New Jersey’s adult-use hashish market has skilled surging development because it launched in April 2022.
Leisure hashish gross sales in New Jersey totaled $789.8 million in 2024, and the variety of retailers has proliferated, giving the multistate operators who had been first out there some severe competitors.
With the inflow of recent operators, primarily small unbiased retailers, multistate operators are dealing with the problem of sustaining market share because the market diversifies and pricing pressures mount.
“From an MSO perspective, first-mover benefit was highly effective, however we’re very excited concerning the new entrants,” mentioned Richard Proud, CEO of New York-based iAnthus Capital Holdings.
“It forces everybody to compete on product high quality.”
New Jersey’s adult-use market by the numbers
New Jersey’s leisure market opened on April 21, 2022, with 13 retailers – all owned by MSOs – that transformed from medical marijuana dispensaries.
That quantity has grown to greater than 200 shops, with the majority being unbiased operators, in response to the New Jersey Hashish Regulatory Fee (CRC).
However 1,524 conditional leisure licenses have been authorized, indicating {that a} bottleneck is stopping extra companies from opening.
Chantelle Elsner, president of the Northeast division of TerrAscend Corp., mentioned the MSO has strategically expanded its portfolio to provide modern strains, codecs and pack sizes.
“We constantly monitor market circumstances and hearken to buyer suggestions to develop trusted merchandise that meet our clients’ wants at a wide range of worth factors,” Elsner mentioned.
TerrAscend, which has places of work in Toronto and King of Prussia, Pennsylvania, had two of the 13 shops that transformed from New Jersey’s MMJ market to grownup use and, shortly after, opened a 3rd.
“The market noticed the sluggish worth compression of 2023 speed up in 2024 because the retail panorama expanded and extra manufacturers and merchandise entered the state,” Elsner mentioned.
“There was important diversification within the premium house along with elevated demand for inexpensive merchandise.”
Flower is the best-selling hashish product in New Jersey, accounting for nearly 43% of the market, in response to Chicago-based Hoodie Analytics.
Vape cartridges are No. 2, accounting for 25%, whereas edibles make up practically 13% of the market, Hoodie’s information reveals.
How municipal management impacts leisure operators
About two-thirds of the state’s 564 municipalities prohibit adult-use gross sales, and laws differ throughout the municipalities that do enable it. That makes it troublesome for marijuana operators to open new shops.
“We wish to open extra shops in New Jersey, however it’s powerful,” mentioned Francesca DeRogatis, proprietor of Nightjar, which has shops in Bloomfield, New Jersey, and East Lime, Connecticut.
“Over 70% of cities opted out, so the provision of actual property is tight. It’s a must to get municipal approval, discover an appropriately zoned web site and have permission from the CRC.”
Whereas there are not any caps on licenses on the state degree, some cities and cities that enable marijuana companies to open prohibit the variety of marijuana companies permitted of their limits.
As an illustration, a municipality will enable one cultivation facility whereas one other will allow two retailers, mentioned Jessica Gonzalez, an lawyer with the New York-based Rudick Legislation Group.
“Even when they don’t have caps, they prohibit zoning a lot that you simply create caps anyway as a result of there’s not sufficient actual property,” Gonzalez mentioned.
However that’s not the case in all municipalities.
Tahir Johnson, CEO of Merely Pure Trenton, mentioned there are seven adult-use shops inside quarter-hour of his store and 4 of them are inside a couple of blocks.
“It’s way more aggressive now,” Johnson mentioned.
Medical hashish operators may get an edge
A invoice not too long ago launched within the New Jersey Senate may give medical hashish dispensaries an edge in municipalities that prohibit leisure marijuana.
If S4074 passes, medical hashish dispensaries would have the ability to bypass native bans and begin promoting leisure marijuana with out municipal approval in the event that they’ve operated complaint-free for six months.
If authorized, the invoice additionally would enable dual-license retailers to designate medical marijuana merchandise as leisure and prohibit municipalities from capping the variety of MMJ dispensaries inside their boundaries.
Out-of-state manufacturers corresponding to Flower Union, which launched in Colorado final yr, are coming into the New Jersey market via partnerships with native companies.
The packaging and labels, which require extra info than Flower Union’s house state, have to be submitted to New Jersey regulators for approval.
However Flower Union CEO Jon Spadafora mentioned leaping via the regulatory hoops will likely be value it.
As a result of the market is comparatively new, shoppers are extra excited to strive new merchandise than they’re in established markets corresponding to Colorado.
“New Jersey has an invigorated viewers – they need to strive every thing,” Spadafora mentioned.
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Unregulated competitors
One of many largest challenges dealing with New Jersey hashish companies is competing in opposition to comfort shops and fuel stations that promote unregulated intoxicating hemp merchandise.
The hemp-based alternate options, typically marketed as delta-8 and delta-9, may be considerably cheaper than regulated hashish.
The value distinction, coupled with wider availability, makes it harder for licensed retailers which can be making an attempt to realize a foothold within the authorized market.
“It creates an uneven taking part in discipline for licensed operators who needed to undergo the method and pay the licensing price,” Gonzalez mentioned.
“All of those retailers and fuel stations are promoting intoxicating hemp merchandise and taking away from their base.”
Margaret Jackson may be reached at margaret.jackson@mjbizdaily.com.
