Strict rules for marijuana use in New Jersey

The New Jersey Cannabis Regulatory Commission (NJ-CRC) recently approved proposed rules and regulations for cannabis consumption lounges in the state, but unless some things change, these businesses will find it difficult to be profitable.

The biggest problem with the proposed rules is the inability to sell anything other than cannabis – not food or alcohol.

“I often tell my clients that a lounge functions more like a hospitality environment than a retail environment,” said Sara Stewart, founder of Ritual Cannabis Hospitality, which helps cannabis owners build consumption lounges. “Their profit margins are lower, and instead of averaging $60 per person, it’s closer to $30.” That means these operators need additional revenue streams that current New Jersey rules don’t allow.

“If you don’t have food, that’s a huge hurdle to a lounge’s profitability,” Stewart said.

Photo by Goodboy Picture Company/Getty

She speaks from experience. Stewart built the Lowell Cafe in California (now called the Original Cannabis Cafe) that serves food and beverages, but she also built one for Green Thumb Industries (OTC: GTBIF) in Illinois without that addition.

“I’ve seen the direct correlation that food brings to a lounge. I saw normality. I’ve seen the profitability,” Stewart said.

She noted that Nevada is moving forward with food in consumption lounges — an example New Jersey may follow.

Some states that have legalized non-food consumption lounges have seen creative workarounds, such as: B. Food deliveries or food trucks parked outside. With either option, however, the cannabis company gives up some of the potential profit.

RELATED: What cannabis lounges could mean for the future of cannabis use

Stewart also noted that building a commercial kitchen from scratch is expensive and that’s why most restaurants take up previously constructed space. Cannabis operations may not be able to find such available space. It is a difficult puzzle for the owners to solve.

Another problem with lounges with no other forms of entertainment or food and drink? overconsumption. Stewart believes that a lounge with groceries that sell small amounts of cannabis, such as B. pre-rolls, would allow an operation to make a profit without overselling the customer.

RELATED: Why Cannabis Consumption Lounges Haven’t Succeeded

“Imagine a bar that outsources spirits but sells food on-site. It wouldn’t be profitable,” Stewart said.

Lounges that sell larger volumes struggle with either not letting customers leave with unused products (motivating them to overconsume) or leaving with additional products that put them in competition with dispensaries.

smoking marijuanaPhoto by Jamie Grill/Getty Images

New Jersey Lounge Laws

The rules are currently under a 60-day public comment period, after which officials plan to finalize the regulations. The operations are referred to as Marijuana Consumption Areas (MCA).

Here are some of the suggested rules:

  • MCA certification is valid for one year and is renewable annually upon renewal of retail marijuana license or medical marijuana dispensary approval.
  • Consumers can bring their own cannabis into the lounge – either medicinal or adult products.
  • Free samples of medicinal or adult-use cannabis may be admitted in a lounge.
  • Customers can take unused cannabis with them, but it must be repackaged to meet government requirements.
  • Strict sell limits to prevent overselling.
  • Customers must be at least 21 years old.

The proposed rules include a $1,000 application fee for all applicants, but if approved, micro-enterprises will have to pay an additional license fee of $1,000, while a standard consumption lounge business license would cost $5,000.

Big no nos

  • Alcohol and cigarettes may not be consumed or sold in the lounge.
  • No grocery retail.
  • Employees cannot consume while working.
  • Any cannabis left in the lounge by consumers must be destroyed.

Post a comment:

Your email address will not be published. Required fields are marked *