N.J. legal weed market delay is ‘totally unacceptable,’ and top lawmaker demands answers

.

The top ranking Democrat in the Legislature is calling on oversight hearings over the repeated delays by the New Jersey Cannabis Regulatory Commission in opening the adult weed market. Meanwhile, the panel's Executive Director is warning of a potential shortage of 100,000 pounds to meet anticipated demand. (AP Photo/Richard Vogel, File)AP

EDITOR’S NOTE: NJ Cannabis Insider is co-hosting a Cannabis Career Fair & Business Expo on April 5 at Stockton University. (Students free.) Tickets here.

Frustrated by the latest delay in launching New Jersey’s legal weed market, the highest-ranking member of the state Legislature said Tuesday he plans to hold hearings on the performance of the state panel in charge of regulating cannabis.

State Senate President Nicholas Scutari, D-Union, said he wants answers from the Cannabis Regulatory Commission, which at last week’s hearing, surprised industry experts when it rejected the applications to sell adult use weed from eight alternative treatment centers that now sell medical marijuana.

The commission said New Jersey is short by 100,000 pounds of weed to adequately supply both medical and recreational marijuana consumers, and called a special meeting for April 11 to review them again.

“These delays are totally unacceptable,” said Scutari, who sponsored both the medical and recreational cannabis laws. “We need to get the legal marijuana market up and running in New Jersey. This has become a failure to follow through on the public mandate and to meet the expectations for new businesses and consumers.”

Scutari, the Legislature’s top Democrat, said he will form a special oversight committee that could also include members of the state Assembly, and plans oversight hearings on the delays, and what can be done to meet the demands and reduce the costs of medical marijuana.

“We’re a year and half into this since the November 2020 constitutional amendment to open the adult weed market in New Jersey,” Scutari said in a separate phone call to NJ Advance Media. “Self-imposed deadlines have passed.”

“The public wants to know the status of the program. This is part of the Legislature’s duty to provide oversight,” added Scutari. “This will be a fact and information gathering process.”

At least two industry experts, meanwhile, say it will be hard to quickly address the panel’s contention that the market is 100,000 pounds short to satisfy both medical and recreational consumers once the adult use market opens. The deficit first came to light at last Thursday’s panel hearing from Executive Director Jeff Brown.

“I think it’s going to be very difficult for the existing ATCs to make up the 100,000 pound differential within that time period,” Robert DiPisa, Co-Chair of the Cannabis Law Practice at Hackensack-based Cole Schotz, said in an email to NJ Advance Media. “I just don’t see how the adult-use program will be launched in the near term if that is the benchmark being set before the ATCs can open their doors to the adult-use market.”

In a Friday note to investors, Cantor Fitzgerald analyst Pablo Zuanic wrote that 100,000 pounds of marijuana is “worth as much as $400 million more than the size of the state’s current medical market – certainly, not something that could be achieved in a matter of weeks.”

The Cannabis Regulatory Commission did not respond to emails seeking clarity on the 100,000 pound shortage and how the alternative treatment centers could cure it by late April or early May, the targeted opening date for the recreational market by both the panel and Gov. Phil Murphy.

Site visits to the alternative treatment centers began earnest Friday, according to the CRC, with the goal of going over lingering supply questions, among other issues.

“In practical terms, the CRC only has two weeks to check operators’ capacity and ability to supply the med market,” analyst Zuanic said in the same investor note.

Zuanic said he believes some of the eight alternative treatment centers will get the green light on April 11, but not all eight.

“We can only wonder about the motivations/intentions of the CRC and constant delays,” wrote Zuanic. “Without having all the facts, it would seem the CRC may want to delay the recreational head start for medical incumbents, in order to narrow the time gap with new social equity applicants starting operations.”

“But on the other hand, this is hurting the state’s tax revenue collection and job creation,” added Zuanic.

The commission on Thursday granted conditional legal weed licenses to 68 smaller cultivators and manufacturers. They are not expected to begin sales until early 2023 at the earliest.

Gov. Phil Murphy recently said the opening of the adult recreational cannabis market was “a matter of weeks, not months” away. A spokeswoman for the Democratic governor said on Monday that Murphy remains steadfast on this timeline.

Brown last week said the Office of Compliance and Licensing “anticipated problems for existing patients to access alternative treatment centers once the recreational market opens up.”

Brown said during the two-year pandemic, “there were no long-term closures of facilities, no market-wide shortages of product, and patients continued to access their medicine.”

“We are once again at the precipice of an event that will bring stresses on the market — albeit it for a much more positive reason: the launching of recreational cannabis sales,” said Brown at last week’s hearing. “But nonetheless, an event that we need to plan to ensure that patients can continue to access their medicine.”

Brown said while the cannabis market has increased by 80,000 square feet in the last six months, it was still far short of what he anticipated demand will be once adult recreational sales begin.

“Our projections show that the market is still undersupplied by about 100,000 pounds for recreational demand and that’s not considering medicinal,” said Brown. He said this assumes a low initial demand for recreational weed: “essentially four ounces per year per consumer in New Jersey and one ounce per year per consumer coming across state lines.”

Brown said the state’s “most vulnerable patients” were at risk and the consequences could be dire if they can’t get medical marijuana.

“We have to solve for the most vulnerable patients here – those with terminal cancer, ALS (Amyotrophic Lateral Sclerosis), MS (Multiple Sclerosis) and other debilitating diseases – patients who have trouble getting to the dispensary on a good day – how do we ensure that they have no disruption in their care?” asked Brown aloud.

Brown suggested exclusive home delivery programs and separate phone lines for medical patients.

In late January, operators at two major alternative treatment centers — Verano and Curaleaf — gave detailed accounts to NJ Advance Media of vaults overstuffed with weed and expressed fears of having to destroy product that does have a limited shelf life.

Elizabeth Hoey, a shift supervisor at RISE, one of the big dispensaries that applied to expand to recreational sales, said the ongoing delays are costing employees. RISE is based in Chicago and has three centers in New Jersey: Paramus, Bloomfield and Paterson.

“I don’t know what the CRC is talking about in reference to their (latest) delay,” Hoey, 37, said in an interview on Monday. “We hired 30-plus people in the past couple of months, and we now have no hours to offer them. We have and have had product waiting to go out the door, and it’s getting dangerously close to having to be destroyed.”

“We have people standing around, ready to receive deliveries from overstocked growers, that only come in once a week, in small batches, because we don’t have anyone to buy it,” said Hoey. “The delays are costing us money, going to cost us employees, and holding back other employees from advancing or getting raises.

“The holding pattern the CRC has us stuck in is making this career less tenable for the very people they are claiming to want to help with this industry,” added Hoey, who was promoted in her first year at RISE.

The CRC has recommended giving hiring preferences to applicants like Hoey who have past marijuana convictions as part of the restorative justice component of the new cannabis law.

Our journalism needs your support. Please subscribe today to NJ.com

Suzette Parmley may be reached at sparmley@njadvancemedia.com or follow her on Twitter: @SuzParmley

If you purchase a product or register for an account through a link on our site, we may receive compensation. By using this site, you consent to our User Agreement and agree that your clicks, interactions, and personal information may be collected, recorded, and/or stored by us and social media and other third-party partners in accordance with our Privacy Policy.