The strategy taken by New Jersey to legalize cannabis for adult use is not unique: let the market’s current medical operators drive the growth while state regulators screen and clear potential competitors.
Adult-use clients have been catered to by the Columbia Care Cannabist dispensaries in Deptford and Vineland since the beginning. And even though there are only two adult-use dispensaries within five miles of Philly, one of which is located in the Deptford storefront, the business has kept up with demand while upholding the integrity of its patient access plan, according to Hayhurst.
TerrAscend maintains an average wait time for its patients of less than three minutes, and the company holds patient-focused events, “so we put our money where our mouth is,” Ghanem said, even though adult-use sales have increased foot traffic and demand.
What are the Proposed Cannabis Consumption Area Regulations:
- Consumption area operators must make a “good faith effort” to ensure only regulated products are consumed on site.
- Consumers may bring their products for consumption, provided it is permitted by the operator (and one assumes many will not allow this). However, neither medical nor personal-use consumption area operators may restrict registered patients from bringing medical cannabis items to a consumption area.
- Neither the entity operating the cannabis consumption area nor anyone else present in the consumption area, may distribute free cannabis samples.
- ATCs may only operate one cannabis consumption area, regardless of the number of locations they operate.
- The proposed application fee is $1,000. Annual licensing fees are $1,000 for micro businesses or $5,000 for standard Class 5 retailers.
The New Jersey Cannabis Supply Chain:
In the third quarter of 2022, statewide retail purchases totaled more than $59 million per month, more than triple what the medical market alone was generating in the first quarter. At the time this article was written, the CRC had not disclosed Q4 sales data.
As of January 2023, CRC reported that New Jersey had 17 cultivation facilities with 418,000 square feet of operational canopy servicing the entire market. Per 100,000 people, that translates to approximately 4,500 square feet.
Comparatively, licensed cultivators had an operational canopy of more than 200,000 square feet per 100,000 people when California’s market supply reached high saturation in mid-2022—at more than 80 million square feet nationwide.
What will be the Impact of the New Jersey cannabis market?
Like Michigan, which has a comparable population to New Jersey, experienced with its $2.3 billion market in 2022, when the market matures, statewide retail sales in New Jersey could average north of $150 million per month.
However, Ghanem noted that during the first six months after adult use became legal in New Jersey, the state’s market underwent diversity in terms of product portfolios and form factors. According to Ghanem, who is a pharmacist who has “dealt with [the] opioids epidemic in other states and the challenges that bring to the patient,” cannabis is the best option for those patients.
While there are frequent worries that a medical cannabis program will deteriorate when adult-use sales begin, Ghanem said he is confident—based on statistics as well as what he has observed with a presence on the ground—that product variety is improving, not worse, in New Jersey.
In the beginning, when the market first opened in April [2022], he claimed, flower accounted for more than 60% of all purchases in New Jersey. Due to the entry of preroll, edible, concentrate, and vaporizer SKUs into the market, the market share is currently just under 50%.
Specifically in August 2022, four months after the adult-use debut, flower made up just under 50% of monthly dollar sales in the state, according to BDSA, a retail sales data provider for the cannabis industry.
How many dispensaries can we expect in New Jersey?
While 13 dispensaries were the first to serve adult-use customers in a state of more than 9 million people, that number grew to 22 dispensaries—operated by nine businesses—as of the first week of March 2023. That’s a ratio of one adult-use retailer per 400,000-plus people.
But that ratio won’t last as new operators—those who didn’t serve the medical market—come online in the coming months. As of Feb. 13, 2023, the CRC had received 940 applications for adult-use retail licenses, 415 applications for cultivation licenses, and 253 for manufacturer licenses.
As New Jersey’s adult-use market continues to develop, the CRC’s Licensing Committee recommended in February not imposing a statewide cap on cultivation licenses.
How many Licensees can we expect in New Jersey?
The laws governing cannabis in New Jersey, one of the states with the most varied cultures in the country, are designed to make sure that the ownership of cannabis companies reflects the state’s demographics, according to Cabrera. That entails avoiding irrational fundraising limitations or forming alliances with knowledgeable operators from other states, she explained.
Executive Director Jeff Brown reported that 72% of adult-use license applicants came from companies with diverse ownership at the CRC meeting on March 2. Additionally, social equity applicants make up about 25% of prospective market participants. Additionally, 87 of the state’s 565 municipalities and 43% of the total applicant pool plan to function in one of the impact zones.
More than 175 of the 940 applicants for adult-use retail licenses that the CRC had received as of Feb. 13 had submitted their requests for conversion, according to Brown, who spoke at the regulatory body’s meeting on March 2. However, most of these applications are still conditional.
Partnership opportunities in New Jersey:
While a record-high 67.1% of New Jersey voters chose to legalize adult use in 2020—a state that legalized it through an election process in the U.S.—local municipalities still retained home rule over whether to participate in the market or specific market segments, including retail, cultivation, or manufacturing.
Additionally, Cabrera added, towns and cities that choose to participate in New Jersey’s adult-use program retain control over licensing ceilings and a competitive licensing process in their areas. According to her, this local control is possibly the greatest obstacle to the market in New Jersey.
The impact that follows. As new licensees make their way onto the market in New Jersey, a sizeable portion of it is currently untapped. Ghanem and Hayhurst said they will keep cultivating connections with new operators as those licensees do begin to go online.
According to Hayhurst, Columbia Care, which has wholesale agreements with every other MSO in the state, takes pride in its menu selection and aspires to collaborate with upcoming nonvertical licensees who might bring a “crafty style” SKU that isn’t yet available.
How we can help?
At Cannabis License Experts, we provide you with the guidance to plan your cannabis business, acquire funding, navigate the legal requirements, and acquire the appropriate cannabis license for your operations. As the United States and New Jersey specifically develop, more and more licensed producers will be needed to meet the demands of consumers.
Cannabis License Experts offers support from day one of starting your cannabis business, including strategic planning, floor plan preparation, site audits, SOPs, Preventive Control Plans (PCPs), and more.
Our Edibles Compliance division can provide you with a solid plan for your edibles business to help get your products on store shelves.
Contact us today to discover how we can license and legalize your cannabis business to meet federal or provincial regulations.
