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
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
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.