N.J. Admin. Code § 17:30-6.8

Current through Register Vol. 56, No. 21, November 4, 2024

Section 17:30-6.8 - Limitations on license applicants, license holders, owners, principals, passive investors, financial sources, management services contractors, and vendor-contractors

(a) The license holder is the party that has responsibility and liability for the conduct of the cannabis business(es).

(b) A license applicant or license holder shall not be established as a trust.

(c) A license applicant or license holder shall only have, at most, one open and pending cannabis business license application for each class of license at any one time and may only hold cannabis business licenses in accordance with the limitations in this section.

1. A license applicant or license holder may abandon a license application, by providing written notice to the Commission, in order to accept another license or submit a new license application.

(d) During the 24-month period following February 22, 2021:

1. A license holder and its owners and principals may concurrently hold one cannabis cultivator and one cannabis manufacturer license;

2. A license holder and its owners and principals may concurrently hold one cannabis retailer license and one cannabis delivery service license;

3. A license holder and its owners and principals may concurrently hold one cannabis wholesaler license and one cannabis distributor license; and

4. A license holder and its owners and principals that have an expanded ATC license may concurrently hold a cannabis cultivator, cannabis manufacturer, a cannabis retailer license, additional cannabis retail licenses for each satellite dispensary, and a cannabis delivery service license; or a cannabis wholesaler license and a cannabis distributor license.

(e) After the end of the 24-month period following February 22, 2021:

1. A license holder and its owners and principals may concurrently hold one cannabis cultivator, one cannabis manufacturer, one cannabis retailer, and one cannabis delivery service license;

2. A license holder and its owners and principals may concurrently hold one cannabis wholesaler license and one cannabis distributor license; and

3. A license holder and its owners and principals that have an expanded ATC license may concurrently hold a cannabis cultivator license, a cannabis manufacturer license, a cannabis retailer license, additional cannabis retail licenses for each satellite dispensary, and a cannabis delivery service license; or a cannabis wholesaler license and a cannabis distributor license.

(f) A license holder holding a testing laboratory license may hold up to three testing laboratory licenses, but may not hold any cannabis business licenses.

(g) A person or entity shall be an owner of only one license applicant or license holder.

1. Where a person is an owner of a license applicant or license holder, that person's spouse, domestic partner, civil union partner, child, sibling, or parent may only be an owner of such license applicant or license holder and shall not be an owner of another license applicant or license holder.

(h) A person or entity may hold an ownership interest as a passive investor in more than one cannabis business or testing laboratory license applicant or license holder.

(i) An owner, notwithstanding the amount of capital or assets that such owner contributes to a cannabis business or testing laboratory license applicant or license holder, shall enjoy the customary incidents of ownership and shall share in the profits and losses of such cannabis business or testing laboratory license applicant or license holder proportionate to the owner's percentage of ownership interest in such license applicant or license holder.

(j) An ownership interest may be held directly or indirectly through an intermediary controlled by the holder, such as a shell company or holding company; the presence of such an intermediary shall not change the determination of the actual holder of the ownership interest.

1. An ownership interest may be in stock or securities or other forms;

2. An ownership interest may not include a security interest on a property, a lien, or an encumbrance; and

3. Mere receipt of a percent of revenue or profits in accordance with the terms of an agreement without a right to ownership or equity interest is not ownership interest.

(k) The majority share of the license applicant's ownership interest, including the ownership interest that qualifies it as a diversely owned business, social equity business, impact zone business, or microbusiness, shall remain the same from the date of submission of a conditional license conversion application or submission of an annual license application until two years after the commencement of cannabis business operations.

1. A transfer of ownership interest, in a license applicant from a deceased owner to their heir shall not be prohibited; and

2. A transfer of ownership interest in a license applicant from a deceased owner to their surviving spouse, domestic partner, or civil union partner, if the license was issued jointly to both the parties, shall not be prohibited.

(l) A person or entity shall be a principal of only one license applicant or license holder.

(m) A principal may have control or decision-making authority over a cannabis business or testing laboratory license applicant, license holder, cannabis business, or testing laboratory directly or indirectly through an intermediary controlled by the principal, such as a shell company or holding company; the presence of such an intermediary shall not change the determination of the actual person or entity exercising control or decision-making authority.

(n) Nothing in this chapter shall be construed to prohibit an employee or volunteer from working with more than one license applicant or license holder, at any or all of its cannabis business premises.

(o) An owner, passive investor, principal, employee, or volunteer of a cannabis business or testing laboratory license applicant or license holder shall be at least 21 years of age, except that a person less than 21 years of age who receives the transfer of ownership interest from a deceased owner or passive investor of a cannabis business or testing laboratory license applicant or license holder as an heir may be an owner or passive investor of a cannabis business or testing laboratory license applicant or license holder.

1. Such ownership interest shall be put into a trust with the heir as the beneficiary until the heir is at least 21 years of age.

(p) A management services contractor may contract with and provide management services to up to five license applicants or license holders.

(q) A license applicant or license holder or its owners or principals may not serve as a management services contractor.

(r) A financial source may provide funding to up to seven license applicants or license holders.

(s) A vendor-contractor may contract with and provide services to more than one license applicant or license holder during the licensing process and after the issuance of license(s).

(t) Remuneration provided by a cannabis business license holder to a management services contractor, financial source, or vendor-contractor may include either a flat fee or a percent of revenue or profits, but in no case shall remuneration include an ownership interest in the cannabis business license holder.

(u) No owner who also has decision-making authority or principal of a license holder operating a licensed microbusiness shall hold any financial interest in another licensed cannabis business, whether or not a microbusiness.

N.J. Admin. Code § 17:30-6.8

Adopted by 53 N.J.R. 1583(a), effective 8/19/2021

Amended by 55 N.J.R. 402(a), effective 3/6/2023