locale.

• If there are underserved areas in the Northern, Central or Southern regions of New Jersey, applicants should consider locating there first.

The months ahead promise to be exciting, but individuals and businesses interested in entering the marijuana industry cannot afford to be passive. We suggest applicants work closely with their attorneys, accountants and other advisors to complete their applications timely and consistent with New Jersey law.

Stay tuned for more updates from CSG’s Cannabis Law Group.