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To get an overview of the New Jersey cannabis marketplace, Cannabis Benchmarks spoke to Edmund DeVeaux, President of the New Jersey Cannabusiness Association (CBA). The CBA represents Alternative Treatment Centers (ATCs) – those businesses licensed first in the medical cannabis sector that are now serving the adult use market – as well as applicants for New Jersey cannabis licenses and ancillary businesses, including cannabis attorneys and accountants. DeVeaux has been CBA President since 2020 and has observed and aided the licensing processes.
DeVeaux explained that of the state’s 12 licensed ATCs, eight were initially allowed to buy recreational licenses, paying upwards of $1 million or more to “have the corner on the market.” New Jersey CRC set requirements and regulations for the adult use market, including having “at least 100,000 pounds of cannabis” on hand to ensure that medical cannabis patients would be well-supplied after the recreational market opened. DeVeaux noted the state is now taking applications for recreational-only businesses, including cultivation, manufacturing, and retail operations.
Regarding the wider view on New Jersey’s cannabis market outlook, DeVeaux is very upbeat. He said the CBA’s goal is a “sustainable, diverse, and profitable” cannabis market. When asked about cannabis prices, DeVeaux said retail prices for indoor-grown cannabis flower are running at $460 – $480 per ounce, with eighth ounces selling for $38 to $48. He understands prices are high compared to many other state-legal markets but believes New Jersey consumers are willing to pay higher prices to access legal cannabis. He notes state taxes add to the cost of New Jersey cannabis but also sees progress on the tax front, with the state’s intention to eliminate medical cannabis taxes by February 2023.
The New Jersey cannabis market is dominated by indoor and greenhouse product. DeVeaux noted outdoor cultivation is allowed, though he is not aware of any outdoor grow operations at this time. When asked if medical cannabis is more expensive than recreational cannabis, DeVeaux said he was unaware of any price disparity, but said the typical conversation with medical patients focused on quality and quantity of cannabis available. His organization models itself after chambers of commerce; DeVeaux said CBA considers “the needs of consumers and producers” equally. He noted medical consumers see themselves as patients and cannabis as medicine and recreational consumers “no longer want to support the unregulated market, even at higher [than illicit] prices.”
DeVeaux strongly supports the SAFE Act. He said the industry needs financial services, including banking and insurance, and noted, “until the federal government removes cannabis from the Schedule 1 designation, we will not have interstate commerce.” He said the Safe Act will “eliminate punishment for banks and insurance companies going into cannabis” financial services.
Taking a longer view, DeVeaux, when asked about the prospect of federal legalization, was not particularly warm to the notion. He has contemplated the downside of interstate commerce and pointed out, “states with a lower cost of doing business and ‘right to work’ states, which typically have lower labor costs” might well undercut more expensive states that support worker’s rights.
DeVeaux is “pleased with the progress” in the nascent New Jersey cannabis markets and credits regulators with much of its early success. He conceded the state still “has miles to go,” but noted, “the road to success is not filled with damages as it was decades ago.”
The New Jersey Cannabis Regulatory Commission has supplied data on sales from April 21, 2022, through May 21, 2022, encompassing a two-day period in April 2022 and four complete weeks of sales and transaction numbers.
The April 21 – May 21, 2022, period shows total sales of $24.2 million on 212,433 transactions. The average transaction price over the contemplated period was $116.84. Average weekly sales were $4.84 million from April 21 – May 21, 2022.