Marijuana is a substance that is still illegal in New Jersey under the federal law, which means that federally insured, large banks don’t handle cannabis transactions. This may seem discouraging to investors who are looking to invest in NJ marijuana companies and businesses. Even though the cannabis industry presents a $75 billion investment opportunity to investors, cannabis investment is not for the sensitive of wallets or weak of heart. The investment opportunities in the state are ideal for pioneers and thrill-seekers. Investing in NJ marijuana dispensary or other similar cannabis business is basically a gold rush which will yield a lot of profits, but not everyone who invests is going to win.
Investors Eye NJ Marijuana Businesses
New Jersey is a prime location for the advancement of the cannabis marketplace. Gov. Phil Murphy is one of the key supporters of adult-use marijuana legalization in New Jersey. He estimates that the cannabis market could reach $1.2 billion. Because of this projection of the industry, lobbyists for legal marijuana in the state are encouraging investors to commit their money to ancillary and real estate industries like greenhouses that would serve the cannabis industry greatly.
Marijuana Business Largely Cash-Only
The projections by analysts regarding the success of the marijuana industry haven’t always met reality. Murphy is projecting $300 million a year in NJ tax revenue from cannabis, which assumes $1.2 billion in sales at a 25% tax rate. Brach Eichler, a Roseland law firm, projected about $1 billion a year in tax revenue to NJ from legal marijuana sales – which would be way ahead of the combined tax windfalls to Washington and Colorado, the first two states to legalize adult use of cannabis.
Because of the federal banking laws, all of the money that is flowing into the cannabis industry still largely uses cash. Any bank that is chartered by the federal government cannot handle money from cannabis businesses and such businesses usually operate with cash payments. John Chiang, California Treasurer, has proposed a state-run bank that could serve the ever-expanding cannabis industry. This idea is widely supported in New Jersey.
Want to Invest in NJ Cannabis Businesses? It Won’t Be Easy
New Jersey is primed to be among the top places for a growing marijuana marketplace as it is on the cusp of legalizing marijuana. With less than a quarter of the 350 licenses required to ensure that the new cannabis market of the state doesn’t fall flat and about 80 licenses to divvy up, NJ has the potential to become one of the toughest regulators in the country.
If you are looking to invest in marijuana companies or establish NJ marijuana dispensary, you will be required to submit ‘merit-based application’. The story is a bit different in Colorado and Oregon, where municipal approval all but guarantees that an investor or retailer will receive a state license to sell marijuana. In NJ, applications will be scored on their:
• Real estate location, including a signed notice, lease, or deed from a town that indicates marijuana sales will be permitted.
• Business history, giving applicants an opportunity to show regulators what makes their team different.
• Security plan, including cameras as well as areas where marijuana will be securely stored.
• Operations plan, where the experience of the applicant in the cannabis industry – especially in other states – will play a role.
And it’s a one-strike rule which means there is no margin for error. One mistake – a DUI arrest by any team member applying for the license or a bad loan – spells doom for an application, on the basis of his experience in other states that have legalized marijuana.
The Bottom Line
The market for investors looking to establish NJ marijuana dispensary or investing in other marijuana companies may seem quite challenging. However, the cutthroat nature of the cannabis industry has done little to discourage investors from looking into the marijuana industry as the next big thing.
Clearing a location is one of the most obvious hurdles for investors in NJ. An application with a commitment from a marijuana-friendly state has a higher chance to get a license as opposed to a similar application in a state that hasn’t taken a stance on the issue. New Jersey would join several states soon to legalize adult use marijuana, opening its doors to investors and entrepreneurs who live within a day’s drive of legal marijuana. It will present many opportunities for investors, marijuana companies, and producers alike by becoming the 10th state to legalize recreational cannabis.