Like license winners for larger cultivation licenses, after winning licenses last month, New Jersey’s cannabis microbusiness conditional license holders are hustling to raise investment cash and secure real estate for their businesses. But unlike their bigger brethren, microbusiness license winners tell Grown In they are struggling to work within the state law’s requirement of siting in an adjacent municipality and dealing with a lot more “predatory lenders.”
“I didn’t expect the real estate battle. When they say you can do it in your town or the town next to it. The absolute lack of communication between the state and the towns – it is just remarkable that you could have a town that doesn’t even know the process,” said Nick Powers, a conditional microbusiness license winner and hopeful proprietor of cultivator “Schnicks Schnacks”.
New Jersey’s microbusiness license class is limited to 2,500 square feet of cultivation and up to 1,000 plants, must be located in a municipality in or adjacent to to the owner, and must draw employees from only the surrounding municipalities. The state is required to award 10% of all licenses to microbusinesses, which must be 100% owned by New Jersey residents. For the first round of licenses, social equity and diversely-owned applicants have priority.
Powers says he’s visited multiple towns, and officials in one municipality in North Jersey told him he’d receive support for citing a license in their town – a state requirement before a final license can be awarded – only to discover the town zoned out his proposed grow location but hadn’t yet posted the new zoning map to the town website. He counts himself lucky he hadn’t signed a lease yet.
“Just to get in its $15,000. Then $10,000 a month for three years,” Powers said. “Imagine if I had signed that lease.”
Meanwhile, some microbusiness license winners say they aren’t getting their due from potential investors who discredit them either because they’re minorities or potentially had a criminal record to quality to win a license.
“I’m dealing with all the predatory people coming that want to use my license. People that are saying you’re just a minority and that’s why you got a license,” said Ebony Maisonet of E-Quality Cannabis. “The average investors say you have to be a criminal your whole life to get [the license]. I’ve never gone to jail or done anything wrong, but I bust my ass to get it.”
Maisonet, who is from Kearney, a town next to Newark in North Jersey, is just starting out her fundraising and figures she’ll have to raise $3 to 5 million to operate for two years. But despite her real estate background, and that her cousin, who currently works in operations for Cookies in Massachusetts, will join her operation, she says investors constantly discount her abilities.
“I’ve had multiple investors reach out to me. Most of them are predatory,” she said. “The amount of predatory people approaching me is absurd. ‘I’ll take over your business and not even give you a job.’”
Powers, who quit his day-time Walmart security job when he won his license, is less concerned about fundraising he says, because he’s made money in cryptocurrency and daytrading. But still investors are knocking.
“The value of the license is just awesome. It’s been interesting,” he said.
With two conditional licenses, one for a microbusiness and a second for manufacturing Powers expects to receive soon, he claims a lot of interest in his operation, which he plans to locate in a more rural part of the state so he’ll have more room to grow and lower operations costs.
“I think [I need] $2 to 3 million,” Powers said. “I think it could be done with less. Seems like every person I speak to wants a piece of both licenses.”
David Nicolas of Prolific Growhouse worked in the underground market all through college, but “took a step back” to take a job in corporate accounting for a year, which he’s left since he won his microbusiness license. Now, he’s flying out to California to meet with investors.
“We’re now in talks with a building in Collingswood, New Jersey. We submitted our application to Camden County for review. We’re waiting for approval from them, and then we’ll apply for our actual license,” he said. “We’re looking to raise about $2 million to start. We’ve already secured about $350,000.”
Already, Nicolas says he has strict criteria as to who he’ll sell his product once he’s up and running.
“I really do think the big ATCs, they’re not going to have enough supply for their recreational demand. I’m only working with up and coming dispensaries. I’d rather the MSOs reach out to me, rather than me to them. I’m only working with smaller-end, minority owned businesses.”