New Jersey Cannabis Market Overview: Insights for Cannabis Businesses in 2024
New Jersey’s cannabis market is experiencing remarkable growth, marked by a substantial 38% increase in adult-use sales between Q1 of 2023 and Q1 of 2024, according to NJ.gov.
Sales for the first quarter of 2024 alone topped $201 million, and experts predict that the market could surpass $1 billion by year’s end.
With more than 130 licensed dispensaries now operating statewide—up from 24 in early 2023—the state continues to position itself as a major player in the Northeastern cannabis industry.
Key Cannabis Business Opportunities in New Jersey
Market Demand
Indicated by strong sales figures, consumer interest in regulated cannabis medical and adult-use products continues to grow. Notably, Marijuana Moment reported that New Jersey’s recreational sales during the 4/20 weekend in 2024 brought in around $12.5 million.
Increased Accessibility
The Cannabis Regulatory Commission (CRC) in New Jersey is actively promoting market access from unregulated to regulated markets by eliminating registration fees for medical cannabis and offering digital IDs to streamline the enrollment process.
Proximity to Major Markets
New Jersey’s location near populous states like New York and Pennsylvania provides a unique advantage to potentially draw out-of-state visitors. The planned expansion of dispensaries across state borders will likely accelerate regional growth.
New Jersey Cannabis Market Challenges
Regulatory Complexities
While New Jersey has a progressive stance on cannabis, its regulatory environment remains complex, especially regarding zoning, moratoriums, licensing, and compliance. This can create barriers for small business owners trying to enter the market.
Price and Tax Competition
High excise taxes on cannabis products, combined with the cost of regulation, make New Jersey cannabis less competitively priced compared to nearby states with lower taxes or medical-only markets. Higher taxes impact profitability and are another factor that make it more difficult for smaller operators to compete amongst larger, vertically integrated players. Today, New Jersey’s Division of Taxation applies a Society Equity Excise Fee (SEEF) for recreational cannabis at $1.24 per ounce.
Social Equity Commitments
The state’s social equity commitments include reserving licenses for minority and women-owned businesses, as well as for those impacted by past cannabis laws. While this creates opportunities for a diverse market, it also presents challenges for meeting these objectives while maintaining business viability.
More New Jersey Financial Considerations
IRC Section 280E That Applies to Cannabis Businesses
Because of cannabis’ federally illegal status, cannabis businesses in New Jersey often face difficulty accessing traditional banking services.
Many are forced to operate in a largely cash-based environment, which presents security risks and complicates day-to-day operations. Efficient cash flow management is essential, particularly for businesses dealing with large tax liabilities under Section 280E.
Working with accountants experienced in the cannabis industry can help businesses create effective cash management strategies, including setting aside funds for quarterly tax payments and managing payroll.
Cannabis Business Valuation and M&A
As the New Jersey market matures, cannabis businesses may look to grow through mergers and acquisitions (M&A).
Accurate and transparent financial records are crucial for any company looking to be acquired or seeking investment.
At CJBS, we assist with:
- Business valuation
- Due diligence
- Preparing financial statements
- Helping businesses become investor-ready
Understanding the unique factors that affect cannabis valuations (such as limited licenses, local competition, and regulatory compliance) is essential for positioning your business favorably in this market.
Partnering with an experienced cannabis accounting firm is key to staying compliant and optimizing financial performance in this evolving market.
For audit and assurance solutions, tax planning and compliance, and business solutions–cannabis businesses in New Jersey can turn to CJBS for assistance. Learn more about our cannabis practice and leaders Matt Bergman, CPA, and Ryan Guedel, CPA here.
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