Getting permission to legally sell weed in Newark remains an expensive mystery

Although the application fee cost her $2,500, Shonda Morton, owner of the Newark cannabis business, said she spent more than $100,000 to apply for a permit to legally sell weed.

In the cannabis industry, like many others, Morton is losing six figures in a hiring process that involves hiring attorneys and consultants, dealing with inflated real estate prices and more.

Like many would-be cannabis shopkeepers, Morton hits a wall in her hometown.

“We use our money because we believe in our dream and what we’re trying to achieve, but at the same time it bleeds us dry,” she said.

Morton grew up on Newark’s Avon Avenue, an area known for gun violence and auto theft, she said.

Morton herself, a victim of gun violence, wanted her cannabis business to create generational wealth for her and the community she comes from, and as a customs agent, she was no stranger to rules and regulations, she said.

Morton’s retail business, known as Bountiful Buds Delights, is made up largely of black women who grew up in Newark — one of the same demographics that state cannabis legislation was written to help.

The state regulator, the New Jersey Cannabis Regulatory Commission (CRC), which approves licenses to grow, manufacture and sell cannabis, gives priority to minority-owned and women-owned companies that apply.

However, the approval of licenses often depends on the applicant having their city’s blessing – a process that has proven daunting in a state where 1 in 5 of its 564 municipalities have opted not to allow cannabis in their city altogether has proven.

“The CRC went where people like us could go in this industry,” Morton said. “But if municipalities aren’t trying to see the same vision, how can we make them work?”

To apply to sell regulated cannabis, upfront funding must be submitted to the city, landlords require money for letters of intent, and more. Because the City of Newark has historically approved licenses in approximately one-year increments, this means that applicants who do not receive a license had to pay those fees for another year before a new round of applications comes through.

Morton still doesn’t have municipal approval and may need to shift her efforts — but one thing’s clear: losing is expensive.

Newark — the state’s largest city — said through its communications office that the city has approved a total of 10 licenses: two growers, one manufacturer, four retailers, one consumption lounge, and two retail micro-enterprises.

Newark last year extended an application process nearly 30 days before it was completed. When Morton received the rejection letter from that round in the mail last December, it didn’t explain how it was rated or why it was rejected, she said.

Morton said she held out for another year before the city decided to resume her trial from mid-October to mid-November.

CEO Shonda Morton of cannabis retail company (center), Bountiful Buds Delights poses for a photo in front of Newark City Hall. Morton and her team applied for a cannabis retail license in the city and found the process fraught with obstacles.

That meant Morton had to pay attorney, consultant, and real estate fees for almost another year. In addition, they cannot be licensed by the state to operate until they have received city approval.

The state had set up a temporary license for those who couldn’t afford it, but that meant little at the local level, Morton said, since operators could only open with a full license.

She said Newark wants to see upfront payments for the company, with the caveat that many small cannabis companies don’t become investable until they actually receive municipal approval.

Morton was stuck in a circle of obstacles.

In late October, NJ Advance Media reached out to the City of Newark Communications Office to learn how the municipality licenses cannabis businesses. The office replied about 30 days later. City officials declined to say when the application would reopen.

According to the city, the selection of applications is made by a committee made up of people from the city’s operations administration, the law and the finance ministries.

Non-refundable registration fees range from $750 to $2,500. In an email, the city said it is prioritizing residents, businesses with at least 50% of the Newark workforce, and people affected by cannabis criminalization.

Morton said the previous rejection letter provided little to no details as to why her company failed to meet those goals.

When cannabis was legalized statewide in 2021, legislation directing the legal market painted a picture of economic justice for those harmed by the War on Drugs. Newark is a portrait of the worst aspects of this failed Nixon-era policy.

In a city that has had to balance everything from a housing shortage due to corporate buyers and economic inequality to a police department under federal oversight for constitutional violations, many residents and suitors of color are waiting with bated breath to see which cannabis companies are going to turn out to open.

Residents are also waiting to see if these companies can serve as models for the ideals of economic justice that sold the industry to pass and support the law.

With a relatively low number of approved cannabis permits but a high number of applications, there is a general frustration among applicants in all communities. The application process has become profitable for city funds, real estate companies and landlords.

In 2021, the process opened and closed for the month of December, which many in the industry criticized as few companies would be able to meet the city’s qualifications in such a short amount of time.

This year, the City of Newark did the same, opening and closing applications within a one-month span. Applications are possible from October 15th to November 15th.

Newark Mayor Ras Baraka and Jersey City Mayor Steven Fulop endorsed legal weed in 2019. In joint statements, they called legalization “the most important and controversial policy of our time” as cannabis legislation moved into the country before it was passed final negotiations.

Bountiful Bud’s chief operating officer Shani Street, who went to Central High in Newark, said the reality on the front lines is different than how the law is being sold. The team consistently evaluates whether or not the deal is worth the money, she said.

With a background as a substance abuse counselor, Street wants to tout the benefits of cannabis and show that her job doesn’t have to be at odds with understanding the plant as something that could be beneficial.

Now there are fears as to whether that dream can become a reality, Street said.

“That’s where the fear sets in — will everything we put out come back?” she said.

Cannabis legislation in New Jersey gave municipalities the power to enact their own cannabis ordinances, which regulate the amount, type, hours, and application fees for cannabis businesses.

“Why should it be when the whole goal is to address social justice and give people like us a chance,” Morton said. “It’s an oxymoron.”

Hasaan Austin, a consultant hired by Morton, said Newark’s facility is part of a larger problem because New Jersey communities lack a common form of evaluating and treating cannabis applicants.

This factor, coupled with the majority of municipalities’ reluctance to license cannabis businesses, has created a tight market, high operating costs, and a confusing landscape for applicants to navigate.

One solution would be to expand eligible zones within Newark for deprived neighborhoods, including residential areas, Austin said.

That, in turn, could discourage landlords and real estate companies from charging exorbitant sums, Austin said.

“More expansion to allow more property stock into the market, which ultimately dictates investment,” he said.

At the state level, the Cannabis Commission recently announced a partnership with the New Jersey Business Action Center to provide technical assistance to applicants.

The program includes webinars, live sessions and mentoring aimed at increasing small business and demographic diversity in a market where the percentage of businesses of color is in the single digits.

A partnership with the New Jersey Economic Development Agency has also been discussed with the Commission, but details of what the program will ultimately look like have yet to be released.

Austin said that while state-level initiatives are good, municipalities also need to invest their own dollars locally, noting that many of the current market barriers are created at the municipal level.

The City of Newark said in an email that “substantial-sized cannabis farms should contribute to a business development fund that helps small business owners obtain a micro-business license.”

Austin said “the barriers are so real for these underserved participants in the community that the city and the private sector need to come together to create better access to capital, more access to job training and so on,” he said. “It’s a collaborative effort that needs to happen in the city.”

Meanwhile, Morton doesn’t want to leave Newark.

“It’s the path we’ve been on since we started, not to mention it’s our city,” she said. “If our own city can’t hug us, dammit, that’s like a slap in the face.”

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