One of the arguments for legalizing marijuana in New Jersey was that a disproportionate share black and brown people were being arrested and imprisoned for marijuana offenses. The campaign proclaimed that decriminalizing the drug would end that, and a legal cannabis industry could go further — steering marijuana businesses to the minorities that had suffered the most from enforcement of pot laws.
State officials repeatedly affirmed this goal after legalization. Making progress on it was never going to be easy for many reasons. Nearly three years after the referendum approving legal sales and consumption, achieving the target of minority ownership of cannabis businesses still looks elusive.
The state Cannabis Regulatory Commission has designated 30% of cannabis business licenses for diverse ownership groups — 15% for certified minority-owned businesses, and 15% for those certified as women owned or disabled veteran owned. Certification requires that a 51% interest or more is held by a combination of minorities, women or disabled veterans, and daily business operations are controlled by one or more of the owning minorities.
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This strong backing at the state level may have given eligibly diverse entrepreneurs the idea that a path was cleared for them to get into the promising cannabis business. Not that simple in heavily regulated and home-ruled New Jersey.
The Cannabis Regulatory Commission seems to be doing its part. In December, it said that 1,080 of its cannabis license applicants — 72% — qualified as diversely owned. A month or so later, the commission announced that 247 applicants with prior convictions had received at least conditional approval to grow, manufacture or sell recreational cannabis.
But after the approval or temporary license comes the hard work of starting a business in New Jersey, including making a solid business plan, finding an appropriate location, securing financing and more. The state hasn’t said how many diversely owned cannabis businesses are open and operating. Judging by the complaints of frustrated minority entrepreneurs and their attorneys to NJ Spotlight recently, the number must be well short of the goal.
Local government approval is a major challenge for all cannabis businesses. For starters, only 1 in 5 municipalities have chosen to allow the sale of cannabis in their towns. Those that do allow it are free to limit it to a designated zone. From Atlantic City to East Orange, sprouting cannabis businesses have had their seemingly fine business locations rejected by local officials.
To help the state reach its goals for diversity in ownership, the Cannabis Regulatory Commission prioritizes applicants with ties to municipalities suffering from unemployment, poverty or disproportionate enforcement of marijuana laws in the past. Municipalities, however, are under no obligation to pursue such priorities or goals. The state gives diverse applicants a break on fees, but towns set their fees and taxes and apply them to all cannabis businesses.
Municipalities also have their own ordinances that apply to their businesses, and those involved in cannabis must meet these too.
In December, the N.J. Economic Development Authority announced more help, a $10 million Cannabis Equity Grant pilot program. Last month that started making awards of up to $250,000 and technical training. Nearly two-thirds of this will be for qualifying social equity applicants, such as those who have previous cannabis convictions or live in economically disadvantaged areas. Their grant application fee of $1,000 may be waived.
New Jersey seems to be developing its legal cannabis market more slowly than other states in the region. Diversity among pot business owners may reach a high short of expectations, and it may be delayed.
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