At least for a while, the New Jersey Cannabis Trade Association avoided criticizing the sate Cannabis Regulatory Commission as New Jersey’s legal weed industry took its first steps.
That restraint appears to be over. The trade group, whose members often describe it as the chamber of commerce of cannabis, issued a report this month blaming the state commission for the slow growth of the industry and comparing New Jersey unfavorably to other states with legal cannabis for adults.
Officials say legal cannabis sales in New Jersey could soon be a billion-dollar industry. But current sales are not there yet. The business organization blames regulators.
The NJCTA report accuses the state commission of moving too slowly on approvals and not doing enough to address the continued black market sales, what many in the cannabis field describe as the “legacy market.”
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“New Jersey’s cannabis industry is being willfully held back and it is inhibiting the fulfillment of promises made to residents and taxpayers, including generating increased tax revenue to support critical social programs,” the report reads. “Additionally, the CRC is falling short in its obligations to support social equity entrepreneurs and cannabis businesses of all sizes who desire an efficient regulatory process that effectively addresses illicit market competitors.”
South Jersey has seen new cannabis dispensaries open, and more are on the way, including Cape May County’s first, planned for West Cape May. But licensed growers say demand has not increased as much as expected, and legal weed sales have stagnated, according to the trade group’s August report.
As of July 26, 37 recreational cannabis dispensaries were open across the state, up from 11 when sales began in April 2022.
“Disappointingly, the state’s overall sales figures have stagnated after reaching a nine-month plateau since the adult use market’s initial launch,” the report states. “When compared to other smaller states’ adult-use cannabis programs, New Jersey is falling shore and lagging significantly behind.”
That’s based on $20.1 million in new tax revenue from cannabis in New Jersey. The trade group compared that to $36.6 million in New Mexico during the same time period, a state with about 2.11 million people compared to 9.27 million.
Recently weed-legal Montana, with 1.1 million people, brought in nearly $42 million in cannabis excise taxes last year, while Oregon, with 4.2 million people, brought in more than $150 million.
“The root cause of the weakness in New Jersey’s cannabis industry is straightforward: The Cannabis Regulatory Commission’s anemic pace of licensing operators has suffocated the legal market,” according to the report.
That hurt tax income, the report states, suppressed the number of new jobs and kept the illicit market functioning and dispensary cannabis costs high. Many who continue to buy weed the old fashioned way cite the high cost of buying from dispensaries, a complaint that has often been raised at commission meetings as well.
Jeff Brown, the executive director of the Cannabis Regulatory Commission, said the states bringing in more revenue tax cannabis at a higher rate.
He said New Jersey’s legal market is set to rapidly expand. He also called on the industry to work to lower cannabis costs.
“After five quarters of sales growth in recreational cannabis, New Jersey’s cannabis market is poised to be a $1 billion market in the next year, within the first two years of legal sales. The NJ-CRC is encouraged that the NJCTA calls for more tax revenue. The report highlights three states with more than double the cannabis tax rate of New Jersey. New Jersey’s innovative law calls for the Social Equity Excise Fee to increase as prices fall,” Brown said in a prepared statement this week.
“This ensures low taxes at the outset of the market but will lead to double or triple state revenue in the future, increasing investments in communities disproportionately impacted by cannabis prohibition. We are also encouraged that the NJCTA highlights the need for lower prices and more competition. We hope their membership heeds their own call to action. High prices keep consumers out of the legal market and keep tax revenue low,” Brown’s response continued.
New Jersey voters backed legal marijuana by a wide margin in a 2020 referendum leading to the creation of New Jersey’s legislative framework for the new market and the licensing process overseen by the CRC.
The first legal cannabis sales began in April of 2021, with more than 12,000 customers spending close to $2 million on the first day.
Since then, the cannabis trade group alleges, the growth has been achingly slow, with one recreational dispensary for roughly every 21,200 cannabis consumers.
“Not only has the pace of licensing by the CRC’s board been soundly criticized, but more so, we’ve seen an all-too-frequent level of dysfunction and arbitrary decision-making,” the report reads, citing a decision to deny a license renewal to one of New Jersey’s largest cannabis growers, a decision quickly reversed in a special meeting.
Brown remains hopeful.
“New Jersey can be the premier cannabis market on the East Coast,” he said. “The NJ-CRC looks forward to working with the NJCTA, and all stakeholders, to make that a reality.”
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