5 Myths About the NJ Adult Use Cannabis Market

  1. The State of NJ has issued 308 adult use cannabis licenses to new operators
    Reality Check: The New Jersey State Cannabis Regulatory Commission (“CRC”) has issued ZERO adult use cannabis licenses that actually allow new operators to be in business growing or selling cannabis.  Those 308 “licenses” issued are only Conditional Licenses, requiring a separate conversion process to an Annual License before a business can legally operate to grow or sell cannabis.  And to date, the CRC has issued ZERO annual licenses to new operators through conversions or otherwise.  The only businesses legally growing or selling adult use cannabis in NJ are a handful of previously licensed medical marijuana operators, known as Alternative Treatment Centers or ATCs, that have “expanded” from medical only to also include adult use sales. 

  2. The State of NJ is making good progress on reviewing new license applications.
    Reality Check: The CRC has consistently missed its own guidelines on turn around times for license application review.  The CRC’s own guidelines call for a 30 day target for Conditional License application review (N.J.A.C. § 17:30-7.2 (c)), and a 90 day target for Conversion and Annual License application review (N.J.A.C. § 17:30-7.9 (c)).  The CRC has only gotten through some Conditionals in a 90 day window, and not all of them at that.  As ZERO Annuals or Conversions have been approved, and some have been submitted as long ago as December 15, 2021, some applicants have waited 257 days and counting without a decision from the CRC.  Furthermore, because the CRC has to give priority to Conditional applications ahead of Conversions or Annuals regardless of when the applications are submitted, when the CRC receives more new Conditional applications than it can review, its Conditional application backlog grows and it never has the resources to review Conversions or Annuals.  This Conditional backlog currently exits and is growing in NJ.

  3. The NJ CRC’s top priority is equity in establishing the adult use cannabis market.
    Reality Check: Bowing to pressure from the NJ Legislature to get any sort of adult use sales underway, the CRC clearly prioritized ATC expansion over getting new social equity or diversity license applicants approved to actually operate businesses.  The ATC expansion process has not suffered under the delays that the rest of the applicants, including social equity and diversity business, have endured. While the CRC ‘s Executive Director, Jeff Brown, often says equity is a priority, you’d never see it in the currently operating adult use marketplace.

  4. The main bottleneck for new cannabis businesses in NJ is the local municipalities.
    Reality Check: There are over 100 local support resolutions on the books from municipalities for Conversion and Annual license applicants.  The CRC has not disclosed the number of Conversion applications received, or the number of verified complete Annual License applications received, but it’s a safe bet most of these applications have the needed local support resolutions approved.  Hence, it’s primarily the CRC review and approval delays that are the bottleneck for new cannabis businesses to get up and running.

  5. The NJ Adult Use market is a robust and growing alternative to the illicit black market
    Reality Check:  The average price of an eighth of an ounce (3.5 grams) of weed in the existing adult use market is ~$60, vs ~$35 on the illicit black market.  Given the oligopoly of 8 companies currently operating alone in the adult use market (all ATC’s), it’s no surprise that legal supply vs demand is keeping legal weed prices well above the going black market rate.  Unless and until the NJ CRC gets way more new businesses operating by addressing the new licensing issues, the illicit black market will continue to be a more attractive alternative to price sensitive buyers.

Leave a Reply

Blog at WordPress.com.

%d bloggers like this: