Proposed Cap on Legal Marijuana Licenses Undermines Racial Equity

An arbitrarily low cap on cannabis cultivators stands in the way of equity and justice in New Jersey's legal marijuana market.

Published on Nov 18, 2020 in Economic Justice

Throughout the campaign to legalize cannabis and develop a regulated marketplace, advocates and state lawmakers alike have highlighted the importance of centering racial equity and economic justice, invoking the need to repair the many harms created by the War on Drugs — especially among marginalized communities of color. While the specific language of the legalization bill (S21/A21) continues to evolve, there are currently provisions within it that severely threaten New Jersey’s ability to reach these goals. The legislation must be amended, especially as it relates to the number of licenses available to cultivators, to ensure our state can lead by example and create a market that realizes the values of equity and justice that have been espoused from the start.

The legalization bill currently implements an arbitrary and incredibly low cap on the number of licenses that will be made available to cultivators, leaving it at just 28. This stipulation is set to remain in place for the first 18 months following the first sale by a newly licensed recreational dispensary. Considering this first sale is likely to be more than a year after the Cannabis Regulatory Commission is formed, the actual wait period is closer to three years.

Allowing this to remain in place would not only limit competition and privilege larger corporations at the expense of other applicants, it would also create a situation where New Jersey’s recreational and medical cannabis markets are unable to provide adequate supply and meet the level of demand that exists, thus inflating prices and allowing nearby states — once they get their legal markets up and running — to siphon off business from New Jersey operators.

As of today, there have already been 12 licenses awarded, with 9 pending from the 2019 Request for Applications, meaning that a total of 21 licenses have already been claimed. If the proposed cap of 28 were to remain in place, only 7 remain to be disbursed.

When placing this in context with other legal cannabis markets across the country, it is clear that a limit of just 28 licenses is irrationally low, especially for a state with as many residents as New Jersey.

Cultivator Licenses for States with a Legal Cannabis Market


Number of

State Population

Number of Cultivators per 100,000 residents

Alaska 200 731,545 27.34
California 5,700 39,512,223 14.43
Colorado 700 5,758,736 12.16
Illinois 20 12,671,821 0.16
Massachusetts 130 6,892,503 1.89
Michigan 330 9,986,857 3.30
Nevada 160 3,080,156 5.19
Oregon 1,150 4,217,737 27.27
Washington 1,120 7,614,893 14.71
New Jersey
28 8,882,190 0.32

Source: NJPP Analysis of Legal Cannabis Markets across the United States

For the vast majority of cannabis markets, where the number of licenses and cultivators are better able to meet state demand, the prices for recreational cannabis are approximately $200 per ounce. In the only other state where the number of licenses is arbitrarily low, Illinois, market prices for recreational cannabis are well over $300 per ounce. This is an important consideration due to the excise fee structure that state lawmakers reportedly agreed upon earlier this week, which would be implemented nine months following the first recreational sale, per reporting by

Proposed Excise Fee Structure for New Jersey’s Legal Cannabis Market

Average Price per Ounce of Cannabis

Excise Fee

$350 and above $10
$250 to $350 $30
$200 to $250 $40
$199 and below $60

Source: Bill to launch N.J. legal weed industry is back on track, could pass by Monday,, Nov 17, 2020.

If the number of licenses remains low, and the average price per ounce in the market remains well above $300 as it has in Illinois, the amount of revenue that could be collected and distributed back into communities harmed by the War on Drugs would be severely limited. The bottom line is that the bill’s current approach to licenses would allow a limited number of companies to wield outsized control, undermining the state’s goals of centering racial equity and economic justice in the legal cannabis market.

In order to fix the weaknesses in the bill, the following must occur:

  • Eliminate the arbitrary cap on the number of licenses and enable the Cannabis Regulatory Commission to determine and award licenses as it sees fit.
  • Exempt micro-licenses and conditional licenses from any caps so that equity candidates can truly take part in the legal market.


If these actions are not taken, the cap on licenses will create an unnecessarily restricted market during the early years of its formation. As a result, there will be little-to-no opportunity for equity candidates who have less capital and limited resources to break into the market; it would also drastically reduce funds collected from the excise fee on legal cannabis that could be directed into communities harmed by the War on Drugs.