In the most recent November elections, fully 67% of New Jersey's adult voters came out to say yes to legalize cannabis.
The new cannabis law, signed by Governor Phil Murphy in February, had a deadline of Aug. 21 for the New Jersey Cannabis Regulatory Commission to create its rules and regulations. The commission complied.
However, out of the state's 565 municipalities, several have chosen not to allow the creation of recreational cannabis program. These municipalities, however, hold the right to change their decision in the future and jump in to create recreational programs.
Cantor Fitzgerald analyst Pablo Zuanic shared his “Brief thoughts on the coming New Jersey rec (or is it wreck?) program” in his Tuesday note.
“We fear New Jersey may not live up to expectations, at least initially,” Zuanic began.
New Jersey's cannabis sales are expected to start on Feb. 15 at the latest, according to an announcement from state regulators.
Referring to the NJ state cannabis commission as being “far from nimble,” approval of new license applications will be slow, said Zuanic, adding that the main concern is not only a sluggish start but a low number of shops. “Only eight stores for a population of 9 million, plus ‘visitors’ from Pennsylvania, Connecticut and New York.”
As a comparison, Zuanic looked at Arizona, population 7 million, which had 70 stores up and ready to sell adult-use cannabis on the first day of the program. And despite that, the “long lines made TV headlines.”
“We fear a 'hiking' trip to the Berkshires in western Massachusetts may be more time eﬃcient (and healthier) than standing in line for hours in one of those eight New Jersey towns come February,” Zuanic pointed out.
TerrAscend Gets Exclusivity In Two Places
There are several publicly traded cannabis operators positively positioned for the new cannabis program in New Jersey, such as AYR Wellness (OTCQX: AYRWF) and Verano Holdings (OTCQX: VRNOF), Zuanic noted. Both companies hold two of the 10 licenses for medical marijuana operations in the state. Of the other eight, six are publicly traded - Acreage Holdings ACRHF, Ascend Wellness AAWH, Curaleaf CURLF, Green Thumb GTBIF, TerrAscend TRSSF and Columbia Care CHWTF.
What gives Ayr Wellness and Verano a competitive advantage? They have three stores each in areas where the state recreational cannabis program has been approved.
To make things more complicated comes the exclusivity some cannabis operators have obtained due to the rules set. For example, in Phillipsburg, the town council chose to opt out and ban all future recreational stores, though it would allow the existing alternative care center (ATC) to sell both medical and adult-use cannabis, explained Zuanic.
The ATC in Phillipsburg is owned by TerrAscend, which in this manner would be granted exclusivity in this town. The same thing is happening in the township of Maplewood, added the analyst.
“We understand these types of decisions may eventually be challenged in court, and on the surface also seem contrary to what the New Jersey Cannabis Regulatory Commission (CRC) is trying to accomplish regarding social equity participation. Yes, the CRC gives towns the right to opt out, but does it give them the right to oﬀer exclusivity to certain operators?” Zuanic asked.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on Bankrate.com. The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.
All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the Bankrate.com rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.
Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.
Rate collection and criteria: Click here for more information on rate collection and criteria.