NJ cannabis may stay costly at licensed shops
Legal sale of marijuana has been established throughout New Jersey, a longtime dream of cannabis advocates. Now that it’s here, though, consumers are waking up to a possibly less-satisfactory reality for the New Jersey style of the pot business.
Just scoring some marijuana seems to require too much effort. We recently saw more than 20 would-be customers standing outside on a cold, drizzly day waiting to enter a cannabis store. The line didn’t budge for more than 15 minutes.
When they can get some, marijuana users are paying what might be the highest legal prices in nation. A recent Press article said 3.5 grams of the precious weed cost $55 to $60 here in South Jersey. That’s substantially higher than five other states sampled, and more than double the comparable price in Massachusetts of $22.
This sort of luxury cannabis market for the affluent is not what advocates had in mind when pushing legalization. Chris Goldstein, an organizer for the National Organization for the Reform of Marijuana Laws, told the N.J. Cannabis Regulatory Commission people making $14 an hour should be able to afford cannabis.
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The rollout of pot sales in the state has been clumsy and slow. Availability of some forms of cannabis, even popular ones, varies by store and region. The cannabis commission has said more time is needed to get enough authorized sellers to bring prices down.
But New Jersey had a head start on New York and its prices are still higher. About a month after the first shop opened in Manhattan, an eighth ounce of marijuana was available for $40.
The opening of new cannabis stores will continue, probably for some years. The Cannabis Regulatory Commission has received almost 1,500 license applications to sell and/or grow marijuana. While this increase in market supply can only exert downward pressure on prices, they might stay too high for many people due to fixed costs of doing business in New Jersey.
Just securing regulatory approval in this over-regulated and unaffordable state is costly. So is buying or renting commercial property — which brings another large list of regulatory requirements — and equipping a public place of business.
Growers must charge a Social Equity Excise Fee, currently $1.10 for each ounce they distribute. Municipalities can charge a transfer tax of up to 2% on cannabis sales. They may also charge a user tax on top of the transfer tax. Cannabis sales, like much else, are subject to state sales tax, at the current tax rate of 6.625%. Since the drug is expensive, quite a bit of buyer’s money goes up in smoke before any desired psychoactive effects are experienced.
Unauthorized sellers of marijuana don’t pay these costs, and don’t need to charge as much to make a profit. NORML’s Goldstein said cannabis has never been cheaper or more readily available on the black market in New Jersey. Advocates have renamed that the “legacy market.”
This was inevitable, as we pointed out a few years ago. California lowered its pot revenue forecast by 40% due to its thriving black market. Its early legalization had created an elaborate network of unregulated growers and sellers who were less fearful of getting caught once the drug was legal.
Arrests for unauthorized selling of marijuana in New Jersey have nearly stopped, from nearly 3,000 statewide in 2018 to just 44 in 2021. One such arrest in Atlantic City recently charged a Brooklyn man with selling from a car advertising marijuana for sale. His car blocking a crosswalk was hard to miss.
Prices at legal stores may improve as more are opened, but they’re unlikely ever to be competitive with the legacy market serving lower income, more urban consumers. The legal and legacy markets will be separate, but in many ways they won’t be equal.
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