New Jersey’s two-year cap, which limited cultivation licenses to 37, has been lifted. While stifling licenses was the wrong move and caused limited supply, deciding not to renew the cap in February is a better move. Now, New Jersey can look forward to production ramping up and delivering more supplies to the East Coast marijuana market.
Overview Of The State’s Adult-Use Cannabis Market
Currently, only seven cultivators supply 13 adult-use retailers. In March, New Jersey saw 17 operational cultivators and 25 annual licensees on their way to becoming operational. Additionally, New Jersey has fewer cultivation licenses than other states, and the local boasts plenty of room for more cultivation.
All this shows a market with a long way to grow, with increased cultivation and cultivators needed. However, the license cap lift is one step toward this.
New Issues For Growers
Despite the potential that comes with this license cap lift, many believe growers will still face many challenges.Even if cultivators have a conditional license, a property, and local approval, they’ll still have to come up with $15 million or $20 million. These hefty requirements will see many new cultivators granted licenses but still unable to open for business.
Up-and-coming growers will also face obstacles caused by 380 municipalities that have chosen not to permit or host cannabis businesses. A competitive market with limited and expensive industrial real estate will also bring challenges, while additional challenges to raising capital in a tough lending environment will also be difficult.
Another challenge for new cultivators will be the difficulty of converting conditional licenses to annual licenses. It is feared that not all cultivators will be able to do so, with the commencement of operations halted. Obtaining local approvals and zoning permits will also be a challenge.
Attractive Market Awaits For Those Overcoming Headwinds
Should cultivators overcome the above-mentioned challenging, a booming and attractive market awaits them. It is expected that premium marijuana could earn up to a whopping $4,500 per pound and see high revenue.
It is also hoped that this attractive market will see new cultivation facilities going online, and the increased availability of microbusiness licenses applicable to smaller cultivators. The market also promises a faster time from seed to sale through the micro-licensing category.
A Rise In Quantity And Quality
As the market becomes more competitive, more competition will arise and with this, improved product and quality. Local medical marijuana patients, who’ve continued to express concerns and complaints over quantity and quality, can now look forward to improved marijuana quality.
In the past, the same small group of operational growers has tended to bring to market the same product. Now, with more cultivators online, the market will become more robust and full of competitors wanted to deliver the best quality for the most sales.
Higher quality and quantity are good for the local cannabis economy, and, thankfully, there’s a huge demand for it. Now consumers can no longer consume secondary products, but enjoy the top-tier products.
The Hope For Long-Term Survival And Avoiding The Oversupply Trap
With hopes high and expectations of a new market bringing top quality and quantity, it is hoped that this new market will survive in the long term. It is also hoped that the new market will not be subjected to new adult-use marijuana jurisdictions or production shortfalls, or face the typical dilemmas seen in other mature state markets. A cautious eye must be kept on downward pressures on prices too.
Most view these risks as far off and a boom and bust far away, if not non-existent. Oversupply, and knock-on consequences of this, is a worry the locals should not be having any time soon as this market is developing at a much more measured pace. For now, the local market future looks bright and full of potential.
“Enjoyed that first hit? Come chill with us every week at the Friday Sesh for a freshly packed bowl of the week’s best cannabis news!”
