Minorities and women seeking to own N.J. legal weed stores `swimming uphill’ to land licenses

EDITOR’S NOTE: NJ Cannabis Insider is hosting a day-long conference and networking event Sept. 15 at the Crowne Plaza Princeton, featuring many of the state’s leading power players. Tickets are limited.

Colia Best has the ambition and drive to get his cannabis business off the ground.

What’s missing is where to put it.

Best wants to have a property in hand to increase his chances of securing a retail microbusiness license with the New Jersey Cannabis Regulatory Commission. He’s been searching within a 30-mile radius of where he currently lives in Sicklerville, as far south as Atlantic City, and as far north as Burlington City since February.

Still no takers. He’s left messages with local officials. Many don’t call him back.

“It’s been disappointing,” Best told NJ Advance Media in a recent interview. “I’m still trying to find a town – a municipality. A lot of these towns won’t even look at you (for a license) without a property.

“That’s where I’m stuck at.”

The New Jersey cannabis law was meant to give minority applicants from disadvantaged backgrounds like Best not just an even playing field to get into the cannabis industry, but a leg up.

But in a red hot real estate market like New Jersey, where inventory is low and nearly three out of four municipalities have opted out of selling adult weed, landing a place to buy or rent for a legal cannabis store has turned into a nightmare struggle for many.

Some say the statute that Gov. Phil Murphy signed a year and half ago touting “social equity” to create a diverse and inclusive cannabis industry and help reverse the damage of the nation’s failed War on Drugs isn’t living up to its promises.

“The process is fraught with so many challenges for social equity applicants,” said cannabis attorney Chirali Patel, who offers a discounted rate for a few such applicants. “It’s even harder now. Of 564 municipalities, you have maybe only 120 towns that have opted in (to cannabis) in some shape or form, limited inventories, and the zoning ordinances they pass further limit where you can do business.”

The Cannabis Regulatory Commission, the 16-month old state agency regulating the industry and overseeing licensing, lists “equity and safety” as its twin goals. On its website, the CRC says: “Social equity businesses, diversely owned businesses, and impact-zone businesses will be prioritized in the licensure process so that their applications are reviewed before other applicants – regardless of when they apply.”

In addition, “Microbusinesses, which are limited to 10 employees and 2,500 square feet, will also be prioritized and, if successful, allowed to apply to expand their business in accordance with consumer demand.”

But some argue the law doesn’t take into account the myriad challenges facing social equity applicants. They must compete against big-money multi-state operators known as MSOs that have unlimited resources and capital for a limited pool of properties. They also deal with investors only interested in helping them out for a stake in their new businesses. And due to the federal prohibition of cannabis, a majority of American banks will not offer loans or lending options to small, minority and veteran-owned cannabis businesses.

So far, 17 dispensaries owned by eight MSOs began selling adult weed in New Jersey since April 21, and two more entered the market last week.

“We can’t compete with all these big MSOs,” said Best, 48, who claims he spends hours on the phone daily trying to line up investors, calling townships, and researching online for real estate. “It’s a waiting game. It’s like trickle down economics — we’re waiting to see what’s left for us.”

Of 102 conditional licenses awarded by the CRC in May and June, 37 were self-identified majority black-owned; 13 were self-identified as majority Hispanic or Latino owned; and roughly a third have owners who have past marijuana convictions. The stats don’t include the 79 conditional licenses announced Thursday.

Dianna Houenou, Chair of the CRC, explained that being awarded a conditional license just indicates an applicant has received initial vetting from the CRC — but not final vetting — and still needs to secure municipal approvals, financing and a site location before submitting an application for an annual license.

“We hope to see, want to see, a lot of our conditional awardees coming back to us for annual licensure — that’s really what the statute was meant to create — this pathway for those individuals,” Houenou told The Star-Ledger editorial board on July 11 while touting the agency’s minority outreach efforts.

“The CRC has, and will make sure, to offer resources for our prospective applicants so they know they can join this industry without having to jump through hoops like in other states.”

But Best said that’s exactly what he’s doing on the local level just to get a so-called resolution of support letter from the township.

“If I can’t get that, I cannot start a cannabis business because the local government is not supporting me,” said Best.

Linda Solana, 58, of Clifton, got her conditional license on June 30.

After months of trolling the internet, Solana found a property last month in next door Elmwood Park 17 minutes after it was posted online to set up her store, CannaVibes.

Elmwood Park is the seventh municipality Solana’s tried. She lost out to multi-state operators in Bellville, and was quickly out-priced over real estate and application fees in Teaneck, Montclair, North Bergen, South Orange and Jersey City.

More than once, Solana said she was advised to go into cultivating instead of pursuing a retail business because of the cut throat competition.

After securing the 3,300 square foot space for CannaVibes in May, Solana plunked down $8,900 on June 1 as the first month’s rent, along with a $17,000 security deposit. In addition, Solana has to give up 2.5 percent of gross profits to the landlord as part of the lease.

“I swam uphill,” said Solana during a recent interview at her day job – K9 Nanni in North Arlington – which pays the bills and start up costs for CannaVibes. She said the rest of the needed $900,000 to get CannaVibes off the ground was coming from partners and investors.

“The problem was real estate.”

Murphy on June 30 signed a bill sponsored by Senate President Nicholas Scutari, D-Union, chief architect of both the state’s medical and recreational adult weed bills, that is designed to help social equity applicants.

The new law allows grants and low interest loans from the state Economic Development Authority to small business cannabis applicants, who were previously banned from applying because of the federal prohibition on weed.

“This bill will help provide access to capital for small and diverse business owners,” Scutari said in a text on Friday.

But it can’t loosen a tough real estate that’s likely to get worse. The CRC reported it has received nearly 1,200 applications for conditional licenses as of July 28. All winners will need a location to apply to convert to an annual license.

“Every applicant trying to get a license is struggling to identify real estate, doesn’t matter if you’re an MSO or a Mom-and-Pop,” said Paul Josephson, an attorney with Duane Morris, who represents clients in various stages of the licensing application process.

“But we have a market problem in New Jersey, period, in the cannabis space. The real estate piece of the puzzle is always the biggest challenge in almost any jurisdiction, especially in New Jersey.”

Next are municipal approvals. Solana attended her share of planning board, mayoral and City Council meetings all spring and summer to show her loyalty and commitment to Elmwood Park officials.

Her persistence paid off. On July 21, Elmwood Park amended its ordinance to allow cannabis micro-businesses, a Category 5 license, to operate within the township. Next for Solana is to appear before the Elmwood Park City Council on Aug. 4 to convince them that CannaVibes will be situated far enough from an elementary school that sits across a six-lane highway. She is 14 feet short of the township’s requirement of at least 1,000 feet.

Solana plans to quote the CRC’s ordinance on cannabis businesses needing to be at least 200 feet away from schools, synagogues and other places of worship in her presentation Thursday.

“They (municipalities) are not giving us the chance to succeed,” said Solana. “They’re putting so many barriers on their ordinances.”

There’s a reason for that, said Bernie Haney, Director of Land Use for Neptune Township, which last week approved Verano Zen Leaf to expand to adult sales at its existing medical dispensary. The township is allowing up to three Class 5 adult use establishments and five retail microbusinesses.

“We have one opportunity to do it right, and nobody has ever done this before,” Haney said. “No one is giving us the rules to govern this. This is going from the bottom up as opposed from the top down. Each town is writing its own laws relative to where, when, how, and the vast majority of towns in New Jersey have opted out (of cannabis).

“We have never entertained the thought of opting out,” said Haney. “But the question was, `How are we going to opt in?’”

Best, the South Jersey entrepreneur, is asking the same thing. Best was hurt by the war on drugs, and is an object lesson for the new law’s restorative justice aims. Growing up in Plainfield’s inner city, Best was arrested for minor marijuana offenses and eventually went to prison for 6 1/2 years, starting in 1993, for heroin possession and distribution.

Best got out of prison in 2001. While on parole and living in a halfway house, he attended Berkeley College in Woodbridge and studied business administration and computer engineering. He now builds large solar energy systems for a Fortune 100 company and offers consulting work via his website www.solarpvplant.com. He’s been clean for 21 years and a father of two.

“Social equity applicants can make a difference in their communities by having their (cannabis) stores open, paying taxes, employing people,” said Best. “That’s the entrepreneurial spirit. This was supposed to be our chance to get our foot in the door.”

But now he’s afraid he’ll soon have no choice but to set his sights from starting and running his own weed shop, to simply delivering the crop to dispensaries owned by MSOs.

“Because it’s less stringent,” said Best. “Where else are we going to go?”

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Suzette Parmley may be reached at sparmley@njadvancemedia.com or follow her on Twitter: @SuzParmley