While some may argue that it’s crass to promote grass, thousands of minority business owners across the region are doing just that and hoping to grab a big chunk of a booming industry that is virtually guaranteed to generate profits.
During a panel discussion earlier this year in Newark, the head of one of the only African American owned venture capital investment firms with a niche focus on the cannabis industry in New Jersey, said medical marijuana is already big business and perched to get even bigger under New Jersey Gov. Phil Murphy’s intense push to legalize recreational weed throughout the Garden State. LaQuay Juel is the president and general partner of Obsidian Elite Investment Association.
The firm, among other things, assists entrepreneurs secure financing to start and maintain a business—especially one that promulgates the mantra of legalized marijuana. “The reality is that 40 percent of the consumers of cannabis are African American and another 20 percent are Latino,” Juel said in a recent interview with TNJ.com “We need to be fully included in every aspect of the industry from the beginning to the end.”
Currently, the use of marijuana for medicinal purposes is allowed in 31 states and the District of Columbia. Recreational use of the drug is permitted in 9 states and the District of Columbia. Various reports and data show the weed business promises a potential $1.3 billion market in New Jersey alone and an expected $300 million in tax revenue for state coffers—-a financial windfall for entrepreneurs starting or expanding cannabis industry related businesses. “It’s not hard to sell and it’s not hard for people to understand the profit model that exists in cannabis processing and distribution,” Juel says.
However, he is quick to add the cost of starting and maintaining the exclusive product and related service business is expensive. The cost of obtaining the initial license could top $1 million and renewal fees could run between $40,000 to $125,000 annually.
“A start-up company may be able to get a license, but they are going to need capital to maintain the business,” he says. For example, under current legislation administered by New Jersey Governor Phil Murphy, businesses processing cannabis are taxed at higher rate than other businesses. The rate for the first year is 7 percent and it would increase annually to as much as 25 percent. According to figures from a Trenton-New Jersey based cannabis information and advocacy group, more than 5,000 licenses have been awarded to marijuana related businesses as of April 2018. “Less than 5 percent have been awarded to African Americans and that’s unacceptable,” Juel says.
Despite Attorney General Jeff Sessions push back and memo earlier this year reversing the federal government’s hands-off policy on marijuana businesses in states where it is legal, Juel and thousands of other New Jerseyans expect that recreational marijuana will become legal in New Jersey. “Organizations and companies that already have state approval to provide medical marijuana services will probably be among the first to offer it for recreational use,” Juel says.
Finally, in a related matter, more than 25,000 patients are enrolled in the New Jersey State medical marijuana program—an increase of more than 10,000 patients since January. The increase is attributed to Murphy’s push to legalize recreational marijuana and the addition of six new chronic medical conditions approved for the program. “By changing the restrictive culture of the State’s Medical Marijuana program, we are now providing greater access to treatment for those who truly need to be helped,” Murphy said in a statement released last week.