Senate Judiciary Committee Testimony –May 12, 2022
Executive Director Brown – Overview of Cannabis Regulatory Commission Progress
Good morning Chairman Stack, Senate President Scutari, and members of the Committee:
Thank you for inviting the Cannabis Regulatory Commission to testify on the progress we’ve made in the past year, and the work that lies before us in establishing New Jersey’s legal cannabis industry – and continuing to expand access to medicinal cannabis.
Today marks 13 months since the CRC was established. While the Commission is still in its infancy as a State agency, in those 13 months of existence, the CRC has made remarkable progress enacting the laws that this body historically drafted and passed to legalize cannabis.
In those 13 months the Commission has:
- Held 15 public meetings that demonstrably engage the public to help shape the rules governing the cannabis industry
- In 4 months, drafted and adopted 261 pages of comprehensive rules for the cultivation, production, and retailing of recreational cannabis.
- In 8 months, launched a licensing platform and began accepting applications for cultivators and manufacturers.
- In 11 months, began accepting applications for cannabis retailers.
- In 12 months, issued 102 conditional licenses for new cannabis businesses.
- Then, — 1 year and 9 days after our formation – the CRC authorized recreational sales to begin on April 21, 2021.
The Commission also expanded access to the medicinal cannabis program by issuing 44 additional awards for medicinal cannabis businesses, and adopted comprehensive testing standards.
The CRC’s goals from the beginning have been threefold:
- Shore up and expand access to medicinal cannabis for patients;
- Begin new business licensing under the CRC’s regulations which prioritize review and issuance of licenses to social equity businesses and diversely-owned businesses; and
- Pursuant to the carve-out for ATCs in CREAMMA, work with current medical industry to approve ATC expansion
We have made great strides in all of these efforts, and when we look at how New Jersey compares against other states, we fair pretty well. We had one of the fastest timelines to new business applications (those for non-medical operators), and are on-par with states like California, Colorado, Michigan, and Montana with how long it took to begin sales.
Prior to approving the beginning of sales, the CRC had to be certain that adequate supply was available for patients and that the ATCs put in place the proper safeguards to ensure those patients could continue to access their medicine. We have done that and now are holding ATCs accountable when they don’t live up to the patient access standards required of them.
While the law required the CRC to review the ATCs for transition outside of the normal application process, beginning new business licensing was always an equal if not more important priority for establishing this recreational cannabis market.
In November 2021, the Cannabis Regulatory Commission announced the beginning of the historic process of accepting applications for new recreational cannabis businesses. We began with growers, manufacturers, and testing laboratories on December 15, 2021. On March 15, 2022, we began accepting applications for retailers. To date, we have received just over 900 applications. I am also proud to report that CRC staff have reviewed 500 of these applications, and applicants have either been moved forward for approval or returned to cure application deficiencies and resubmit.
The CRC has approved 102 conditional licenses, issued 327 cure letters, and we continue to process and review additional applications.
From the start, the CRC has acted in an intentional manner to ensure New Jersey’s cannabis industry is as diverse as our great state. The regulations and the Notice of Application Acceptance adopted in November 2021 institute priority review and approval for Social Equity Businesses, Diversely-Owned Businesses, and Impact Zone Businesses. Our application and annual fees are among the lowest in the country – particularly for microbusinesses. The CRC launched a brand new application platform in record time – mere months – and it is simple and easy to understand. Our webinars and website provide free access to all the information the application process requires. Additionally, the NJ-CRC’s regulations include protections against predatory contract agreements and our team of investigators work to verify that applicants for businesses licenses are truthful on their applications.
We have done this new work, even as we have completed the work we inherited from the Department of Health. We completed the 2018 and 2019 RFA process and approved 44 of medicinal cannabis business permits – significantly more than intended at the time of those RFAs to ensure we are meeting patient need. Half of those awardees are either minority-owned or minority and women-owned.
The CRC has embraced the outsized responsibility that comes with starting this particular industry in New Jersey. Even as we understand that stakeholder priorities are varied – speed, seizing the economic opportunities, safety, social equity – we have remained committed to building it on a foundation of equity and safety that will be a model for other states. We are committed to ensuring that our regulatory actions and decisions are reflective of our deep understanding that the criminalization of marijuana has had negative and disproportionate effects on people and communities of color. We have known from the beginning this would be difficult and ongoing work, but we are proud of the framework we have already put in place.
The Commission’s rules require businesses to adhere to strict testing standards and ensure cannabis items are contained in child-resistant packaging. Personal-use cannabis items must be labeled with specific details so that consumers know exactly what they are getting, including: the identities of the cannabis businesses that created the product, expiration dates, active and inactive ingredients, and a list of all potential allergens in the product. Packages are also required to contain several warnings indicating the product contains cannabis and the toll-free telephone number of the poison control center.
The CRC is willing to take swift action against any business that fails to adhere to these requirements.
Beginning recreational sales on 4/21/22 was an important milestone. But it doesn’t mark the end of the process, it marks an important step in a multi-year effort to establish New Jersey as the premier cannabis market on the East Coast. We are doing so in a way that is deliberate, based on lessons-learned in other states, and in a manner that holds true to our core values: equity and safety. We are sure hindsight will agree that the NJ-CRC’s path and pace and deliberateness is good for New Jersey and this cannabis market.
The CRC remains dedicated to ensuring this market reflects the diversity of our great state and helps to alleviate the many mechanisms of inequality created by the criminalization of cannabis. To that end, we’ve provided the Committee with some in-depth data on where we stand with new licensees and we will continue to release data on this growing industry so that all stakeholders have an accurate view. I’m also joined by the Director of the Office of Diversity and Inclusion, Wesley McWhite, who is going to share some updates on progress directly with the Committee.
Looking forward, the Commission’s upcoming work will focus on:
- Adopting additional rules for the personal-use industry;
- Modernizing the existing rules for the medicinal industry;
- Monitoring and enforcing rules to ensure compliance; and
- Continued information-sharing on the composition of the cannabis industry and the Commission’s future priorities.
There are also several challenges that we need to continue to work on to achieve the goal of making New Jersey’s market equitable and accessible. These include:
- Expanding access to capital for new entrepreneurs
- Removing impediments to finding real estate
- Educating municipalities to open up new opportunities for more applicants
- Ensuring medicinal cannabis access is unimpeded by recreational sales
Thank you for your time today. I’m going to turn it over to Director of the Office of Diversity and Inclusion, Wesley McWhite and then we are happy to answer any questions you may have.
Director McWhite – Office of Diversity and Inclusion Testimony
Good morning Chairman Stack, Senate President Scutari, and members of the Committee:
The Office of Diversity and Inclusion, termed the Office of Minority, Disabled Veterans, and Women Cannabis Business Development in the statute, is tasked with:
- Promoting participation in the cannabis industry from persons from socially and economically disadvantaged communities;
- Conducting advertising and promotional campaigns to increase awareness of opportunities in the industry; and
- Developing and recommending policies, practices and protocols to ensure diverse representation among owners, operators and employees in the cannabis industry.
The vision of the Office of Diversity and Inclusion is to continue to build upon the social equity framework that has been established by the CRC and the statute. That framework includes our priority application review for social equity, diversely owned and impact zone business, equitable access to information and continuous and ongoing outreach, engagement and relationship building through the Office of Diversity and Inclusion.
The CRC’s social equity framework ensures a firm and solid foundation with which we will continue to build, implement and recommended policies that result in cannabis businesses and a workforce that reflect the diversity of our State. NJ stands tall and has been recognized for its social equity efforts so far and there is much more to come.
To meet our charge and our visions, specifically, the Office of Diversity and Inclusion has:
- Established 185 contacts with re-entry groups, minority advocacy groups, disabled veterans/veterans Groups, tribal communities, cannabis industry leaders, many others.
- Held 80 outreach meetings and presentations to stakeholders, community groups, and potential entrepreneurs.
- Established a “Leaders of the Legacy” workgroup to develop recommendations to help people currently or formerly operating in the unregulated market transition to the regulated market.
- Assisted the CRC with ongoing oversight of corporate social responsibility plans and equity at NJ’s Alternative Treatment Centers. The Office will be developing an Equity Scorecard so that these efforts are transparent to the public.
I am proud to report that throughout the last 13 months, the CRC has held true to our values of both safety and equity.
While we are only at the beginning of recreational cannabis business licensing, the CRC’s policies show promise. We can report that of the 102 conditional licenses 37 are self-identified majority black-owned and 13 are self-identified as majority Hispanic or Latino/a owned. These conditional license holders must still establish sites and gain municipal approval to convert to a full annual license. Roughly a third of the 102 businesses have owners who have past marijuana convictions.
Of the 44 companies that were recently issued medicinal cannabis awards, half are either minority-owned or minority and women-owned, including 4 that are black or African American owned, 3 that are Hispanic or Latino/a owned, and 8 that are Asian owned. The statute sets goals for medicinal cannabis for 15% minority owned permit-holders and 15% women or disabled veteran-owned. If all these awardees complete the permitting process, New Jersey’s medicinal cannabis market will be 19% minority-owned, 19% minority and women-owned, and 33% women-owned.
Continuing to work together is the only way to ensure our industry reflects the diversity of our state – in terms of geographic location, business size, and demographics of business operators and workers.
Cannabis legalization is only one part of addressing issues caused by the War on Drugs. Legalization alone is not enough to undo centuries of systemic exclusion from economic, political, and social opportunities. Social equity, diversity and inclusion is not a destination it is a journey.
We at the Cannabis Regulatory Commission are committed to doing our part to effectuate the justice goals expressed by the Legislature, the Governor, and the public. And we look forward to continued work with our partners, including this body, and any others who share that vision.
Thank you for your time.