Will Chemistree Gain a Stake in the New Jersey Cannabis Market?


When New Jersey's hopes of legal recreational cannabis were squashed in March, the state vowed to expand its medical marijuana program. Now, the New Jersey Department of Health is taking action and looking for new applicants to operate up to 108 additional Alternative Treatment Centers (ATCs), one of which will be Chemistree Technology's partner Applied Cannabis Sciences of New Jersey (ACS).

The Department of Health announced its expansion plans last week, which will include up to 24 cultivation licenses, up to 30 manufacturing permits, and up to 54 dispensary licenses. Applications will be available on July 1, and ACS has already announced its plan to apply for all three permit types to create a vertically integrated business model, which bodes well for its Vancouver-based partner, Chemistree Technology (CSE:CHM) (OTCQB:CHMJF).

“When we entered discussions to participate with ACS, we were particularly impressed by the team of industry experts they had assembled, and their deep local knowledge of the dynamic, developing New Jersey market for medical cannabis,” said Chemistree President Karl Kottmeier in the news release.

Of course, this isn't the first time ACS has applied under the Department of Health's new Request for Applications (RFA) program. In fact, ACS was placed in the top 20 applicants last summer when six licenses were offered.

New Jersey's Massive Medical Marijuana Expansion Plan

The massive planned expansion of New Jersey's medical marijuana program was created to supply the growing need for medical marijuana, which increased significantly over the past year after the Department added five new illnesses to the list of qualified medical conditions.

Adding those conditions, which include two types of chronic pain, anxiety, migraine, and Tourette’s syndrome, as well as Opioid Use Disorder in January brought on 30,000 new patients, bringing the total patient count to 47,500.

“We are at a point where patients just cannot wait any longer for easily accessible, affordable therapy. This request for applications allows for specialization of businesses to increase medical product in our state,” said New Jersey Health Commissioner Dr. Shereef Elnahal. “In addition, by allowing for three sizes of cultivation endorsements (5,000 square feet, 20,000 square feet and 30,000 square feet), we are increasing opportunities for small and medium-sized businesses to participate in the program.”

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Untapped Potential in New Jersey Medical Market

Chemistree Technology partnered with ACS in April after the two companies were introduced by Chemistree board member Nico Escondido, who is a founding member of the ACS team.

"The potential to expand Chemistree’s presence outside of California and Washington state and ultimately introduce our signature brand Sugarleaf to the large New Jersey consumer base by partnering with ACS is consistent with our growth strategy,” said Kottmeier. “New Jersey is home to over nine million people currently being served by only 12 cannabis operators in its medical program."

If successful, the application will provide ACS with a fully integrated cultivation, manufacturing, and retail sales license in New Jersey.

Considering that ACS already ranked high on the New Jersey Department of Health's list of potential candidates last year, the prospect of the company being approved looks pretty good. If accepted, it will also provide Chemistree with an eastern US presence, further solidifying its spot in the US cannabis market.

The proposed expansion still needs approval from New Jersey Governor Phil Murphy, who has proposed changes to the medical marijuana expansion bill that are said to include increasing the number of cultivation licenses to 36 and ending taxes on medical marijuana within three years.

Investors will want to keep an eye on approval of the proposed New Jersey medical marijuana expansion plan and whether ACS makes the final cut.

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