All was wine and roses the day New Jersey lawmakers sanctioned the state's first medical marijuana dispensaries in 2010. Under the law, the six dispensaries were to be nonprofits. Didn’t happen!
Today, New Jeresy's medical marijuana businesses have evolved outside of the limits of the nonprofit designation and other rules. Two of the dispensaries have struck agreements with out-of-state, for-profit corporations to manage operations, while leaders of a third formed a pair of for-profit businesses affiliated with the dispensary. Another dispensary pays rent for a building owned by its chief executive. Other less obvious "transactions" appear to stretch the bounds of propriety.
Such arrangements were not the intent of the law, circumvent the nonprofit requirement and are usually illegal. The New Jersey Health Department which manages medical marijuana program doesn’t have sufficient jurisdiction to intervene. Unlike most nonprofits, New Jersey's medical marijuana dispensaries are allowed to operate in near-total secrecy. New Jersey's secrecy laws are unusual among states that regulate nonprofit medical dispensaries. Disclosure of post-licensing transactions are necessary in other states. Connecticut requires discloses of backgrounds, business relationships and financial backing on a public website. California, where medical shops do not need to operate as nonprofits, has a downloadable public database that shows the corporate structures of the businesses.
New Jersey's marijuana laws exempt medical marijuana dispensaries from state attorney general's jurisdiction that regulates charities. Federally recognized nonprofits, by contrast, must publicly disclose their finances, including compensation of key executives, rent and other business relationships. None of the six medical marijuana dispensaries in New Jersey has federal nonprofit status, as marijuana remains illegal under U.S. law, even as medicine except for one company that has an FDA approved application.
The current administration in New Jersey waived the nonprofit requires as it solicited applications to license six new medical marijuana dispensaries. To date, 149 applications have been filed for the six new permits.
Before the filing of our Regulation A Offering Circular with the Securities and Exchange Commission, First Jersey Cannabis Corporation was aware of the conduct of current license holders and declined to file for a marijuana dispensary certification, even though our facility was more than qualified. From the outset, we intend to petition for a recreational, adult use cultivation and distribution license when available by the state of New Jersey.