TRENTON – Recreational marijuana sales start Thursday in New Jersey, the culmination of a more than decade of advocacy efforts and the debut of what’s expected to grow into a multi-billion-dollar industry.

It’s happening at 13 medical dispensaries that are expanding their operations, generally owned by the nation’s larger marijuana businesses. Six of the seven companies starting adult-use sales are among the 15 largest cannabis companies in the country, and none are small, local mom-and-pop businesses.

It won’t last that way forever, but that’s how it’s starting. And it’s noteworthy given the emphasis on equity and opportunity during the development of the legalization law and its regulations.

Ami Kachalia, a campaign strategist for the American Civil Liberties Union of New Jersey, said “there is a first-mover advantage that will exist” for the alternative treatment centers that are converting Thursday.

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“It’s really important for New Jersey’s cannabis industry to reflect the diversity of our state and to really prioritize ownership by those who’ve been most harmed by the criminalization of marijuana,” Kachalia said. “While the start of sales is a historic moment for the state, the fact that it’s largely corporate and multistate operators that are opening up only heightens the need for more investment in building an equitable industry.”

'The promises of legalization'

Thirty-seven of the first 68 businesses approved for conditional licenses to grow or manufacture recreational marijuana were diversely owned businesses, owned by women or minorities. Those aren’t for retail dispensaries, and none of those have started their operations yet.

Kachalia said “there’s promise there that we will build a more equitable industry in the long term.” She said going forward, the CRC should prioritize people with prior records for cannabis and from communities most harmed by criminalization, in which minority populations were far more likely to be arrested despite usage rates comparable with white residents.

“To make sure that we are really living up to the promises of marijuana legalization, which was really grounded in racial and social justice,” she said.

That can be achieved, Kachalia said, by helping providing access to capital and other financial resources and technical assistance. New York has a $200 million fund to support ‘equity applicants,’ and she said New Jersey should do something similar.

“Ultimately I think in order to get there we need to prioritize it from the start, and we also need to have robust support for people who’ve been most harmed by criminalization to help them enter into and succeed in the industry,” Kachalia said.

Eleven dispensaries are due to start selling marijuana to any adult customers Thursday morning. The ones in Deptford and Vineland will start adult-use sales at 5 p.m.

Million-dollar fees

The companies are paying steep fees to the state as part of expanding their alternative treatment centers to include recreational sales.

A ‘vertically integrated’ ATC, meaning it has licenses to grow, manufacture and retail marijuana, must pay at least $800,000 as part of the expansion.

Six of the seven companies are expanding sales at two of their dispensaries, so they pay a total of $900,000 each. The expansion fee would be $1 million for companies to expand three dispensaries, which at least four of the companies could seek to do if they obtain local approvals they’re still seeking.

The current state budget was revised last month to anticipate just over $4 million in tax revenues from the state budget from recreational marijuana sales. Next year’s state budget anticipates a bit over $19 million.

Those don’t reflect all the tax revenue from recreational marijuana sales, as only about 30% goes to the state. The rest is required to be spent on programs that benefit the areas that saw the most arrests for marijuana possession and distribution during the time it was illegal.

That total also doesn’t reflect the amount in fees that are brought in by the Cannabis Regulatory Commission, which are considered “off-budget” and go toward the CRC’s operations. Those fees are expected to top $9.3 million this fiscal year and approach $17.3 million in fiscal 2023.

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