Legislation to revise restrictions on medical cannabis businesses has become law in New Jersey.
On Monday, October 18, Governor Phil Murphy signed S2875/A5179 into law, expanding the scope of review of alternative treatment center permit applications and other related materials.
Assemblyman Brian Bergen (R-Morris) introduced the legislation in 2020.
Representatives Verlina Reynolds-Jackson (D), Jamel Holley (D), and Gordon Johnson (D) co-sponsored A5179.
Senators Troy Singleton (D), Shirley Turner (D), and Representatives Verlina Reynolds-Jackson, Jamel Holley, and Gordon Johnson co-sponsored S2875.
Bergen says that the legislation incentivizes investors to cover dispensary startup costs for minority, woman, and disabled veteran business owners.
“It’s not a marijuana bill, it’s a business bill,” says Bergen. “Starting a business is near impossible nowadays. With this law, entrepreneurs are going to get a shot to enter into a fresh new industry and grow the economy.”
Bergen says that the new law contains thoughtful protections that ensure investors aren’t predatory by confining them to a specific portion of ownership.
Previous regulations prohibited single entities from concurrently holding more than one medical cannabis cultivator, dispensary, or manufacturer permit.
The new law allows investors, investor groups, or funds to own up to a 35 percent interest in up to seven entities that have medical cannabis dispensary permits.
The dispensaries must be minority-owned, woman-owned, or disabled veteran-owned and certified by the Division of Revenue and Enterprise Services in the Department of the Treasury.
Terms of the investor agreement must also require the investor to provide significant financial and technical assistance or intellectual property to the dispensary.
“I applaud the bill’s sponsors for seeking to address what can be a major impediment to some prospective cannabis business owners: accessing the capital necessary to start and sustain their businesses,” says Governor Murphy. “This bill will not only enable investors to support multiple businesses, but will also allow new entrepreneurs who have been historically unerrepresented as business owners in the nation’s regulated cannabis industries to receive capital, training, and assistance in running a successful business.”
Based on the level of assistance, medical cannabis businesses have at least five, seven, or ten years to pay the full amount with interest.
Investors may maintain ownership interests once the assistance is repaid, but they may not hold a controlling interest in the business.
If the business defaults on the assistance, the controlling interest can only transfer to another certified minority, woman, or disabled veteran-owned company.
“Pursuant to the CRC’s authority under the bill and in order to ensure that the bill is implemented in a manner that furthers the bill’s goal of promoting a diverse and equitable cannabis industry,” says Governor Murphy. “I urge the CRC to adopt regulations in accordance with the Administrative Procedure Act that protect against predatory lending practices and one-sided agreement terms that put power solely in the hands of the lender.”