How to Start a Weed Business in Nj

New Jersey's newly formed Cannabis Regulatory Commission met for the first time on April 12, 2021, to start the process of establishing a responsible, fair, and equitable cannabis industry in New Jersey. Initial cannabis regulations were released on August 19, 2021, and will empower the CRC to begin licensing cannabis businesses like cultivators, manufacturers, and retailers. The NJ CRC is in charge of awarding all cannabis retail licenses and will also assume the New Jersey Department of Health's responsibility of overseeing the medical cannabis industry in a market that is projected to surpass $1 billion in sales by 2023.

To open an adult-use recreational cannabis dispensary, one must apply for a Class 5 Cannabis Retailer license issued by the CRC. Applications for these will open soon, but with constantly evolving regulations, microbusinesses vying for these coveted licenses, and excellent social equity provisions, the competition is bound to be intense. So if you are a visionary entrepreneur looking to jump onto the bandwagon early and capitalize on this exciting opportunity, you must have a robust business plan. One of the crucial elements of a business plan is budget and financing and figuring out how much it will cost to launch your cannabis business. This blog post explains the main costs that you will incur as a marijuana dispensary owner in New Jersey.

Application and License Fees

To reduce barriers to entry, initial application fees are low, and applicants will pay the full application only after approval. Applicants only need to pay 20% of the fee at the time of submission, and the remaining 80% will be collected after the license is approved. The cost to submit an application will start as low as $100, and the total application costs will range from $500 - $2,000. The annual retailer license fee for cannabis dispensaries in New Jersey has been set at $10,000 per year.

The New Jersey Cannabis Regulatory Commission has extensive criteria for applicants, and an application must include a detailed business plan to qualify. Some of the requirements include the applicant's environmental impact plan, community impact plan, workforce development plan, a summary of the applicant's safety and security procedures, and the chosen point-of-sale system for compliant sales of cannabis products.

It's essential to consult cannabis industry experts and lawyers before you submit your application, and as a potential dispensary owner, you will have to incur professional fees of at least $10,000 or more. If you are considering launching a marijuana delivery service, you also have to apply for a separate Class 6 Delivery License.

Location and Real Estate Costs

Unless you own a store location, you will most likely be leasing retail space in a neighborhood that has good visibility, high foot traffic, and where you can easily target your ideal demographic. You'll probably pay a premium for being in the cannabis business, and annual real estate expenses can run over $100,000. The rent of a retail store can range between $100/sqft and $400/sqft annually, depending on the location. And even though the New Jersey retail market witnessed a slump of $0.47/sqft during the pandemic, new retail locations will also have to adapt to the rising trends of curbside pickup and delivery to provide the best customer experience in the future.

Once you have selected an ideal location compliant with all local zoning laws of New Jersey, you may have to spend up to $75/sqft in design and renovations to meet regulations, match your brand identity, and optimize store flow.

Technology and Infrastructure

Your tech infrastructure is the foundation of your marijuana dispensary. Cannabis sales at your store require fast and reliable hardware and software and a compliant cannabis-specific POS system. For your IT infrastructure, you will need Tablets, Computers, Cash Drawers, Receipt Printer, Barcode Scanner, etc., all of which will add to your upfront capital costs. Investing in a reliant POS software system, like Cova, which has the best features to ensure fast and compliant sales, will be a wise decision, as you will get a higher return on your initial investment.

New Jersey requires you to maintain a security surveillance system or risk having your license revoked for lack of compliance, so add on at least $50,000 for that. And as a cannabis dispensary owner in New Jersey, you must maintain impeccable records of all your inventory, finances, and other aspects of your business, so employ the right tech to set it all up.

Inventory Costs and Employee Wages

Substantial investment is required to maintain a regular supply of cannabis inventory. As a retailer, you will need to buy products in bulk, and stocking your shop with high-quality cannabis could cost you around $1,500 per pound. Considering the anticipated demand at your dispensary, it's crucial to have enough stock and some buffer for inventory spoilage. You must also park money for packaging supplies and labels. Efficient inventory management can help keep costs low.

To run any business successfully, you need dedicated and fully trained employees. The size of your shop will dictate how many people you need on staff, but a couple of budtenders, a supervisor, and a store manager will amount to an annual payroll of approximately $250,000 if you pay them at industry standard rates.

Marketing, Advertising, and Taxes

Cannabis is among the country's highest-taxed and highly regulated industries, and marketing and advertising restrictions only add to the costs. You can expect to spend at least $25,000 or up to 10% of your sales revenue on marketing and advertising annually. Adult-use cannabis sales in New Jersey will be taxed at 7%, and municipalities will be allowed to charge local sales taxes of up to 2%. These taxes must be paid to the state government.

Navigating through all these legal cannabis regulations can be challenging, but we are here to help. If you are a cannapreneur looking to open a cannabis dispensary in New Jersey, you certainly need an expert technology partner to be successful in this business. Cova can guide you through the whole process and help you set up a compliant dispensary in no time. Click below to learn more.

Written by

Gary leads Cova's charge into the legal cannabis space by guiding the vision, strategic development, 'go to market' plans and culture. A Denver native, he recently moved back to establish Cova's HQ there. While he joined Cova only a year ago, he was a successful business partner to Cova's parent company since 2011. Before joining Cova, Gary was a principal in over a dozen tech start-ups in the mobile communications industry ranging from small VC funded companies to Fortune 100 firms, including Onavo, which was later acquired by Facebook. In those companies he led Sales, Marketing, Business Analytics and Market Expansions. He has also held a multitude of leadership roles with Verizon and AT&T for the first 15 years of the wireless industry. Gary holds a Degree in Finance with a Masters in Marketing from the University of Colorado. In his spare time Gary enjoys skiing, mountain biking, outdoor sports, travel and comfort food.

How to Start a Weed Business in Nj

Source: https://www.covasoftware.com/blog/cost-of-opening-cannabis-dispensary-new-jersey

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