New Jersey Governor Phil Murphy made good on his promise to legalize recreational cannabis, and that’s great news for the stocks of the state’s licensed producers: Acreage Holdings, Curaleaf Holdings, Green Thumb Industries, Harvest Health & Recreation and Ianthus Capital Holdings. Each of these multistate chains has a medical marijuana license in the Garden State, positioning them for the much bigger recreational market when it arrives next year.

Jersey legislative leaders and the governor announced their agreement on adult-use cannabis Tuesday—but the news had no visible effect on the stocks of Acreage (tickers: ACRG.U.Canada and ACRGF.OTC), Curaleaf (CURA.Canada and CURLF.OTC), Green Thumb (GTII.Canada and GTBIF.OTC), Harvest (HARV.Canada and HRVSF.OTC) or Ianthus (IAN.Canada and ITHUF.OTC).

Curaleaf has the largest presence in New Jersey, with a 40% share of the state’s medical-marijuana prescriptions.

“Legalization will benefit the state in various ways including the criminal justice component with the expungement of marijuana offenses and the increase in local tax revenue that will benefit communities,” said Green Thumb chief executive Ben Kovler. “GTI looks forward to being a part of it with our recent license win in the state.”

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Adult-use cannabis in New Jersey is also an opportunity for Canada’s industry leader, Canopy Growth (CGC), in a roundabout way. Canopy’s venture investment spinoff Canopy Rivers (RIV.Canada) owns a piece of TerrAscend, a firm that’s investing in U.S. cannabis businesses. One of TerrAscend’s American ventures is a majority stake in NETA NJ, which recently won a dispensary license in Phillipsburg, NJ. So in a twice-removed way, Canadian pot companies are already here.


If the Jersey legislature approves the bill, as is expected, the state would be the first to legalize recreational use without a referendum by voters showing that they back the move.

The bill will impose an excise tax of $42 an ounce on legal cannabis growers. That compares to national average retail prices that range from $60 to $90 an ounce, according to market researcher Cannabis Benchmarks.

The proposed law provides local revenue, too. A municipality that hosts a cultivation facility will get a 2% tax. Hosting a wholesaler will yield a 1% tax, while allowing a retail store will generate a 3% tax on local sales.

Murphy made sure that New Jersey’s bill will promote the social- justice objectives that have fueled the legalization movement. Pot has been used illegally across all social and economic groups, but minority groups have borne a disproportionate burden of arrests and imprisonment.


The bill will establish a process for expunging convictions for low-level marijuana offenses and require the cannabis industry to include minority and women-owned businesses, as well as low-income communities and individuals.

Write to Bill Alpert at william.alpert@barrons.com