New Jersey is one of the most sought-after cannabis markets in the U.S. because of its prime location in the densely populated Northeast and a rapidly growing industry that generated $1 billion in sales in 2024—an impressive 25 percent increase from the previous year. What started in 2022 with just 13 medical retailers has expanded into a thriving marketplace of 200 adult-use dispensaries, with independent operators making up the majority.
At last week’s Benzinga New Jersey Spotlight industry event, panelists expressed optimism and caution about the future of the market. Seth Yakatan of Katan Associates cautioned, “Price compression is coming, like every other market.”
Rachel Wright, CPA, from Verdant Strategies, reinforced this view, stressing the importance of financial preparedness.
“98 percent of my California clients are still around; it doesn’t mean everybody’s out of business in three years,” she said.
Wright advised operators to focus on operational efficiency and deploying working capital wisely to weather market shifts. Yakatan also cautioned about the looming threat of hemp-based products that may have a significant impact on dispensary sales.
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Investors Are Looking For Fast Returns
During the Fast Returns or No Deal panel, investors made one thing clear: they want quick returns to mitigate risk. With new licenses continuing to enter the New Jersey market and competition increasing, the runway for ROI that once existed has significantly shortened, making investors more cautious about where they put their money.
Dan Neville, CEO of Advanced Flower Capital, broke down the numbers behind investor concerns, particularly regarding New Jersey’s status as an unlimited license state. He highlighted how the increasing number of dispensaries is shrinking individual market share.
“You’ve got a billion-dollar market with 200 dispensaries that average $5 million in revenue,” Neville said. “Some will do better, and some will do worse. If that number climbs to 300 next year, then you’re looking at $3 million per dispense rate, and at that point, it’s hard to be profitable after 280E obligations to justify the investment here.”
Another key concern investors expressed is the high cost of company buildouts. Many agreed that multi-million dollar dispensary and cultivation facility investments are unnecessary. The panel urged entrepreneurs to remain lean and efficient, emphasizing the importance of focusing on core competencies rather than overambitious expansion plans.
Patrick Rea of Poseidon advocated for a minimum viable dispensary approach, stating, “Entrepreneurs should think about their stores as really good liquor stores, as opposed to the Apple store.”
Prove It: The Investor Mindset
Financial projections alone aren’t enough for investors—operators must prove they can execute. Steven Ernest of Chicago Atlantic warned that investors seek tangible success before writing checks.
“The folks that have actually been able to provide fast returns to their investors are the ones who have the checkbooks,” he noted. “We’re looking for sustainable cash flows.”
Despite the demand for quick ROI, Rea believes this investor mindset will ultimately benefit entrepreneurs.
“I think it forces businesses and entrepreneurs to launch businesses focused on profitable growth instead of just growth at whatever cost.”
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The Art of the Deal
Securing financing in today’s highly competitive cannabis market is no easy feat. Yakatan emphasized the probability of success is low due to the high number of competing projects. He, too, advised entrepreneurs to demonstrate proof of concept and a track record of success before seeking investment, as investors are far more likely to fund businesses that have already shown they can execute.
When it comes to deal negotiations, CPA Rachel Wright stressed the importance of identifying non-negotiables upfront. She advised business owners to put their “deal breakers” on the table first to avoid wasting time on fruitless negotiations.
“For example, if someone is interested in acquiring your business but only offers stock when they go public—without any cash—then that’s a deal breaker. Don’t waste energy continuing the conversation.”
Preparing For An Exit Strategy
Bullet-proof financial and operational preparation is key for entrepreneurs looking to be acquired. Speaking on the “Are You Ready for a Profitable Exit?” panel, Leah Heise advised businesses to establish a data room from day one. Keeping accurate financial records not only demonstrates operational transparency but also makes a company a more attractive acquisition target.
Joshua Horn of Fox Rothschild echoed this sentiment, emphasizing that financial preparedness is critical when seeking investors or bank financing.
“Banks will want to see your regulatory history, tax returns, and financial statements,” he said. “If you have real estate, do you have leases? What are the terms of those leases? Are those leases assignable?”
The panel reinforced that early strategic planning can significantly impact the success of a transaction. Marc Claybond of Crowe, LLP underscored the importance of tax diligence for both buyers and sellers.
“It’s critical these days to do tax diligence—whether you’re a buyer or a seller—to understand the other party’s tax filing history, their exam history, any liabilities they have, what their tax structure is, and how all those can impact the ultimate purchase price,” Claybond explained.
He added that acquirers often assess tax risk, interest, and penalties and factor them into the final purchase price as a reduction. A well-documented financial history and a proactive approach to compliance can make the difference between a successful acquisition and a deal that falls apart.
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AI Is The Future of Cultivation
At the core of a successful cultivation operation is the ability to grow high-quality products with high yields and low costs. AI-driven cultivation facilities are beginning to emerge as the next way to optimize operations by integrating advanced monitoring technology to track plant health in real time.
Currently optimized for single-tier grows, these overhead robotic modules scan the canopy, analyze plant health, assess nutrient needs, and detect potential threats. Some of the most sophisticated AI systems can even identify contaminants from humans entering the facility, preventing costly losses due to disease or quarantine.
Speaking on the “How High-Tech Cultivation Is Defining East Coast Cannabis” panel, Jesce Horton, a respected Oregon cultivator, expressed his enthusiasm for AI’s role in crop steering—a cultivation technique that optimizes plant growth by manipulating environmental factors. He explained how cannabis plants constantly react to changes in temperature, humidity, and airflow by generating different hormones and growth signals. AI-driven insights can potentially improve results by 10-30 percent and help cultivators make precise adjustments to maximize yield and quality. According to Horton, even a 5-10 percent increase in yield or quality can be a game-changer for growers.
Learning From The MSO’s
As New Jersey’s cannabis market matures and competition intensifies, MSOs (multi-state operators) are adapting their strategies for 2025. Debra Borchardt led a discussion with leading NJ MSO operators about how they are navigating this evolving landscape.
Trip McDermott of Verano shared that his company has shifted focus from retail to wholesale to increase product brand awareness. With more vendors and cultivation facilities entering the market, the strategy has moved away from rapid scaling toward incremental improvements in product consistency and quality.
For Julie Winter of AYR Wellness, the approach is about striking a balance—serving their own dispensary customers and medical patients while maintaining strong relationships with wholesale dispensary partners. She also highlighted AYR’s success in localizing its national strategy by collaborating with Jersey-centric brand Mudd Brothers to introduce their solventless rosin products. She added that this partnership not only strengthens AYR’s connection with local consumers but also helps differentiate its offerings in a crowded market with high-quality rosin products.
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Loyalty Programs & Market Expansion
Loyalty programs are a marketing staple for dispensaries to engage and retain customers. McDermott noted that Verano is actively evaluating its Cabbage Club loyalty program to balance in-store exclusivity with broader wholesale distribution.
Given New Jersey’s retail cap, which limits the number of locations a company can own, he adds that expanding through strategic wholesale partnerships makes more sense for maximizing market presence. While exclusive in-store product drops foster brand loyalty, Verano recognizes that distributing through 60-70 dispensaries, rather than just a handful, provides greater revenue potential and brand visibility.
Independent Retailers Face Tough Competition From MSOs
Undoubtedly, independent retailers in New Jersey face an uphill battle in growing their market share. MSOs (multi-state operators) had a two-year head start, allowing them to build strong brand awareness and customer loyalty before independents even entered the playing field.
Gaby Wilday of Molly Ann Farms shared insights from Lit Alerts market data platform, identifying Ascend, Green Thumb Industries, TerrAscend, AYR, and Verano as the dominant brands in New Jersey’s top 10. And despite only representing 18 percent of retail locations, MSOs generate 39 percent of the state’s cannabis revenue—more than double their proportional market share. In contrast, independent operators make up 82 percent of the market yet generate 20 percent less revenue than their MSO counterparts, underscoring independent dispensaries’ challenges.
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Finding a Competitive Edge
With competition intensifying for both retailers and brands, Dan Neville urged entrepreneurs to identify untapped opportunities—whether through novel product offerings, niche consumer experiences, or unique business models. He emphasized the importance of finding a sustainable revenue stream that can withstand market fluctuations and price compression.
As New Jersey’s cannabis market evolves and matures, independents must differentiate themselves, maximize operational efficiency, and build strong customer relationships to stay competitive against established MSO giants.
*This article was submitted by a guest contributor. The author is solely responsible for the content.