The New Jersey Cannabis Regulatory Commission (CRC) is opening up their application process on March 15 for distribution and retail applicants.
Business owners seeking to apply should get a head start, if they haven’t already.
The 32-page document provided by the CRC on the application process includes information on the scoring system as well as the categories candidates will be questioned on.
“The portal opens on the 15th and there is going to be a mad dash to get everything together,” said Osbert Orduña, a New Jersey dispensary applicant. “Then comes the impending challenges.”
Grown In conducted a brief Q&A with Orduña, attempting to relay some of the challenges he is facing during the process. Orduña, owner of The Cannabis Place, is a minority and disabled veteran applicant, applying in both New Jersey and New York.
This interview has been edited for clarity and grammar.
Grown In: What are your plans with a license?
Orduña: “We want to have a dispensary. At least 5,000 square feet, but eventually we want to have onsite consumption and that has to be affiliated with the dispensary. So we want to have a space that can grow into that, rather than being locked into a smaller place.
The state hasn’t given the rules on consumption lounges. They may say there is a minimum for square feet, or tell us it has to be on a second floor or it’s not allowed in the basement. We just don’t know what the rules will be and it’s a huge gamble looking at spaces. We don’t know what they will say is acceptable, other than there must be access to the consumption space from the dispensary.
Grown In: The real estate market in New Jersey and across the country is booming. What challenges has that presented?
Orduña: What happens is, you have to settle. You were looking for a five-bedroom house and now you have to settle for a two-bedroom cottage. We have what we want to target, but we may have to settle for less.
We have had preliminary discussions with a municipality and have paperwork prepped. But without any further guidance, we are still in a holding pattern.
Grown In: What are the financial risks associated with this process?
Orduña: I’m a Hispanic male that grew up in the projects in New York. I don’t have a rich uncle to lend me money and there isn’t any generational wealth being transferred to me. I didn’t grow up debt free, without college loans or inherited any real estate.
Like most other people of color, I have had to scrape by and save every penny to launch this operation. When you look at the impact zones they are talking about for social equity applicants, I am that person. I was born Latino but I earned my disabled veteran status serving in Iraq.
If you are looking at opening a dispensary, you are looking at about $1.5 million needed. How does the average person that does not have generational wealth come up with that money? A lot of people in the legacy market aren’t rich, they do it just to pay their bills.
At this point, Grown In asked Orduña about the social equity portion of his application. The question is whether a multi-state operator would approach a minority person in order to front an application. Orduña has personal experience with this.
Orduña: I was at a cannabis function. A guy sitting across from me got my attention because of the shirt he was wearing. We struck up a conversation and he wrote on the back of a napkin, and breaks it down to me and pitches me and wants to know if I’d be interested in what the offer would look like.
He breaks down how the timeline of when the license can be converted, a three-year window with a 51 percent ownership. … and they would be a management service organization and they would handle everything.
Ultimately as soon as the license can be sold, they would buy my interest and I would get a one percent royalty once they took over the license. Why the hell would I do that?
A person that is in a dire financial situation would take that one percent.
Grown In: What hindrances have you had to overcome with the application process?
Orduña: There’s no partial credit [with the New Jersey CRC scoring system]. You either get the points or you’re scored non-responsive and they’ll send it back to you for corrective action because they’re not awarding partial credit. You have no idea what the reader is looking for.
One of the questions is about having experience selling cannabis products to a consumer. If you are coming into cannabis for the first time, with no legacy experience or any experience in another state, how do you answer that?
How do you answer questions on packaging and labeling? The state hasn’t even finished defining that.
How do you answer questions about control and seed-to-sale tracking if you haven’t been in a legalized market in other states. If you are from the legacy market, do you tell them you kept it in your sock drawer?
How do you answer these questions?
Despite his frustrations, Orduña is pushing forward, knowing the risks associated with the application process. His application is ready to go and he looks forward to gaining a conditional license with the opportunity to push forward on the state’s tight timeframe. The window once the conditional license is approved is 120 days with a 45-day extension available.
Orduña: It sets you up for failure. All the leg work you have done, if you can’t close everything and button it up for the conventional license, you have lost your capital investment.
This is why some of these firms are charging $60,000 to $100,000 to put an application together. Imagine getting the golden ticket and then having to turn it down.