The Current State of the Cannabis Market in New Jersey

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Although New Jersey has had legal medical cannabis for over a decade, that time and experience is not translating into a smooth expansion for the recreational adult-use market. Looking back, the current struggles aren’t surprising.

New Jersey legalized medical cannabis in 2010, but access to the program was highly restrictive and alternate treatment centers—the only legal source of cannabis for qualifying patients—were few and far between. Only six ATCs were allowed across the state, the first did not open until 2012, and the sixth opened years later in 2018. Access began to improve after adult-use was legalized in February of 2021, but a litany of legislative, regulatory and economic problems have prevented the state’s legal cannabis market from taking off as hoped.

Few Choices for New Jersey Cannabis Consumers

Issues holding back the market’s potential include a lack of licenses, a dearth of dispensaries, expensive pricing and overwhelming corporate control. 

Entrenched corporate domination from the medical cannabis era means that adult-use consumers see less variety on dispensary shelves. Limited product selection and availability from the long-established operators has created a market where consumer demand isn’t driving innovation, there is less motivation to leave the illicit market in favor of regulated cannabis, and there is not much competition from new companies catering to connoisseur consumers.

Product confusion also plays an important role in why the market is struggling. The proliferation of unregulated hemp-derived synthetic cannabinoids like delta-8 THC or HHC for sale in smoke shops and gas stations across the state contributes to the slow growth of sales in the newly legal recreational arena. The products are advertised as being similar to what customers would find on the legal market but at cheaper prices.

There are currently 53 recreational  New Jersey dispensaries, and 11 exclusively for medical cannabis patients. That is a small number for a state with a population of over 9 million. Thankfully, the retail footprint is expanding, and that should give consumers more access and allow brands to differentiate themselves through quality as opposed to quantity.

Local Bans and Moratoriums Abound

In 2020, townships in the state had to make a decision: Should they opt in and allow for licensed cannabis businesses to operate within their borders? 400 towns opted out completely, which is not terribly surprising considering they were facing the uncertainty of how the industry would operate and be regulated when they were forced to make the choice. Some of that sentiment is beginning to change, and reports show about one-third of New Jersey municipalities now allow some form of licensed cannabis business (cultivation, manufacturing, testing, retail), with hopefully more to come as understanding of the industry and the plant itself grows.

Unfortunately, municipalities that do allow retail cannabis sales have increased zoning restrictions, thereby increasing real estate competition that only contributes to the difficulties of running a New Jersey dispensary.

Slowly Moving Towards an Improved New Jersey Cannabis Market

New Jersey’s Cannabis Regulatory Commission (CRC) has been fighting an uphill battle to keep up with the state’s regulatory demands and is gradually making progress. It has gone through a major—and obviously necessary—expansion—from around 10 to over 50 employees to handle the surge in licensing requests and new legislative and regulatory initiatives. But things are still moving slowly. 

There has not been any movement on legal cannabis consumption spaces since public feedback on regulations was closed in March 2023. The number of active adult-use cultivation and manufacturing license holders continues to grow, but they are not yet approved to commence operations to get flower and infused products to market.

The current situation is difficult for the few New Jersey dispensaries that are operating. Educated consumers will seek and buy quality products through whatever means, even if they are not provided by their local regulated markets.

In February 2023, the cap on cannabis cultivation licenses was removed, but questions still remain about how the market will react. Will more cultivators come online to provide the flower necessary to make infused products? The difficulties for new businesses will remain, so how many will find success? Without legal funding or accounting / finance support, many will suffer if the state of the market does not significantly change.

Moving forward, new operators should focus their due diligence on doing a few things very well. Some of the most successful brands are single-focused and operate with less overhead and more opportunity to stand out in a product category.

It is clear that the current state of New Jersey cannabis can—and must—be improved. Corporate dominance is contributing to a lack of general competition fostered by small and mid-sized businesses, and the odds appear stacked against license holders as they strive for success.

As a trusted provider of cannabis testing services, Trichome Analytical bridges the gap between consumer safety and business growth. How can we help you? Reach out today.