New Jersey’s Adult-Use Cannabis Market Continues to Expand Rapidly with New Entrants and Rising Competition

New Jersey’s adult-use cannabis market has experienced remarkable growth since its launch in April 2022. Recreational cannabis sales reached $789.8 million in 2024, and the number of retailers has increased significantly. Multistate operators (MSOs) that initially dominated the market are now facing heightened competition from independent businesses entering the industry.

Multistate Operators Face Increasing Competition as Market Diversifies

With the arrival of numerous small, independent retailers, MSOs must adapt to shifting market dynamics. The surge in new businesses has intensified competition and contributed to mounting pricing pressures.

New Jersey’s Expanding Recreational Cannabis Market in Numbers

When New Jersey’s adult-use cannabis market launched on April 21, 2022, only 13 retailers—exclusively owned by MSOs—were operational, all converted from medical marijuana dispensaries. As of 2024, that number has expanded to over 200, with most retailers being independent businesses, according to the New Jersey Cannabis Regulatory Commission (CRC).

Despite this growth, 1,524 conditional recreational licenses have been approved, but many businesses have yet to open due to regulatory bottlenecks.

Chantelle Elsner, president of the Northeast division of TerrAscend Corp., noted that her company strategically expanded its offerings with innovative strains, formats, and packaging sizes to maintain its competitive edge.

Flower Leads Sales, but Vapes and Edibles Are Gaining Popularity

Flower remains the best-selling cannabis product in New Jersey, accounting for nearly 43% of the market, according to Chicago-based Hoodie Analytics. Vape cartridges hold the second spot at 25%, while edibles make up approximately 13% of sales.

Municipal Regulations and Local Control Present Challenges for Retailers

Despite the market’s growth, about two-thirds of New Jersey’s 564 municipalities prohibit adult-use cannabis sales. Among the towns that allow sales, regulations vary widely, making it difficult for businesses to establish new retail locations.

Some municipalities impose strict licensing caps or zoning regulations that effectively limit the number of cannabis businesses in their jurisdictions, further constraining market expansion.

Potential Legislative Changes Could Favor Medical Cannabis Operators

A bill recently introduced in the New Jersey Senate, S4074, could provide a competitive advantage to medical cannabis dispensaries operating in municipalities that ban recreational sales. If passed, it would allow medical dispensaries to bypass local bans and start selling adult-use cannabis without municipal approval after operating without violations for six months.

The bill would also permit dual-license retailers to reclassify medical marijuana products as recreational and prohibit municipalities from limiting the number of MMJ dispensaries within their borders.

Out-of-State Brands Enter the New Jersey Market Through Partnerships

New Jersey’s expanding cannabis industry has attracted out-of-state brands seeking new opportunities. For example, Flower Union, a cannabis company launched in Colorado, has entered the New Jersey market through partnerships with local businesses.

Though the regulatory process differs from other states, Flower Union CEO Jon Spadafora believes the challenges are worth navigating.

Unregulated Hemp Products Create Challenges for Licensed Cannabis Retailers

A growing concern for New Jersey’s licensed cannabis businesses is competition from convenience stores and gas stations selling unregulated intoxicating hemp products, such as delta-8 and delta-9 THC. These hemp-based alternatives are often more affordable than regulated cannabis, making it difficult for legal retailers to maintain their customer base.

Future Outlook: A Competitive but Promising Market

New Jersey’s adult-use cannabis market is poised for continued expansion, with new independent retailers and out-of-state brands contributing to a more competitive landscape. However, challenges such as municipal restrictions, pricing pressures, and competition from unregulated hemp products remain significant hurdles for businesses.

As the industry evolves, operators must focus on product quality, pricing strategies, and regulatory navigation to thrive in New Jersey’s dynamic cannabis market.