New Jersey’s adult-use cannabis industry has been rapidly growing since its launch in April 2022. The market saw an impressive $789.8 million in sales throughout 2024, with the number of dispensaries increasing significantly. This influx of independent operators is intensifying competition for the larger multistate companies that initially dominated the market.

Increased Competition among Cannabis Businesses

As more independent retailers enter the scene, major cannabis corporations are working to maintain their foothold in an evolving market. Richard Proud, CEO of iAnthus Capital Holdings, acknowledged the shift, stating that while being an early entrant provided an advantage, the new competition is driving companies to focus more on product quality.

When New Jersey first permitted adult-use sales in April 2022, only 13 dispensaries—all affiliated with multistate operators—was open. Since then, the number of retail locations has surpassed 200, with independent businesses making up the majority. However, over 1,500 conditional licenses have been approved, indicating regulatory hurdles that are preventing many businesses from launching.

To stay competitive, large operators like TerrAscend Corp. have been expanding their offerings with new product formats, strains, and package sizes. According to Chantelle Elsner, president of TerrAscend’s Northeast division, consumer demand for both premium and affordable cannabis products has continued to shape the industry.

Shifting Market Trends

Flower remains the top-selling cannabis product in New Jersey, accounting for about 43% of sales, followed by vape cartridges at 25% and edibles at nearly 13%, according to Hoodie Analytics.

The state’s evolving cannabis landscape has also led to a gradual decline in prices, a trend that accelerated in 2024 as more businesses and brands entered the market.

Local Regulations Limit Growth

Despite growing demand, cannabis business expansion remains restricted by local laws. Approximately two-thirds of New Jersey’s 564 municipalities have opted out of allowing adult-use sales, creating real estate challenges for businesses looking to open new stores.

Francesca DeRogatis, owner of Nightjar dispensaries, pointed out the difficulties of navigating municipal restrictions. Even in towns that allow cannabis businesses, zoning laws and local caps on dispensary numbers make it difficult to secure a location.

Attorney Jessica Gonzalez noted that while some municipalities do not set a specific limit on cannabis businesses, restrictive zoning policies often create an indirect cap by limiting the number of viable properties.

However, certain areas are experiencing the opposite trend, with clusters of dispensaries competing in close proximity. For example, Tahir Johnson, CEO of Simply Pure Trenton, reported that his store operates near seven other dispensaries, four of which are within a few blocks.

Proposed Legislation Could Benefit Medical Dispensaries

A newly introduced Senate bill (S4074) could provide an advantage to medical cannabis dispensaries by allowing them to transition to adult-use sales without requiring municipal approval—provided they have operated without violations for at least six months.

If passed, the bill would also prohibit municipalities from imposing limits on medical marijuana dispensaries and allow businesses with dual licenses to classify their medical cannabis products for recreational sales.

Out-of-State Brands Entering the Market

New Jersey’s cannabis market has also attracted out-of-state brands like Flower Union, a Colorado-based company that is expanding into the state through local partnerships. Due to stricter labeling and packaging requirements, Flower Union must undergo an approval process from New Jersey regulators before launching its products.

CEO Jon Spadafora views the regulatory hurdles as a worthwhile investment, noting that New Jersey consumers are eager to explore new products, unlike in more established markets where purchasing habits are more rigid.

Challenges from Unregulated Cannabis Alternatives

Legal cannabis businesses in New Jersey are also facing competition from unregulated hemp-derived products, such as delta-8 and delta-9 THC, which are commonly sold in convenience stores and gas stations.

Because these products are typically cheaper and more widely available, they create a competitive disadvantage for licensed cannabis businesses that have undergone regulatory processes and paid licensing fees.

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