January 03, 2025 By Michael McQueeny
Who May Apply?
Any applicants currently holding a Class 5 Retail License or Alternative Treatment Center (“ATC”) with a Dispensing Endorsement may apply.
Notably, for entities possessing multiple retail licenses and endorsements—such as ATCs with three (3) operational dispensaries—only one such dispensary can be selected for a consumption area endorsement, regardless of the number of retail endorsements that entity possesses.
When May I Apply?
When you may apply depends on a host of different factors, including, but not limited to, possessing all the requisite application materials (including municipal approval—as discussed more fully below). However, the general timeline for applications is dependent on the type of priority that the licensee currently possesses.
In particular, the application timeline is as follows:
- January 2, 2025 – Applicants open for Social Equity designated retail businesses (owners with cannabis-related convictions or residents of Economically Disadvantaged Areas).
- April 2, 2025 – Applicants open for all other microbusinesses and Diversely-Owned dispensaries (minority-owned, woman-owned, disabled veteran-owned).
- July 2, 2025 – Applications open for all other Class 5 retail operators.
As the preceding identifies, the ability to apply depends on how the individual company is structured, with the first application window open for social equity businesses, the second for microbusinesses and diversely owned, and the third for everyone else (including impact zone businesses). While those entities not falling within the first two priority categories will certainly have to wait for the time-frames specified, it also provides those businesses with the ability to obtain all of the information and materials required for the application, and, for those willing to do so, even build-out in advance of the ultimate Cannabis Regulatory Commission (“CRC” or the ‘Commission”) approval.
What Are the Fees for Applying?
The application fee is $1,000 ($200 submission fee + $800 approval fee). The annual licensing fee is $1,000 for microbusinesses and $5,000 for standard businesses.
What Materials Are Required to Apply?
The application requirements include:
- An oath or attestation that the information provided in the application is true and accurate.
- Municipal approval (discussed further below).
- Detailed floor plans for the premises that will be used as the cannabis consumption area. These floor plans must indicate whether the cannabis consumption area will be indoors or outdoors and include the structural and ventilation requirements for indoor or outdoor consumption areas established in N.J.S.A. 24:6I-21(f) and N.J.A.C. 17:30-14.10(b)-(c).
- Standard Operating Procedures, including for:
- Transferring medical cannabis or cannabis items purchased by a qualifying patient or consumer in its retail establishment to that patient or consumer in its cannabis consumption area.
- Providing information regarding the safe consumption of medical cannabis or cannabis items to all persons entering the cannabis consumption area.
- Requiring each person who wishes to enter the consumption area to produce an acceptable form of government-issued photo identification to prove they are at least 21 years of age.
- Ensuring, when a patient or consumer leaves a cannabis consumption area, that any remaining unconsumed medical cannabis or cannabis item that is not carried out with the patient, the patient’s designated caregiver, or the consumer is destroyed. When patients or consumers carry out medical cannabis or cannabis items that can no longer be resealed, the medical cannabis dispensary or cannabis retailer shall provide the patient or consumer with an exit package to store their unused cannabis items or medical cannabis, as applicable.
- Making good faith efforts to ensure that consumers, patients, and caregivers bring only regulated medical or personal-use cannabis items into the consumption area, which can include a prohibition on outside personal-use cannabis items from being brought into the consumption area.
- Ensuring that if an emergency requires law enforcement personnel, firefighters, emergency medical services providers, or other public safety workers to enter a cannabis consumption area, the medical cannabis dispensary or cannabis retailer shall prohibit on-site consumption of medical cannabis and cannabis items until such public safety workers have completed their investigation or services and have left the premises.
What is Required for Municipal Approval?
Statutory authorities permit municipalities to opt in/opt out of some or all cannabis uses, including, but not limited to, cannabis consumption lounges. Operational retailers should consult with local ordinances to determine whether consumption lounges are permitted within their respective municipalities and zones. Such ordinances may govern the location, manner, and times of operation of consumption areas and include reasonable minimum distances from schools, child daycare facilities, playgrounds, and places of worship where the municipality allows cannabis consumption areas to be located.
Notably – especially for those who engaged in the cumbersome and lengthy process of obtaining a Resolution of Support from a municipality’s governing body to operate as a medical and/or adult-use cannabis dispensary – the application need not be accompanied by a new full Resolution of Support, but does, nevertheless, require the completion of a municipal approval form from a designated municipal official. This form, a mandatory application document, must contain certain mandatory information related to the applicant, including:
- Cannabis business name
- Municipality
- County
- License type
- Entity ID
Additionally, a section of this form is to be completed and ultimately signed by a municipal employee and include the following information:
- Employee name
- Title
- Contact Number
- Email Address
- Indication as to whether the cannabis consumption area endorsement application complies with the town’s terms and conditions of operation or, if it doesn’t, the remaining requirements that must be met before an endorsement can be issued.
Applicants must keep in mind that licensees often operate under a myriad of local approvals, but most notably: (1) local cannabis licenses and/or (2) municipal land use approvals. As it relates to the local license, bear in mind that the local licensing committee may impose its own additional requirements on applicants. Potentially even more impactful, applicants should consult with professionals with respect to the impact of any proposed addition of a cannabis consumption lounge and its impact on any previously received conditional use and/or site plan approvals. It is likely that applicants may have made representations related to on-site consumption that became a material aspect of any previously received land use approval. Moreover, to the extent any physical changes to the interior or exterior of the property may be required to accommodate the consumption lounge, applicants may have to return to the land use board to seek an amendment to the original land use approval, which may impose additional effort, expense, and delays. Given the myriad local forms of regulation, it is not surprising, in that regard, that the CRC’s municipal approval form contains a line item describing that while the application complies with local ordinances, but certain remaining terms and conditions are still outstanding. This is akin to what many municipalities did in issuing Resolutions of Support, stating that the business and location are endorsed, subject to ongoing municipal requirements and processes. Care should be taken in communicating the import of the municipal approval form to municipal authorities so as not to delay the ultimate process before the municipality.
Moreover, it is important to remember that though a municipality may deny an application for endorsement for a consumption lounge, applicants are not without recourse and/or process. Any person aggrieved by a denial of an endorsement application may request a hearing in the Superior Cout in the county in which the application was filed. The request for the hearing shall be filed within 30 days after the date of the municipal denial, and the person shall serve a copy of the request for a hearing upon the appropriate officer for the municipality that denied the application or revoked the endorsement. A hearing shall be held within 30 days of receipt of the request for a hearing.
What Other Restrictions and Limitations Apply to Consumption Lounges?
The following requirements, restrictions, and prohibitions apply to consumption lounges:
- The sale of food, beverages, alcohol, or tobacco on the premises of a retailer (including in the consumption lounge) is prohibited – though consumers may bring outside food into a consumption lounge or have it delivered there, in compliance with the law.
- Retailers must limit the amount of cannabis sold to a person to be consumed in its consumption area to the permissible limits identified by statute.
- No free cannabis samples may be distributed within the consumption lounge.
- Indoor consumption lounges must be:
- in a structurally enclosed area, separated by solid walls or windows from the area in which cannabis is dispensed.
- only accessible through an interior door after first entering the dispensary or retailer facility.
- comply with all ventilation requirements applicable to cigar lounges in order to permit indoor smoking, vaping, or aerosolizing of medical cannabis or cannabis items that is the equivalent of smoking tobacco not in violation of the New Jersey Smoke-Free Air Act.
- Outdoor consumption lounges:
- must be in an exterior area on the same premises as the cannabis dispensary that is either separate from or connected to the dispensary.
- are not required to be completely enclosed but must have sufficient walls, fences, or other barriers to prevent any reasonable view from any sidewalk or other pedestrian or non-motorist right of way of patients or consumers consuming cannabis within the consumption area.
- must ensure that any smoking, vaping, or aerosolizing of cannabis that occurs in the area does not result in migration, seepage, or recirculation of smoke or other exhaled material to any indoor public place or workplace, which may include any ventilation features the Commission deems necessary and appropriate.
For Retailers – the Time is Now
With increasing competition comes the opportunity to become more competitive. As noted by the Commission’s Executive Director at its year-end meeting, New Jersey is now home to more than 190 medicinal and recreational dispensaries open in all twenty-one (21) counties, with even more retailers to come. All dispensaries are seeking to grow their consumer base, whether through more targeted advertisement or expansion into delivery. In any event, retailers should consider whether consumption lounges fit into their underlying business model of brand expansion and attracting more consumers, given that as the preceding identifies, substantial diligence, research, and additional action is required to bring such expansion plans into reality.
