Relief for Micro and Conditional Cultivators & Manufacturers

The Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization (CREAMM) Act established the Social Equity Excise Fee (SEEF) as a groundbreaking mechanism to ensure that revenue generated from adult-use cannabis sales would be reinvested into the communities most harmed by prohibition. While well-intentioned, the current implementation of SEEF has not effectively delivered direct, measurable support to social equity licensees or small operators—the very groups the Legislature intended to benefit. Furthermore, microbusinesses and conditional licensees face financial strain during the build-out phase, when facilities are not yet revenue-producing but are still subject to this obligation indirectly through cost pass-throughs and cash-flow burdens.

My recommendation seeks to:
(1) clarify and enforce SEEF’s reinvestment mandate,
(2) establish temporary relief or scaled application for microbusinesses and conditional licensees, and
(3) dedicate SEEF funds toward grants, not loans, that expand cultivation and or manufacturing capacity and product diversity in the regulated market.

Legislative Authority under the CREAMM Act

The CREAMM Act authorizes the Cannabis Regulatory Commission (CRC) to assess and allocate the SEEF to “promote and encourage participation by persons from communities disproportionately harmed by cannabis prohibition and enforcement.” The Act further grants the Commission and the Legislature authority to determine how these funds are distributed to achieve equity and market balance. The statute’s plain language and legislative history make clear that SEEF was never intended as a general revenue generator—it was created as a tool for reinvestment. The Legislature retains full authority to amend or direct its use to ensure compliance with the Act’s equity mandate.

Problem
Despite the establishment of SEEF, many equity licensees—including small manufacturers, microbusinesses, and conditional operators—report no direct benefit from the program. Funds have been slow to reach those actively building facilities, hiring local residents, or reinvesting in impact zones. Simultaneously, these same licensees face the highest capital costs, steep inflation in equipment and construction, and limited access to banking. Without SEEF relief or direct grant support, New Jersey risks undermining the very equity outcomes the Act was designed to advance.

Recommendation

1. Reinvest SEEF into Equity Licensees:
   Amend CREAMM implementation policy to require that no less than 70% of SEEF revenue be reinvested directly into equity licensees—through grants, technical-assistance programs, or infrastructure funding—rather than general administrative or community grant pools. The CRC should be required to issue an annual SEEF Impact Report detailing collections, allocations, recipients, and measurable outcomes tied to equity advancement.

2. Provide Temporary Relief or Scaled SEEF for Microbusinesses and Conditional Licensees:
   Enact a temporary deferral or sliding-scale reduction in SEEF obligations for microbusinesses and conditional licensees during the build-out and pre-revenue phases. Relief could be structured as a two-year graduated model—0% during active build-out, 50% during the first full year of production, and 100% thereafter—ensuring that equity operators can reach operational stability before bearing full excise obligations.

3. Convert SEEF Allocations into Grants (Not Loans):
   Allocate a defined percentage of SEEF funds to direct-grant programs that fund equipment purchases, packaging compliance, product testing, and marketing for social-equity and micro manufacturers. Grants—not loans—are essential to prevent further debt accumulation in a sector already constrained by limited capital access.

Rationale

• Fulfilling Legislative Intent: SEEF was created to repair harm and empower those most affected by prohibition, not to create new financial barriers.

• Economic Equity: Scaling or deferring SEEF during build-out protects small operators who lack the deep capital reserves of multistate operators.

• Accountability and Transparency: Annual impact reporting will ensure that SEEF revenue achieves its intended purpose—reinvesting in licensees who embody the spirit of social equity.

• Market Expansion: Grant funding to manufacturers will directly increase product diversity and lower consumer costs, generating long-term tax revenue and stabilizing the regulated market.

Proposed Language Concept

“The Commission shall ensure that revenues collected under the Social Equity Excise Fee are reinvested directly into equity licensees and applicants through grants, technical-assistance programs, and infrastructure support. The Commission shall establish a temporary sliding-scale or deferral for SEEF contributions applicable to microbusinesses and conditional licensees during facility build-out. No less than seventy percent of SEEF revenue shall be allocated as grants to support manufacturing, job creation, and product expansion among social-equity operators.”

Intended Outcome
This reform restores SEEF to its original purpose: a reinvestment mechanism that directly supports social-equity operators rather than a passive revenue stream. By granting temporary relief to microbusinesses and providing non-repayable grants to manufacturers, New Jersey will strengthen the equity ecosystem envisioned by the Legislature—driving economic empowerment, improving product diversity, and ensuring that communities most impacted by cannabis prohibition share in the success of the regulated market.

SEEF Accountability Addendum

To ensure transparency and uphold the legislative intent of the Social Equity Excise Fee, the NJCBA Manufacturing Committee recommends implementing annual SEEF audits and public reporting requirements as part of this reform. The CRC should publish a detailed yearly report outlining total SEEF collections, allocations, disbursements, and measurable impacts on equity licensees, including the number of grants awarded, funds distributed by license class, and job creation outcomes. Independent audits, conducted by a qualified third party or the State Comptroller, should verify compliance and financial integrity. This level of transparency will build public trust, guarantee that SEEF dollars reach their intended beneficiaries, and provide lawmakers with clear data to guide future equity investments.