Social Equity in New Jersey

CannaBlog By Jim Marty CPA, CEO, and Founder, and Peter Prevot, CPA, CIA, Director of Application Advisory Services

Bridge West CPAs and Advisors to the Cannabis Industry

BW - NJ Social Equity

New Jersey Governor Phil Murphy recently signed a set of bills to legalize, regulate, and tax adult-use cannabis in the Garden State. The legislation included several provisions to promote social equity in the cannabis industry and repair damages caused by years of prohibition that disproportionately impacted people of color.

Jim Marty, Bridge West’s CEO, participated in a Social Equity Zoom meeting with over 40 cannabis business professionals to discuss New Jersey’s social equity programs. Within the next few months, the Garden State will likely release adult-use cannabis business license applications, and the time is now for social equity candidates to begin preparation. Event participants noted that the opportunities to progress towards diversity and inclusion in the NJ cannabis industry are limited. Attendees expressed a strong desire to work together to accelerate social equity and lift black voices in the cannabis industry.

Social equity programs can be implemented at the State and local levels and will have the following aspects:

Demographic ownership that parallels minority population

Demographic ownership of NJ cannabis businesses means that if 13% of the population is Black or African American, then 13% of adult-use licenses should be reserved for that group. Nationally, at this time, nearly 100% of cannabis business license holders are white. The advocates who participated in the Social Equity Zoom Meeting believe that there is a window of opportunity to establish minority ownership programs before licenses are awarded.  Regulators should thoughtfully consider zoning preferences, extra points on applications for minority owners, and incentives to landlords and property owners to help achieve an equitable permitting structure.

Access to capital

Access to capital has always been difficult for the cannabis industry. Marijuana-related businesses still cannot obtain a bank loan or other traditional forms of credit. However, State and local programs can certainly help in this regard. Access to capital can take many forms, including grants, low-interest loans, and favorable terms on equity partnerships.

Access to industry experts

Access to industry experts is a critical component of any social equity program. It is vital for social equity applicants to be sufficiently ‘set-up for success’ throughout the application, buildout, and operational phases. Simply earmarking permits for social equity applicants does not achieve the intended goal if the license holder lacks the experience and resources to build a successful company. It would be in the State or local government’s best interest to establish separate trust and grant funds to connect social equity applicants and licensees with qualified industry experts.

Expungement of past drug-related convictions

Expungement of past drug-related crimes can be challenging for many reasons. Several participants on the Social Equity Zoom call had served prison sentences. One attendee shared a personal story of selling cannabis in high school, for which he served a ten-year prison sentence. Even with good intentions, State programs that expunge prison records are complex.  Overlapping Federal and State jurisdictions can be particularly challenging, and paper court records that pre-date computerized documents can be difficult to locate. A well-crafted State program should address these challenges.

To build a thriving cannabis business, social equity applicants need the support of experienced advisors throughout the application, buildout, and operational phases. Bridge West has significant experience providing Cannabis License Application Advisory Services and welcomes the opportunity to assist social equity applicants. If you are interested in applying for a cannabis license or have questions about the application process, please contact us to schedule a complimentary consultation.