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How to Open a Dispensary in NJ the Legal Way

How to Open a Dispensary in NJ

If you are thinking about opening a cannabis dispensary in the state of New Jersey for adult and recreational use, then you have come to the right place, because right now we’re about to provide you with an in-depth guide on the matter. How to start a dispensary in New Jersey is exactly what we are going to teach you today.

This is an in depth and step-by-step guide designed to help beginners open a legal cannabis dispensary in the state of New Jersey. There are many different elements and factors that one must consider once starting a legal cannabis dispensary in New Jersey, such as security, store location, licensing, financing, compliance, inventory, and much more.

Of course, the main aspect that we are here to address today is the legal aspect, as cannabis is of course very strictly regulated, and all new dispensaries must follow all laws very closely or risk being heavily penalized.

As you can imagine, for a dispensary to be considered legal, a lot of red tape has to be navigated through, and this is exactly what we are here to help you with.

Keep reading to find out what exactly you need to do to open a dispensary in NJ. If you follow the steps as laid out below, you should have no problems starting your own legal marijuana dispensary in New Jersey.

Step 1: Plan and Create Your Business

Step 1: Plan and Create Your Business
Step 1: Plan and Create Your Business

Just before you start planning and creating your legal cannabis business, it might be wise to take a closer look at New Jersey cannabis laws. Once you understand all of the official New Jersey cannabis laws, the first real step is to create a formal business entity.

If you don’t already have a business form, this is what you’ll need to do, and you’ll likely need both a lawyer and accountant to ensure that you’re doing everything correctly. At the very least, you’ll need to create a specific type of business in the state of New Jersey, which could be a sole proprietorship, partnership, an LLC, or anything in between.

Once you have your business entity form, you’ll then need to get an EIN and tax identification numbers, so you can legally pay taxes, hire employees, open a business bank account, and more. At this time, you’ll also want to look into getting business insurance for your new cannabis dispensary.

Something that you’ll quickly realize here is that the New Jersey Cannabis regulation Commission, otherwise known as the CRC, puts a whole lot of weight on the cannabis dispensary planning process. To apply to open a dispensary in the state of New Jersey, you’ll have to fill out an application, and you’ll need to include an in-depth business plan.

There are various components that your business plan needs to include, such as the following:

  • What business funding looks like.
  • What the physical location of the dispensary will be.
  • How you will source your cannabis products and how you plan to fulfill your inventory.
  • What your overall projections of revenue are.
  • What your staffing plan looks like.
  • What your equity and diversity plans are.
  • Your plan to minimize the risk for people around you, which includes a community impact plan and an environmental plan.
  • How your dispensary will be marketed.
  • What your security plan is to keep your dispensary safe.
  • What sort of compliance and point of sale software that you will use.

Step 2: Secure a Location for Your Dispensary

In the state of New Jersey, before you start applying for your dispensary license, you have to find a location for your dispensary, and it must be secured before the application is processed.

The problem is that in New Jersey, in most towns and cities, there are laws that do not allow for recreational cannabis businesses, including distributors, manufacturers, cultivation facilities, dispensers, and delivery services, which means that you have very limited options here.

There are also rules around zoning, which means that there are only specific locations where your dispensary is legally allowed. After that, you’ll also need to find something that is within your budgetary range.

What it really comes down to is that you’ll need to hire a professional real estate agent that specializes in cannabis real estate.

Legal issues aside, you’ll also need to find a location that is large enough to suit your needs, is in a good location for foot traffic, and provides you with opportunities for growth, all while remaining within your budget. As you can see, there are very many factors that you need to consider when choosing the location for your cannabis dispensary.

Step 3: Secure Funding for Your NJ Dispensary

Step 3: Secure Funding for Your NJ Dispensary
Step 3: Secure Funding for Your NJ Dispensary

Remember that the CRC requires that you show proof of funding in your application so you can receive your cannabis business license. Therefore, not only does your budget need to be on point, but you also need to find where your money is coming from.

Remember that there are a variety of costs that you’ll need to consider here. These include your real estate and build out costs, your application and licensing fees, operational costs, staffing costs, hardware, software, security, taxes, and inventory costs.

Just to provide you with a rough idea of the finances you’ll need, you’ll likely need somewhere around $125,000 for real estate fees, $300,000 per year for employee salaries, $50,000 per year for legal, insurance, and financial services, over $100,000 per year for software, hardware, and security.

Then, you have to take the cost of all of your cannabis products into account as well. Therefore, to open a cannabis dispensary in New Jersey, you’re looking at around $600,000 to $800,000 at the very least.

We haven’t even covered licensing and application fees in the state of New Jersey either. Expect to pay roughly $400 to submit your application, $1600 for the approval fee, and roughly $10,000 for a class five cannabis retailer license in total.

In terms of where your funding will come from, you can consider funding your own business, getting funding from family and friends, looking for partners, getting private investors, brokers, crowdfunding, or you could even take up a loan. With that being said, not many banks will provide cannabis dispensaries with loans, so this might be difficult.

Once you have created a budget and secured funding, you can then move on to apply for your license. However, remember that the CRC wants you to be extremely clear and detailed with both your budget and funding requirements, and if they think that you don’t have a clear path to open a business, they will deny your license.

Step 4: Apply for Your New Jersey Dispensary License

What is interesting to note is that in the vast majority of states in America, you actually have to apply for your cannabis dispensary license first, before you secure a budget, location, and more.

However, in the state of New Jersey, you have to do all of those things before applying for your cannabis license. Remember, the New Jersey Cannabis Regulatory Commission has very strict criteria of who is allowed to receive a cannabis dispensary license.

You absolutely have to read through all of the resources available to figure out whether or not you’ll be approved. Here is a link to a published report that will provide you with all of the information that you need about legally opening a cannabis dispensary in the state of New jersey.

What You Need to Know About Applying for a Dispensary License in New Jersey

The most important thing that you need to know about opening a cannabis dispensary in the state of New Jersey is that you will need a class five cannabis retail license. In order to do this, there are a few different things you’ll need to do.

This includes submitting an article of incorporation, providing proof of real estate, first getting approval from your local municipality, submitting a detailed business plan, having security plans, and more. The unfortunate reality for many people here is that a lot of these applications can be thousands of pages long due to all of the strict requirements.

What is however beneficial is that the Cannabis Regulatory Commission accepts applications on a rolling basis. This means that you can apply for a license at any time, and there aren’t even any limits as to the amount of licenses that this Commission can issue to applicants. As long as you meet the criteria, you should most likely receive your license.

On a side note, if you’re only planning to open a very small dispensary with 10 or less employees, you might be able to attain a microbusiness license instead of a class 5 dispensary license.

However, to be eligible for the microbusiness license, you have to be a resident of New Jersey and have to have lived in the state for at least two years. Furthermore, at least half of the staff of the dispensary have to be located in the same city or in a bordering city to where the business location is.

What is also interesting to note is that there are many social equity opportunities for people who live in economically disadvantaged areas of New Jersey. If this is the case, you may submit a social equity business certification on the cannabis regulatory commission’s website, along with why you qualify for such a bonus.

All in all, when you are applying through your cannabis license, make sure that you have provided the CRC with all of the information possible.

The CRC wants to see that you are well-prepared, that all of the factors have been considered, and that your plan accounts for any possible circumstances. Remember that if you plan on running a delivery oblation, you’ll need to meet additional requirements, such as having GPS tracking systems on all vehicles.

Types of Cannabis Licenses in New Jersey

Types of Cannabis Licenses in New Jersey
Types of Cannabis Licenses in New Jersey

The next thing that you need to know about attaining any sort of dispensary or cannabis related license in the state of New Jersey is that there are actually a few different types.

  • There is a Class 1 Cultivator License, which allows for the license owner to cultivate cannabis plants.
  • The Class 2 Manufacturer License is available for those who want to manufacture and produce a variety of cannabis products.
  • There is the Class 3 Wholesale License, which allows a business to sell, store, and transfer a variety of recreational cannabis products between different retailers.
  • There is the Class 4 Distributor License, which allows a business to transport and sell bulk quantities of cannabis.
  • The Class 5 Retailer License, which is most likely what you’ll need, allows people to purchase inventory from a variety of licensed producers, and then sell them in a physical retail location.
  • If you plan on delivering cannabis, you’ll also need a Class 6 Delivery License.

Permanent versus Conditional Cannabis Licenses

You also need to be aware of the differences between permanent and conditional licenses. First, we have the permanent license, which is the official approval provided to you by the regulatory agency, which allows you to operate any kind of cannabis business, in this case a dispensary, and in New Jersey.

These are licenses that expire every year. Yes, these licenses must be renewed each and every single year in order for your business to stay valid.

We then have the conditional license, which is a temporary license. This type of license is often provided to applicants who don’t yet have municipal approval or some kind of physical location. If you have a conditional license, you can start building an operation and work towards satisfying the other requirements to get your permanent license.

If you have a conditional license, you’ll have just 120 days or roughly four months to meet all of the requirements to get your permanent license. If you want to first get a conditional license, it will cost you $200 to apply for it and $800 once it is approved. You then have to pay another fee to convert a conditional license to a permanent license, which costs another $1000.

Applying for a Class 5 Cannabis Retailer License in New Jersey – Step by Step

The following is a step by step tutorial on exactly how to get your class 5 retailer license in the state of New jersey.

  1. Figure out what type or types of licenses that you need to start your business.
  2. Determine if you first need to apply for a conditional license or if you’re ready for the permanent license.
  3. Make sure to follow this application guide, and put together all of your application materials.
  4. Go to the official Cannabis Regulatory Commission website and register an account.
  5. You’re going to have to complete all of the steps required by the CRC portal and upload all of your forms and documents. If you omit any steps or information, you may be denied.
  6. At this point, you will have to pay a variety of fees, and if you’re applying for a Class 5 Retailer License, you will have to pay $400 for the submission of the application.
  7. You now want to make sure that everything is correct and then submitted. If applying for a full license, it may take up to 90 days for you to receive word.

Other Legal Considerations When Opening a Cannabis Dispensary in New Jersey

Other Legal Considerations When Opening a Cannabis Dispensary in New Jersey
Other Legal Considerations When Opening a Cannabis Dispensary in New Jersey

There are some other legal requirements that you’ll have to meet in order to legally operate a cannabis dispensary in the state of New jersey.

  • The state of New Jersey requires that dispensaries keep odors from escaping the premises, which means that air and smell proofing your establishment is necessary.
  • Any neighbors and law enforcement within 100 feet of the cannabis dispensary have to be provided with contact information of at least one staff member who can be notified if any problems arise.
  • You must also have 24/7 surveillance monitoring.
  • Remember that there are shopping compliance regulations that you need to keep in mind as well. For instance, anybody purchasing cannabis must be of the legal age, and they cannot purchase more than one ounce of cannabis or equivalent products at once.
  • It is also the law that anybody in the state of New Jersey cannot legally possess over 6 ounces of cannabis at any given time.
  • There are also packaging and labeling instructions, with labels being required to include warnings, a summary of testing results, the ingredients, the serving size, and the THC levels. Packaging may also not contain any misleading or false information.

How to Open a Dispensary in New Jersey – Conclusion

Perhaps the most important consideration for anybody who wants to start a legal cannabis dispensary in the state of New Jersey to keep in mind are all of the licensing requirements.

Remember that the Cannabis Regulatory Commission is very strict and pays close attention to not only that your requirements are met, but also how complete all of your application forms are.

If you are extremely diligent and follow all of the steps necessary as laid out by the cannabis Regulatory Commission, you should be able to obtain your license without a problem.

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Fabian R.

I hold a Bachelor's degree in Political Science from Ryerson University in Toronto, Canada. With close to a decade of professional experience, my expertise lies in content writing, blogging, and copywriting. I've dedicated the past 10 years to crafting content centered around health, fitness, and cannabis subjects. My strengths include exceptional writing abilities, effective communication, and a track record of delivering swift results.