Less than four years after adult-use cannabis sales began, a wave of dispensary closures is sweeping the state, revealing a market where the odds are stacked fiercely against new entrants.
High-profile ventures backed by celebrities like rapper Ice-T and Wu-Tang Clan’s Raekwon have shuttered within a year, emblematic of a system struggling under its own weight.
The Medicine Woman in Jersey City, co-owned by Ice-T, locked its doors in early 2026 after a grand opening just last April. Hashstoria in Newark, associated with Raekwon and media personality Charlamagne Tha God, was evicted in mid-2025. They are not alone.
Independent shops like Blossom Dispensary and JC Element in Jersey City, Royal M in Plainfield, and Bleacher’s in Franklin Township have all ceased operations.
Even an established name like The Botanist closed its Atlantic City boardwalk location, unable to sell recreational products there.
The reasons for this attrition form a perfect storm of economic pressure.
While the state has issued over 230 retail licenses, municipal zoning has created bizarre pockets of intense saturation.
A handful of “opt-in” towns host clusters of stores competing for the same customers, while vast “cannabis desert” municipalities prohibit sales entirely. This forces businesses into brutal, zero-sum competition in limited areas.
“It’s very tough. Tougher today than when we first opened,” said Max Maksimyous, owner of Urb’n dispensary in Newark, who called the closures a “wake-up call.” He cites the “tons of fees and stuff” required for compliance as a key driver of high prices.
Those high prices at legal stores are their Achilles’ heel. They are undercut daily by a persistent and flourishing illicit market, comprised of traditional underground operators and unlicensed “smoke shops” selling intoxicating hemp derivatives.
These competitors operate without the burdens of state licensing fees, rigorous testing, security mandates, or crushing tax liabilities.
The federal tax code, specifically IRS Section 280E, delivers a uniquely punitive blow. Because cannabis remains illegal federally, licensed businesses cannot deduct standard operating expenses like rent, payroll, or marketing. This results in effective tax rates that can exceed 60%, a burden no other legal industry faces.
Compounding this is a regulatory environment described by some operators as a “paperwork nightmare.” Local zoning hurdles make finding viable locations difficult, and the slow rollout of promised amenities like consumption lounges has stalled potential revenue streams.
The outcome is a market contradiction. Suburban dispensaries near borders draw customers from states like Pennsylvania, often thriving.
Meanwhile, urban stores in communities disproportionately impacted by past drug policies are failing. They entered neighborhoods with long-established, convenient, and cheaper illicit alternatives, armed with a business model strained by overhead and regulation.
“The hood was never paying those prices,” one industry observer noted bluntly on social media, capturing the core miscalculation. Legalization aimed to create a new market but ignored the economics of the existing one.
The state legislature is now considering a bill to intensify enforcement against unlicensed operators, upending the promise of justice that girded the push to “legalize” pot in New Jersey.
Nationwide, state and local police made over 204,000 marijuana-related arrests in 2024, a year when FBI crime data shows there were 502 such arrests in New Jersey.
Critics have noted that the law signed by Governor Phil Murphy after two-thirds of the state’s voters cast ballots to make marijuana legal actually provides penalties of up to 20 years in prison for possession of the leafy plant.
The new legislation is clearly a push to further protect corporate profits and tax revenue, a far greater priority for politicians than such causes as universal or restorative justice.
Yet for the owners of The Medicine Woman, Hashstoria, and other shuttered stores, such action comes too late. Their closures stand as a stark ledger entry in the state’s legal experiment: a tally of high hopes, significant investment, and a market that, for many, proved impossibly hard to cultivate.