FAIRFIELD, NJ — When Fairfield Business Administrator Joseph Catenaro addressed the township council about marijuana retail sale and zoning regulations at last week’s meeting, he suggested that the “get out in front on the issue as soon as possible” now that New Jersey is in the process of legalizing marijuana.
He added that the township “is beginning to receive inquiries regarding business opportunities and where the township stands.”
He explained that the “hot topics” of marijuana in the state of New Jersey (NJ) “range from medical marijuana to recreational marijuana, manufacturing, distribution, growing, retail sales, consumption and a myriad of other topics.”
“We should be prepared as a township to discuss and address many of these topics and address our official position,” he said.
Catenaro provided the governing body with a list of facts, trends, licensing information and “overall pros and cons of the different possibilities relating to every aspect of the use of marijuana or its manufacturing, sale, cultivation and overall forecasting of job creation and economical potential.”
“There are currently five marijuana dispensaries already within NJ for medicinal purposes,” he said. “Twenty-nine states and Washington D.C. have legalized marijuana for medicinal purposes. Eight states and D.C. have legalized marijuana for recreational use. Vermont is expected later this year with Connecticut and Rhode Island and NJ to follow suit.
“NJ Senate Bill 830 (S830), introduced Jan. 9, 2018, would legalize possession and personal use of small amounts of marijuana for persons ages 21 and over and would create a Division of Marijuana Enforcement and licensing structure. This is the same as assembly bill 1348.
“The present bills, introducing possession and personal use/sale of marijuana, do not contain a home growing component. And if/when legalized in NJ, municipalities will have one year to prohibit, if not, municipalities will have to permit until being able to revisit the issue again in five years.”
He said that this last statement is most crucial because it makes it necessary for the township to act quickly. If the township does not provide ordinances on retail sale, zoning regulations and more within one year of state adoption, Catenaro said the state will make these decisions for Fairfield, and that nothing can be done until the five-year period is up.
There are ways to regulate the industry, he said, such as regulating time of operation and locations. He added that locations can be very specific, and that the number of uses can be limited, but there must be one per municipality. If allowing agriculture, the municipality can dictate where, and civil penalties can be regulated.
It was also noted that some municipalities, such as Hawthorne, are banning the retail sale of marijuana within their communities.
Councilman Tom Morgan made the point that in the past, Fairfield was against the abortion clinic and the porn shop and lost in the courts because the township had no ordinances in place. Morgan said he would like to see zoning where it would least impact the town. This is why it is most important to be ahead of the issue, he said.
No decisions were made on how to handle the problem, but the governing body was in agreement that there should be no dispensing of marijuana in the township. If there has to be a concession, the council said that manufacturing it in Fairfield would be a better option, and that no recreational use would be allowed.
Noting that the opiate problem in New Jersey is out of hand, Mayor James Gasparini said that the government is already spending millions of dollars to alleviate this issue, and is now looking to legalize marijuana.
“I just don’t get it,” he said, adding that he does not want marijuana anywhere in town.
The legalizing of marijuana also will necessitate a whole new state agency, costing millions for New Jersey taxpayers, according to council members. Councilman Michael McGlynn said that this is “bad business,” and that the government should be “controlling spending and not moving in this direction.”
Catenaro also stated the following concerning Colorado:
“In 2012, it was the first state to legalize marijuana and sales began in 2014. Municipalities have an opt-out provision, and less than 100 of the 200 plus municipalities allow for its sale. The sale of marijuana is used as an economic development tool through creation of jobs and obtaining tax revenue and bolstering tourism. With this comes a rise in property disputes.
“Highway fatalities have risen with higher levels of THC, the chemical responsible for most of marijuana's psychological effects, found in drivers, but there is no direct correlation. The measuring of THC and blood alcohol levels are different processes which is presenting comparison challenges.”
Regarding the production of marijuana, Catenaro explained that Terra Tech, a vertically integrated cannabis-focused agriculture company, cultivates, manufactures, extracts and dispenses marijuana for medicinal purposes at eight locations in Nevada and 10 in California. The company’s product is organic, non-GMO, Kosher and Global Food Safety Initiative certified, he said. Its model includes closed-environment agriculture in large, high-tech greenhouses.
There are at least three aspects to consider when siting such a facility, he explained: electricity/power grid considerations, since such a facility requires from 5-to-7 percent more power than traditional manufacturing; water nutrient management; and the carbon dioxide component for extraction.
With the legalization, there will be five license types to be expected—cultivating, manufacturing, dispensing, lab, and distribution/transporting—as well as a $500,000 licensing fee.
For cultivation, typical startup costs are $75 per square foot for indoor warehouse and $50 per square foot for outdoor cultivation, Catenaro said. As for dispensary levels, he said that Terra Tech-related dispensaries are seeing more than 1200 patients a day at their locations, which Catenaro compared to Starbucks or McDonald’s.
He said current trends show that the market is on the rise for marijuana oils and edibles, whereas smoking is on the decline. Vape pens are rapidly gaining momentum as well, and there are currently 13,200 people in New Jersey with prescriptions.
According to Catenaro, there are also currently 4,000 participating doctors in the NJ Department of Health Medicinal Marijuana Program. The six dispensaries in New Jersey are in Montclair, Egg Harbor, Woodbridge, Secaucus, Cranbury and Bellmawr. The Department of Health is calling these dispensaries alternative-treatment centers.
He also stated that there are only four large banks dealing with the marijuana industry due to federal prohibitions on the industry: Bank of America, Citigroup, Wells Fargo and J.P. Morgan.
More than 18,000 jobs have been created in Colorado, and Caternaro said it is forecasted that the industry will create 250,000 jobs by 2020.
He also noted that potential benefits include real estate demands for warehouses, an increase in property value, accelerated vitality of central business districts, such as accessory businesses, and additional tax revenue. The potential detriments include local regulations, incompatible uses and enforcement costs.
Some additional considerations include adaptive reuse, such as gas stations and clinics; revitalization; economic development; industrial development; workforce development; commission creation; minimum size to be financially viable is about 10,000 square feet; and facilities must be cannabis only. If facilities go vertical, capital expenditure increases and internal rate of return fluctuates.
The council will continue to discuss this topic at future meetings. The next meeting will held be on Tuesday, May 29 at 7 p.m.