Hemp and Cannabis News

Search

GOOD START FOR NJ CANNABIS SALES… BUT!


Based on G-101 algorithm projections, seventeen recreation cannabis retailers had estimated sales in New Jersey from April 21, 2022, to June 30, 2022, reached $33 million with 319,292 probable transactions. The state legalized recreational cannabis sales in February 2021 to anyone over 21 years old, but retail shops did not open until April 21 of this year—the day after the cannabis’ high holiday. “This is only a beginning—it shows there’s a lot of growth in this market,” reported executive director Jeff Brown. New Jersey Cannabis Regulatory Commission

"The demand could be high because the people are buying more than they would otherwise need. Time is needed for legislators to clearly see what the new industry is, like when casinos came to Atlantic City. I think you’ll see the same thing in the cannabis industry. You may not see the same level of restriction of locations, or perhaps the number of dispensaries, so I think that’s something that the track record that’s developed over the next several months, to a year, will enable legislators to look at making reasonable modifications down the road,” said John Wisniewski, former New Jersey legislature.

Meanwhile, cannabis black market thrives despite legalization.

G-101 algorithm projected illegal sales in New Jersey for the calendar year to June 30, 2022, had reached $81.3 million. The number itself speaks volumes. The belief that the sale of an illegal substance should dissipate as that substance becomes legalized is wrong. The destruction of the illegal marijuana market was one of the primary arguments used by pro-legalization politicians to promote the drug. Results in other state markets are in line with what New Jersey is currently experiencing. From G-101’s calculations, the illegal trade is stronger than ever because the cannabis offered, on average, is 80% cheaper and 25% higher quality.

Selling buds at far lower prices thanks to significant tax per ounce of flower required from dealers and excessive excise tax required from the consumer, legal options in New Jersey are pricier than their underground counterparts.

The New Jersey cannabis industry must look to California for similarities, the largest weed market in the world, on the simple premise that the future is written from the past and requires addressing prior mistakes and adjust accordingly. Cannabis as a legal recreational crop will never generate sufficient positive cashflow from operations until its business model changes. Controlling the destiny of recreational cannabis is hidden in other people’s mistakes.

Current headlines from California.

Authorities in California have seized over $195 million in illicit marijuana products this year while retail sales were estimated at $1.9 billion, and the underground cannabis grossed $2.2 billion. Meanwhile, the return of invested capital by the legal cannabis market was a negative 3%.

  • Despite legalizing the sale and possession of cannabis for recreational use, the Golden State is home to unlicensed retailers and the other kind, frustrating rule-following dispensaries and denying the state and localities of tax dollars.

  • 71% of all marijuana sold in California in 2021 was illicit, as was 90% of the weed sold last year in Massachusetts. More than half of marijuana sales in Oregon and Washington were illegal last year.

MAIN REASON: One of the main reasons appears to be cost. Cannabis sold at state-legal dispensaries is often more expensive than drugs obtained on the underground market and is heavily taxed, often at multiple stages of the supply chain. Abiding by state regulations can be costly for growers and retailers, too, with licensing fees and other regulations.

Onerous regulations and slow licensing processes can slow the transition from an illegal market to a legal one. Meanwhile the black market modifies its business model to accommodate the consumer.

States must crack down on illegal growing operations, which are, in many cases, harder to track down and easier to hide. With adult-use cannabis illegal in 39 states, a demand for cannabis in the underground market will always exist.


“The past, the present and the future are really one: they are today.” Harriet Beecher Stowe

Don't miss an update...