The NJ Canna Crawl

The Garden State is growing green.

Note: Cannabis Confidential subscriptions remain paused through year-end.

I’ve always said its the people and the products behind the cannabis industry that tell the true story. That’s often lost in translation because many of the drivers behind this emerging corner of economic growth have been grinding, not getting out.

As 2023 came to a close, I grabbed a friend of ours who is a fellow investor in the space and we decided to do just that—so it was off to Jersey for some old school due dilly.

We began in North Jersey at The Apothecarium Lodi, one of TerrAscend’s three retail outlets and true story: they share a parking lot with a gentleman’s establishment that was often featured on the hit TV show The Soprano’s…

…not that you gotta park if you don’t wanna, as this joint has it’s own drive-through…

…but if you stay in your car, you’d miss the killer experience inside, one that highlights some of the best flower in the state—including Kind Tree, Gage, Cookies and Legend—as well as one of the leading edible brands in Wana.

The team was super-friendly, engaged and knowledgeable—thank you Chris K—and by the time we checked-out, it was self-evident why Chairman Jason Wild continues to buy his stock at every turn, adding to the 90-odd million shares he already owns.

Personal highlights: GAGE Sunset Octane flower, Kind Tree Filthy Animal pre-roll, Wana 20:1 CBD:THC Blood Orange gummies.

From there, we went southbound to Bloomfield and Green Thumb’s RISE dispensary…

…where another friendly squad was there to walk us through our shopping experience.

While I’m no stranger to their brands, I had forgotten that New Jersey isn’t chocolate-friendly yet which means that the one product I was perhaps most looking forward to…

…wouldn’t be available on this trip. Bummer, but thankfully there were other items to keep my mood attuned. Personal highlights: Rhythm Animal Face, Dog Walkers LA Kush Cake and the Big Dog Afternoon Delight.

With half our trip complete, Pete and I headed south to Union where Julie Winter and AYR Wellness awaited. I’ve been to an AYR—the Back Bay launch in Boston in April of 2022—but never in New Jersey, so we were anxious to learn more.

They did not disappoint. Their brand family was on full display from the moment we walked in—Kynd, Stix, LIT, Wicked—with a wide selection of options, form factors + education, which remains a critical component of the ongoing migration to cannabis.

We were struck by the passion of the team + the evolution of the customer experience, a dynamic that’s created a lot of buzz since CEO David Goubert took over last year.

By the time the dust settled, some of our personal highlights included: Kynd London Pound Cake, HAZE Mudd brothers live rosin vapes and Walking Stix Memory Loss.

As we left Union and continued our sojourn south, there was only one place left to go and that was Zen Leaf Elizabeth, where Verano products were on full frontal display…

…and Manny & Co. serviced their steady stream of savvy and sophisticated customers…

…which continues to expand, both in-store and through their wholesale presence.

This wasn’t my first Verano rodeo—they’ve been a great partner to Mission Green—so I sorta knew my way around the menu. Personal highlights included Iced Swift Lifts Motorbreath, Bits Acai Affection lozenges and (the) Essence G Purps flower.

While there are other notable Garden State operators (Curaleaf, Ascend and Acreage, among them), Verano + TerrAscend are currently 1 and 1A in terms of statewide share, which says something given legal industry sales will push $1B in this first full year of adult-use.

2024 should see additional storefronts + wholesale opportunities as the legal adoption continues to crowd out illicit market share. We expect volume trends to increase and friendlier consumer pricing trends to emerge as brand affinities develop over time.

New Jersey by the Numbers

The referendum to legalize cannabis passed in December 2020 with 67% approval.

Statewide revenues:

Q122: $55.8m  (med)

[adult-use sales began April 21, 2022]

Q222: $138.9m ($59.2m med + $79.7m rec)

Q322: $177.7m ($61.1m med + $116.6m rec)

Q422: $182.3m ($49.9m med + $132.5m rec)

FY22: $554.9m  ($226.1m med + $328.7m rec)

Q123: $179.3m  ($34.4m med + $144.8m rec)

Q223: $193.1m ($32.9m med + $160.2m rec)

Q323: $206.1m  ($29.2m med (-41.5% YoY)+ $176.9m rec (+33.5% YoY))

YTD 23: $774.8m (est. FY $950m if Q4 is flat rev QoQ) / ($96.6m med + $481.9m rec)

Avg. pricing: $13.96/gram in Jan '23 → $12.49/gram in Oct '23.

Adult-use tax revenues thus far (collections began Q222): $50.4m

Social equity excise fees thus far (collections began Q123): $2m

Launched Phase 2 cannabis equity seed grant program: 48 applicants/$150k each

91,370 medical patients (down from peak of 129,369 in May '22)

5,352 caregivers

1,541 doctors

2257 total licenses
^ 805 micro licenses + 1452 standard licenses
^^ 546 social equity status licenses + 1711 non-social equity status licenses

1281 retail licenses
^ 468 micro licenses + 813 standard licenses

566 cultivator licenses
^213 micro licenses + 353 standard licenses

364 manufacturing licenses
^97 micro licenses + 267 standard licenses

2.6% disabled veteran owned

18.2% minority & woman owned

25% minority owned

21.7% woman-owned

…and two very happy campers.

/end

Enjoy your holiday stretch, be safe and please enjoy responsibly.

CB1 has positions in / advises some of the companies mentioned and nothing contained herein should be considered advice.