Conditional retail license winners in New Jersey are scrambling to lock down locations and open their stores before the regulator’s six month deadline for operation, but worry about slow municipal approval processes and if existing cultivators will have enough product to fill their shelves when they open.
“Now that we have the conditional approval we have six months to get to the full license, and we have to find a location, lock down the real estate. And that takes money, raising capital for not only real estate but also working capital and other things that come with getting the business together,” said Tahrir Johnson, owner of Simply Pure Trenton, a conditional retail license winner.
Johnson reports that he has already signed a letter of intent for supply with two existing cultivators, also known as Alternative Treatment Centers (ATCs), so he is less concerned about getting product on his shelves. Johnson, says this is his third time applying for a license and believes he’ll need to raise $2 million for real estate and working capital.
“I would love to have a place we can own, but if there’s an opportunity to lease, it’ll be less expensive. I’m keeping all my options open. My goal is to be the first Black-owned dispensary to open our doors in the state,” he said.
Dustin Alvino, a commercial real estate developer and owner of The Jersey Joint Dispensary, is planning to open in a building he bought in 2019 in his hometown of Glassboro in South Jersey. He originally bought the building to apply for an ATC license, and has held onto it with the idea that he would apply again in a later round.
“There’s going to be a lot of competition for the product,” he said. “Most of the cultivators have dispensaries. What value proposition do I have for them?”
Alvino expects that even if he is able to make a deal with ATCs, there will be some sort of supply crunch until the independent cultivators come on line in 18-24 months. To be prepared, he’s expecting to raise about $2.5 million for his build-out and to have enough working capital on hand.
“It’ll be a real challenge. I’m in a unique situation where I have enough money to weather a storm and get into the cultivation business. I‘m concerned for some of the smaller businesses getting in, because I see a price war to some capacity,” he predicted.
For retail microbusiness winners, finding a location is especially difficult, since it needs to be located in either their hometown, or a municipality next door. Steve Cassidy, owner of Daylight Cannabis, has a letter of intent in Mt. Laurel, which is next door to his home in Medford, in South Jersey near Philadelphia, but he’s not sure if he’ll get a local zoning variance he needs for the property.
To be safe, Cassidy is working to get a letter of support from another township, which has put a cap on five dispensaries. But that township has already issued five letters of support – all for people who have yet to win their licenses. Cassidy hopes to convince the township that those are dead letters, so to speak.
“The state and municipalities level are not jiving well together,” he said. “You could have resolutions of support for as many [towns] as you want, and then you work out who will operate later.”
As far as he’s concerned, Cassidy thinks getting municipal approval for location, zoning and permitting will be the biggest barrier to opening by the state’s six month operations deadline.
“If I could have it running by the end of the year, that would be an amazing feat. Governing bodies could slow it down,” he said.
Meanwhile, Tahrir Johnson’s Trenton dispensary will be getting friendly competition from a kindergarten classmate, John Dockery, co-owner of Simply Pure Downtown Trenton.
“We’ve been friends since pre-kindergarten. He’s more like extended family. I spent nights at his house, I know his mom and dad and he knows my parents,” said Dockery, who is working with a similar group of investors as Johnson and is still lining up his property.
“Trying to get approval from the city of Tenton. We have a couple of locations in mind, but nothing solid yet,” said Dockery.
“The city of Trenton has been going back and forth with new ordinances. They literally just approved the ordinance [allowing cannabis businesses] last tTuesday. At that point they approved the motion to put together a cannabis commission that would review and approve the final licenses,” said his business partner Klau Wanetabe, who has opened cannabis businesses in Florida and Maryland.
“Hopefully as soon as they get their committee together, we can go in front of them and tell them our ideas and then we can open. Maybe early fall,” said Dockery.