June 5, 2019

Removal of Vertical Integration Requirement for Cannabis Market in New Jersey Opens Up Wholesale Opportunities


The New Jersey Department of Health (NJDOH) issued a press release outlining changes to the state’s medical cannabis rules stemming from an executive order issued earlier this year by Governor Phil Murphy.

The most notable change for our purposes is that NJDOH will create a separate permitting system for cultivation, manufacturing, and dispensary operations. This means that individual businesses of those types will be licensed in the future, effectively creating a wholesale cannabis market in New Jersey where there had not been one previously. To this point, New Jersey’s licensed medical cannabis businesses have been required to be vertically integrated and wholesale trading has not been allowed.

When the application period for new licenses will begin and when the new licenses will be issued is unknown at this point. Inquiries to NJDOH on the matter yielded the following, decidedly unhelpful response, “Pursuant to the Department’s rules, any Request for Applications would be announced in the New Jersey Register.” Additional questions on whether a timeline for the issuance of new licenses has been established did not receive replies.