On June 3, 2019, the New Jersey Department of Health (NJDOH) issued a much-anticipated Notice of Request for Applications (Notice) and announced that it is seeking new applicants to operate up to 108 new medical marijuana Alternative Treatment Centers (ATCs). Applications for the new ATC licenses will be available on July 1, 2019, and will be due August 15, 2019. The Notice comes as another step in the Department’s efforts to expand the State’s medical marijuana program and increase the supply needed to meet the demand of the current – and ever-increasing – number of participants in the program. As of June 3, 2019, there are 47,500 registered patients in the Garden State’s medical marijuana program.

I. Overview

The Notice of RFAs came just days after the New Jersey Senate passed a bill, the “Jake Honig Compassionate Use Medical Cannabis Act,” aimed at expanding the State’s medical marijuana program. The State Assembly approved the expansion bill on May 23, 2019, and the Senate passed it a week later. Because the Senate made some last-minute revisions to the bill, it will need to be voted on again by the Assembly before the bill goes to Governor Murphy for signature. The Assembly vote is expected to take place around June 10, 2019, and Governor Murphy is expected to sign the bill, although his signature is not guaranteed. Among other things, the bill would nearly double the number of medical marijuana dispensaries from 12 to 23 and increase the amount of marijuana that patients can buy at a time from two to three ounces per month. The bill would also ease the burden on patients by only requiring them to see physicians once a year to verify their eligibility for the program. It would also create a new commission to oversee implementation of the program – a role currently held by the NJDOH – and would include a plan to phase out the state sales tax on cannabis sales by 2025.

Speculation that the Notice of RFAs would be released was fueled by the NJDOH’s May 13, 2019 amendments to the State’s medical marijuana rules, which we discussed previously. Most notably, those rule amendments created a separate permitting system each for cultivation, manufacturing, and dispensing medical marijuana. Previously, the program was vertically integrated (i.e., cultivation, manufacturing, and dispensing under one license).

II. The Number and Division of Permits

Through the Notice of RFAs, New Jersey is seeking new applicants to operate up to 108 new ATCs. The Notice provides for separate permits for cultivators, manufacturers, and dispensers of medical marijuana as follows: up to 24 cultivator endorsements, up to 30 manufacturer endorsements, and up to 54 dispensary endorsements. The NJDOH will seek up to the following numbers of permit endorsements by region:

Northern Region (Bergen, Essex, Hudson, Morris, Passaic, Sussex and Warren Counties):

Cultivation endorsements: 8
Manufacturing endorsements: 10
Dispensary endorsements: 20

Central Region (Hunterdon, Middlesex, Mercer, Monmouth, Ocean, Somerset and Union Counties):

Cultivation endorsements: 8
Manufacturing endorsements: 10
Dispensary endorsements: 20

Southern Region (Atlantic, Burlington, Camden, Cape May, Cumberland, Gloucester and Salem Counties):

Cultivation endorsements: 8
Manufacturing endorsements: 10
Dispensary endorsements: 14

In order to "provide for opportunities for small, medium and large businesses to participate in the RFA, and to control the overall size of canopy in the Medical Marijuana Program," the Notice also provides that the NJDOH will seek to issue cultivation endorsements in the following tiers of canopy sizes:

• 20,001 square feet to 30,000 Square Feet: up to 3 cultivation endorsements, 1 in each region.
• 5,001 square feet to 20,000 Square Feet: up to 6 cultivation endorsements, 2 in each region.
• Up to 5,000 Square Feet: up to 15 cultivation endorsements, 5 in each region.

III. Eligibility

The Department will seek applications from both for-profit and non-profit entities, as the statutory requirement for two nonprofit ATCs in each region has already been met. Entities may submit a maximum of three (3) applications and may only submit one (1) application for a cultivation endorsement and one (1) application for a manufacturing endorsement. Additionally, applicants for cultivation endorsements may only submit an application for one (1) canopy size tier. A separate application is required for each endorsement.

The Notice also provides that no entity or individual will be awarded more than three (3) total endorsements in this licensing round. Further, no entity or individual shall hold more than one (1) cultivation endorsement, one (1) manufacturing endorsement, and three (3) dispensary endorsements as a result of the awards made in this licensing round. Current ATC permit holders and permit awardees will be considered to hold one (1) cultivation endorsement, one (1) manufacturing endorsement, one (1) dispensary endorsement, and one (1) additional dispensary endorsement for every satellite location that has been proposed to the NJDOH and allowed to proceed in the permitting process as of the open of the application period – provided, however, that ATCs shall have the opportunity to rescind those satellite waiver applications by July 1, 2019 if they wish to submit additional applications in the upcoming licensing round.

IV. Timing

The current application submission and review schedule is as follows:

Monday, July 1, 2019: Initial Day of Open Application Period.
Tuesday, July 16, 2019: Pre-Application Webinar held by the NJDOH to review the RFA process and the most commonly submitted questions.
Thursday, August 15, 2019 at 3 PM EST: Submission Deadline.

V. Review Criteria

Applications must include a full and complete response to each of the criteria specified in the Notice of RFAs, as well as completion and submission of all mandatory information, or risk disqualification. If the application is found to be complete, then the application will be reviewed and scored by a selection committee that “shall be chosen for their expertise and shall be free from conflicts of interest.” The Notice provides that the selection committee will score the applications based on the RFA criteria, and then the Department will compile the scores and issue its Final Agency Decisions (FADs). FADs will be based on scoring, location (region and county), the limitations outlined under the eligibility criteria of the RFA, and any other criteria the Department determines is consistent with effectuating the goals of the Act.

The review and award schedule will reportedly be determined based on the volume of applications received, and the Notice provides that the Department may stagger awards by endorsement with cultivators first, manufacturers second, and dispensaries third. Awards based on the RFA shall be valid for the following time frames:

Cultivation and manufacturing endorsements: 18 months
Dispensary endorsements: 12 months

VI. Scoring

Similar to the last round of RFAs, the Notice outlines two parts to the RFA: submission of mandatory information and scoring criteria. The mandatory information includes 13 categories of information including, but not limited to:

• certain corporate information including a copy of the entity’s organizational documents or bylaws and evidence of good standing;
• a detailed list of the proposed ATC’s employees, principal officers, and members;
• a list of all persons or business entities having five percent or more ownership in the ATC – whether direct or indirect;
• written verification of the approval of the community or governing body of the municipality in which the ATC is or will be located;
• evidence of compliance with local codes and ordinances; and
• floor plans of the proposed ATC.

With respect to scored criteria, the Notice includes seven criteria. Below is a summary of the seven broad categories of criteria—the most points for which are apportioned to Criteria 6 and 7:

Criterion 1: Ability to meet the overall health needs of qualified patients and safety of the public (30 points). The measures include a security plan, environmental impact plan, and a quality control and quality assurance plan, each worth 10 points.
Criterion 2: History of compliance with regulation and policies governing government-regulated marijuana programs (20 points).
Criterion 3: Ability and experience of applicant in ensuring an adequate supply of marijuana (20 points).
Criterion 4: Community support and participation (20 points).
Criterion 5: Ability to provide appropriate research data (10 points).
Criterion 6: Experience in cultivating, manufacturing, or dispensing marijuana in compliance with government-regulated marijuana programs (100 points). With regard to Criterion 6, applicants need only respond to the measure that is applicable to the endorsement being pursued. The measures for this criterion include a "Cultivation Plan," "Manufacturing Plan," or "Dispensary Plan."
Criterion 7: Workforce and job creation plan, including plans to involve women, minorities and military veterans in ATC ownership, management and experience with collective bargaining in cannabis industries (100 points).