With six months of adult-use cannabis sales under its belt, the New Jersey cannabis market is off to a solid start. Per BDSA’s Retail Sales Tracking data in the New Jersey market, monthly dollar sales have grown ~30% since May 2022, the first full month of adult-use cannabis sales, to total roughly $65 million in August 2022. While the market remains constrained by the current macroeconomic situation, as well as state regulations, the New Jersey cannabis market still holds the potential to be a top ten contributor to the growth of legal cannabis sales by 2026.
Six Months Out of the Medical Era, Retailer Access is Limited and Cannabis Sales Remain Concentrated Among a Few Brands
While reforms of the state’s medical program under Gov. Phil Murphey helped with the cannabis market growth, New Jersey still launched its adult-use cannabis market with an industry that was much less developed than other recently launched markets, with low retailer availability and just a handful of brands. With roughly one dispensary per 100,000 residents, New Jersey has the lowest per capita dispensary count of any adult-use market, and legal sales remain highly consolidated. The top three brands in New Jersey bringing in ~55% of legal sales in the state from August 2022.
Flower Holds Strong in New Jersey, Dabbables Lag Behind
Compared to other cannabis markets, flower holds a much higher share of dollar sales in New Jersey. While most cannabis markets typically see flower bringing in a ~40% share of dollar sales, BDSA Retail Sales Tracking data show that flower made up just under 50% of monthly dollar sales in New Jersey in August 2022. Also notable is the unusually low sales of dabbable concentrates in the Garden State’s nascent adult-use market. Dabbables usually bring in 5%-15% of dollar sales across BDSA-tracked markets, but in only a ~2% share of dollar sales in New Jersey in August 2022. While dabbables hold an especially low share in New Jersey, the dominance of the flower category is typical of new markets. Arizona, which launched adult-use sales in early 2021, has seen flowers share of dollar sales in the market fall from ~50% in Q4 2020 to ~40% in Q3 2022.
New Jersey’s Cannabis Consumer Base Shows Different Priorities When Choosing Where to Shop for Cannabis
New Jersey has seen a massive expansion in cannabis consumer participation, with BDSA Consumer Insights showing that the share of consumers grew ~15% from Spring 2020 to total over 50% in Spring 2022. The states consumer base shows several differences in store choice drivers compared to the aggregate of consumers in all other adult use markets. While vertical integration ranks towards the bottom as a store choice driver across the aggregate of adult-use markets, a retailer growing its own cannabis is the top driver of store choice in New Jersey, with 42% of consumers in New Jersey citing this as a top driver of store choice.
With Limited Storefront Retail Access, New Jersey Cannabis Consumers Lean on Delivery and Legacy Market
New Jersey cannabis consumers, who have more limited access to storefronts than consumers in other states, are much more likely to purchase from friends or family, or from a delivery service When looking at the aggregate of consumers across adult-use markets, BDSA Consumer Insights data show that recreational dispensaries are the most claimed source that consumers buy their cannabis from, with 52% of consumers across adult-use states claiming they bought cannabis from a recreational dispensary in the past six months, while 30% claim to have bought from friends or family, and 14% claim to have bought from a cannabis delivery service. By contrast, only 36% of New Jersey cannabis consumers in Spring 2022 reported buying from a storefront dispensary in the past six months, while 45% claimed to have bought from a friend or family, and 27% claimed to have bought from a cannabis delivery service in the past six months. While this is likely to shift significantly as the adult-use market gets its footing, New Jersey consumers are also much more likely to prioritize delivery when choosing where to shop, with 30% claiming that a retailer having delivery or mail order is a major influencer of where to shop, compared to just 10% across the aggregate of adult-use cannabis markets. New Jersey made significant progress in expanding access in the lead up to adult-use sales, but the current constrained retail availability and low number of brands suggest that the market has plenty of room to grow. BDSA’s cannabis market forecast projects annual legal sales in New Jersey to reach ~$700 million in 2022, and grow to ~$2.3 billion by 2026, making New Jersey a top ten contributor to global legal cannabis sales growth by 2026.
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