In the News

Crucial Perspectives: Cannabis Need-to-Know

ROI-NJ

January 25, 2021

In its Cannabis Resource Issue, ROI-NJ asked New Jersey’s top legal and financial experts what anyone who wants to break into the state’s cannabis business should keep in mind.

ROI-NJ posed several questions. Sills Cummis Cannabis Industry Practice Group Co-Chairs Victor J. Herlinsky, Jr. and Robert E. Schiappacasse weighed in.

How do you serve those in the cannabis industry?

Our Cannabis Industry Practice provides a broad range of services to the cannabis industry. Our clients include applicants for licensure to do business in the cannabis industry, operators in the cannabis industry and others doing business in the industry, including sources of finance, consultants and advisers, landlords and cannabis company executives. Specifically, we have been involved in cannabis-related transactions in New Jersey, Nevada, Arizona, Pennsylvania and Maryland. As one of a few law firms involved at the outset of the legalization of gambling in New Jersey, we understand the political, business and legal challenges clients will face. In that spirit, we work both to understand the regulatory framework and to guide our clients to maximize the benefits and protections available under existing and proposed laws and regulations. —Robert E. Schiappacasse

How should those who want to be involved in the industry proceed in the next 12 months as the rules and regulations — and the licensing — are worked out?

Given continuing regulatory issues revolving around cannabis, it would be advisable for those wishing to enter the market to proceed cautiously. The soon-to-be-approved Cannabis Commission still needs to be set up with staff and regulations. There are inherent delays in any new organization, and regulatory issues could compound this. The difficulty in acquiring alcohol liquor licenses in New Jersey could be a preview of what the cannabis license market could be like. This being said, regulatory barriers on entry will ensure that the licenses will be valuable once attained. The problems of too many licenses associated with markets such as Colorado and Oregon will not occur here in New Jersey. —Victor J. Herlinsky, Jr.

What is a barrier to entry — or an issue most people don’t think of — that needs to be addressed to play in this space?

One hurdle to possible success in the cannabis industry here in New Jersey is experience. As a nascent industry in New Jersey, operators are going to need to have access to intellectual capital and resources to solve problems and address issues that are likely to occur, and yet may be unique to the industry here in New Jersey. Unlike other, more well-developed industries in which first-time operators would have years, if not decades, of industry information to rely upon, New Jersey operators may need to go outside New Jersey for that information. —Robert E. Schiappacasse

What’s something else we should know about doing business in the cannabis space in New Jersey?

The key to any successful cannabis enterprise will be finding the appropriate location. Finding a receptive municipality is no easy task. Many municipalities have chosen to take a wait-and-see approach. Furthermore, the local zoning that has been approved for development of cannabis businesses are often in industrial or other out-of-the-way locations, which are not necessarily conducive to thriving retail operations. I believe that the correct formula for finding a location to start your cannabis business in New Jersey must include strong local connections, either through professional consultants or equity partners. —Victor J. Herlinsky, Jr.