New Jersey’s recreational marijuana sales grew slower in the first quarter of 2024 than they have at any other point since the state began allowing adult-use cannabis sales in April 2022.
The state’s 130 recreational dispensaries had roughly $201 million in non-medical cannabis sales during the first three months of the year, about 4.4% more than they reported in the last quarter of 2023, when recreational sales totaled $192.6 million.
The growth reflects a marked slowdown from the final quarter of 2023, when recreational marijuana sales grew by about 8.9% in what was then the lowest growth quarter on record, and it could herald the end of surging growth the adult-use market has enjoyed since its launch despite persistently high prices.
“There has been a significant increase in the number of dispensaries, which is great, that are selling cannabis products both medically and recreationally, but it is a concern for sure that the market growth rate is slowing,” said Todd Johnson, executive director of the New Jersey Cannabis Trade Association.
The Cannabis Regulatory Commission touted the first quarter sales figures in a press release last week, pointing to the 38% year-over-year growth compared to the first three months of 2023, when recreational sales totaled $145.7 million.
Commission Chair Dianna Houenou said the growth showed consumers moving away from black-market marijuana purchases and toward legally purchased cannabis. But the overwhelming share of that growth — fully 84% of it — happened in the latter three quarters of 2023.
“The significant growth in sales year over year is an indication of the strong potential of New Jersey’s cannabis market,” Jeff Brown, the commission’s executive director, said in a statement. “We anticipate that as even more dispensaries open across the state, new brands are introduced to the market, and cannabis becomes less stigmatized, sales numbers will continue to go up.”
Some cannabis boosters suggested the slowdown was a result of regular business cadence and shifting seasonal demand. Scott Rudder, president of the New Jersey CannaBusiness Association, noted sales typically slow after holiday spending sprees and sales.
“Usually, you see a slower first quarter and then it picks up, for our industry, around 4/20, which kicks into the spring and the summer, and then you kick into the fall with the holidays, so your second, third, and fourth quarters are usually your best quarters,” he said.
A spokesperson for the governor declined to comment and referred queries to the commission.
In a follow-up statement, Brown echoed Rudder, pointing to seasonal trends to explain the decline, also noting recreational sales reached a record high in March. Despite the slowing growth, the $201 million in recreational sales means the first quarter revenue was also record-setting.
“We see other signs of steady growth in New Jersey’s cannabis market, like the pace of new businesses in all the license classes coming into operation,” Brown said. “We believe in the long-term potential of the recreational cannabis industry in New Jersey and remain committed to fostering a robust and equitable cannabis market.”
Sales growth did see a sizable decline in the first quarter of 2023, too, falling five percentage points from the prior quarter to a growth rate of 9.4%.
That revenue rounded out the first year of the state’s legal market, and it’s unclear to what degree the decrease represents a seasonal shift in demand and how much of it can be attributed to a climbdown from explosive growth seen amid the market standup.
None expect the market to reach the staggering 46.3% quarterly growth it enjoyed in the third quarter of 2022, when the market was still only months old, and quarterly growth hovered at or near 10% for all of 2023.
Others pointed to New Jersey’s persistently high cannabis prices to explain the flagging growth, noting prices here are among the nation’s highest.
“The slow growth in the adult-use sales and the diminishing sales on the medical side are no surprise because the prices on the regulated side continue to be, quite frankly, hyper-inflated compared the other states or the legacy market right here in New Jersey,” said Chris Goldstein, a regional organizer for the National Organization for the Reform of Marijuana Laws in New Jersey.
High prices leave New Jersey’s legal market at a competitive disadvantage with black market dealers and synthetic cannabinoids that occupy a legal gray area but have grown more popular since New Jersey legalized recreational marijuana, Johnson said, adding dispensaries had recently taken steps to reduce prices through sales discounts.
Sales in New Jersey’s recreational cannabis market have lagged behind those in some other states with comparably young markets.
Recreational sales in New Jersey totaled $475.3 million in the market’s first 12 months of operation, soaring to $730.8 million in the second full year.
By comparison, Missouri reported more than $1.1 billion in revenue from its first year of recreational sales, and recreational sales in Maryland totaled $512 million over the market’s first nine months.
Both states have roughly two-thirds of New Jersey’s population.
“Missouri did $108.7 million in rec sales alone in March of this year. I think that, given their population versus New Jersey, we have a lot of work to do to figure out why our market is so far behind,” Johnson said.
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