Licensed adult-use cannabis sales only began in April 2022 for New Jersey, but already one cannabis trade group has called out some of the issues within the state’s new industry, saying that slow licensing and a lack of enforcement is creating a “doom loop.”
The New Jersey Cannabis Trade Association (NJCTA), a cannabis trade group representing the majority of the state’s cultivators and dispensaries, shared a new report on Tuesday blaming the state’s slow-growing cannabis industry on the New Jersey Cannabis Regulatory Commission (CRC), The Philadelphia Inquirer reports.
The agency is in charge of establishing and enforcing regulations to govern legal cannabis, and according to the NJCTA report, the CRC is “hindering the market’s potential” because of its protracted licensing process.
NJCTA Executive Director Todd Johnson told the publication that the group is advocating for change, starting with “the removal of the bureaucracy,” adding that “We are making it difficult right at the point of entry for now reason.”
New Jersey could be losing as much as $1.8 million a year in potential tax revenue for each dispensary location because of delayed retail store openings, the report states. NJCTA also said that the rapid increase in unregulated hemp-derived cannabinoids and New Jersey’s limited enforcement against illicit operators are responsible for the state’s slow industry growth.
According to government data, the CRC has received 2,177 applications since it first allowed businesses to begin applying for licensure in December 2021. Of that total, 1,399 applications have been approved and about 400 are currently being processed, CRC Executive Director Jeff Brown said. Brown added that the agency has been “very clear” with applicants on expectations and timelines.
“We understand that business owners have to make decisions, and we try to be up front with expectations so that people can plan accordingly,” Brown told the Inquirer, adding that licenses are generally approved within three to six months. The law states that the CRC is supposed to approve conditional license applications within 30 days and annual license applications within 90 days, but the CRC is allowed to extend the deadline due to the volume of applications.
Some applications can also experience delays due to factors beyond the CRC’s control, like municipal approval issues, real estate issues and a lack of response from applicants to letters detailing fixes, Brown said. He added that he expects the state to have 50 recreational dispensaries running by the end of 2023, up from the current total of 37.
The CRC doesn’t regulate products like delta-8 THC, but Brown said that the commission believes these products may be hurting the growth of the regulated market. He added that the CRC is ready to work with partners to address issues around hemp-derived cannabinoids; simultaneously, the state is also considering new rules around hemp-derived cannabinoids.
CRC data shows that recreational cannabis has generated about $306 million in sales, and $18.8 million in sales tax revenue, for the first two financial quarters of 2023 combined. The NJCTA has also projected that legal cannabis sales could potentially rake in approximately $38.39 million in taxes this year.
When compared to similar-sized states with legal cannabis sales, however, these numbers tend to pale in comparison. Johnson told the Inquirer that Maryland, for example, only has a population of 6.16 million people (New Jersey has 9.2 million) and had more than $80 million in sales during its first month of legal operations. New Jersey’s market is also older, but still, it’s pulling less money.
Johnson said that the NJCTA also sees the approval of new products, like new types of edibles, as a strength to help the recreational market compete against the illicit market.
“New Jersey just seems to be lacking in our resolve to really build a strong foundation through which operators of all kinds can be successful in the state,” Johnson said. “Make it easier for folks to get through the initial hurdles so that they can get to the real obstacles.”
