The Tri-State Area Is Setting Up To Become An Adult-Use Cannabis Powerhouse

New Jersey is the newest state to allow for the sale of recreational cannabis and we are bullish on the potential impact the development has on New York. 

Although we have been bullish on New Jersey, we expect the legalization of recreational cannabis to accelerate the pace of legalization in New York. We consider this possibility to be the most significant potential impact of legalizing recreational cannabis in New Jersey and believe our readers should be aware of this.

New York is expected to be one of the largest cannabis markets in the US and we are bullish on the opportunity for several reasons. From being one of the largest populated city in the world to being the largest capital market in the US, we are not surprised by the amount of companies and investment firms that are closely watching how the market advances.

On Thursday, New Jersey will start to allow for the sale of recreational cannabis and we expect to hear stories about how long the lines were at legal dispensaries in the state. The metric we are most interested in for New Jersey is the amount of recreational cannabis that is sold to out-of-state residents (especially from New York). 

If you look at Illinois which started to allow for recreational cannabis sales in 2020, the state is generating a significant amount of revenue from out-of-state residents. Last month, Illinois generated more than $130 million of sales revenue from recreational cannabis and out-of-state residents accounted for $40.5 million of the amount. 

Once the New Jersey cannabis market gets up and running, we expect New York residents to account for more than 33% of recreational cannabis sales in the state. If New Jersey’s sales revenue are anywhere close to Illinois, we expect New York legislatures to expedite the process to allow for the sales of recreational cannabis. 

In the post-COVID economy, states are looking for new taxable sources of revenue. So far, many states have legalized sports betting to create a new taxable revenue stream and expect cannabis to follow a similar path. 

We believe the US cannabis industry is barely in the first inning of a multi-decade growth cycle and are working to identify the companies that will be the greatest beneficiaries of the trend. We consider the US to be the most attractive cannabis market in the world and our readers can learn more about it by emailing support@technical420.com with the subject “US Cannabis Industry” to be added to our distribution list.

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Michael Berger is Managing Partner of StoneBridge Partners LLC. SBP continues to drive market awareness for leading firms in the cannabis industry throughout the U.S. and abroad.

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