■ Manufacturing
Continued From Page 17 be established for those licenses . Towns want to be sensitive to allowing local entrepreneurs and micro businesses instead of large , multistate operations .”
Beyond zoning , municipalities have regulatory considerations . Some larger municipalities like Hoboken have formed cannabis review boards to oversee licensing and monitor ongoing issues . “ Most municipalities try to mirror the state ’ s regulations ,” Frank explains . “ Even so , every municipality is unique .” Differences typically surround hours of operation , parking , and crowd control issues , as well as a potential operation ’ s proximity to parks and schools .
“ Some towns are developing community services agreements to help encourage these businesses to be good neighbors . They want to mitigate potential community fears about this new industry in their town .”
As a result , locating an optimal site for a new cannabis business can be both difficult and costly . “ Potential license applicants would be smart to have opening conversations with a prospective municipality to understand the requirements before consummating a real estate transaction ,” Frank suggests .
Cash Is King
The cost of real estate aside , prospective licensees will need working capital . Lots of capital . Building even a small cannabis retail operation is expensive . According to Sax LLP ’ s Polyniak , a typical small cannabis retail operation will cost $ 700K to $ 800K to open ; a small cultivation site could easily require $ 3 million to as much as $ 20 million .
“ Cannabis is a very capital-and-regulatory intensive industry ,” he notes , warning potential licensees that even with brisk early sales , high operating costs can quickly evaporate a cannabis start-up ’ s cash flow .
“ Besides paying an effective tax rate that can be as much as 70 percent , the interest costs of capital can be 18 percent to as much as 25 percent . Since current bank regulations prohibit federally-chartered banks from lending to cannabis businesses , licensees must find capital from family , friends , and nontraditional sources .”
“ Cannabis is an all-cash business . You can ’ t use credit cards , and you can ’ t transact across state lines .” Todd explains . “ Currently , only two NJ commercial banks and a few credit unions will provide banking services to cannabis businesses . That ’ s because it is still at least partially an illegal business .”
Hopefully , the banking and lending struggles will change soon . Congress is set again to vote on ( H . R . 1996 ) the Safe Banking Act . The bill prohibits federal banking regulators from penalizing a depository institution for providing banking services to a legitimate cannabis-related business . The act will also make proceeds from a legitimate cannabis-related business not
be considered proceeds from unlawful activity . Passage will open the capital needs that traditional institutions provide to cannabis businesses , as a depository institution will not be liable or subject to asset forfeiture for providing a loan or other financial services to a legitimate cannabis-related business .
Training Cannabis Workers
On the worker training front , NJ Cannabis Certified has partnered with eight New Jersey colleges to offer an online training program for cannabis workers . The five module sessions are reasonably priced at $ 500 and upon completion earn participants a certificate as NJ Cannabis Certified . According to their website , each module concentrates on a fundamental topic related to working in the cannabis industry – cannabis cultivation , manufacturing , and dispensing .
As the state ramps up its new training and mentoring opportunities , 2023 promises to welcome a new wave of cannabis entrepreneurs . Will Congress act to remove constraints that restrict capital ? Can New Jersey provide the needed support to help communities create jobs and opportunities in this industry ? Only time will tell .
“ The State is trying its best , but this is still an emerging industry that is sort of chicken-andegg story . But more cannabis is coming to New Jersey , without a doubt . There is demand , and there are people willing to invest the capital to make it happen .” Todd concludes .
Background photo : Getty Images / iStockphoto / deimagine
For researchers , growers , manufacturers and retail operators will all find new opportunities in New Jersey ' s growing cannabis industry .
Photo : Getty Images / iStockphoto / janiecbros Photo : Getty Images / iStockphoto / chriss _ ns
Photo : Getty Images / iStockphoto / OpenRangeStock Photo : Getty Images / iStockphoto / FatCamera
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