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New Jersey’s legalized market for recreational cannabis continues to grow as sales hit $160.2 million between April and June, according to the state.

For the second quarter of 2023, the New Jersey Cannabis Regulatory Commission recorded a 10% increase from the $145.7 million in revenue generated from January through March. After receipts for medicinal cannabis are factored in, sales topped $193.1 million for the latest period, according to the state.

However, dispensaries licensed to sell medicinal products pulled in $32.9 million — down from $34.46 million in the prior quarter.

Following the launch of New Jersey’s adult-use market last year, enrollment in the state’s medicinal cannabis program has decreased steadily, from 128,548 in April 2022 to 100,841 in August 2023. As a result, many medical-only dispensaries are starting to pursue approvals to expand into adult-use sales.

As of Aug. 23, there are 32 dispensaries open for medical and adult-use sales and an additional 14 open exclusively for patients. New Jersey also has 36 storefronts licensed for recreational sales.

Though 80% of the state’s 565 municipalities have opted out of allowing cannabis sales, there now is at least one dispensary in 18 of New Jersey’s 21 counties, according to the CRC.

In an update during the CRC’s Aug. 18 meeting, Executive Director Jeff Brown highlighted several recent openings, including:

• New alternative treatment centers in Jersey City (downtown FLWR and RIPT), Gloucester (HoneyGrove) and Waretown (BLOC).
• New recreational dispensaries in Rockaway (Kind Kush), Harrison (Cookies), Somerset (Leaf Haus), West Milford (Mountain View Farmacy), Toms River (The Social Leaf) and Lambertville (Union Chill).
• New expansions into recreational sales in Atlantic City (Design 710), Newark (URB’N) and Sicklerville (MPX).

With prices for products remaining “very high,” Brown said the cost is pushing consumers away from the legal market. The proliferation of Delta 8 and Delta 9 products at cheaper prices is also impacting sales, he said.

However, according to Brown, the CRC believes as more stores launch in the Garden State, market conditions will improve.

Of the 2,177 applications submitted for licenses, the CRC has approved 1,399, with the majority being conditional. Additionally, 349 conditional license holders have gone on to secure necessary local approvals and have since applied to convert to annual licenses so they can open.

The CRC also reported that the state collected $9.49 million in recreational sales tax for Q2, while the Social Equity Excise Fee generated $702,071 during the period.

Under the law in New Jersey, at least 70% of all tax revenue, including social equity excise fee revenue, is supposed to be invested in “impact zones” — defined as cities with higher-than-average unemployment rates, crime indexes and cannabis arrests.

When it comes to how the state should invest tax revenue generated from the market, the state is still determining what the priorities will be, though the CRC has recommended initially investing in grants and training/technical assistance for aspiring entrepreneurs in impact zones and economically disadvantaged areas.

Editor’s note: This story was updated at 2:10 p.m. ET Aug. 24, 2023, to correct the medicinal cannabis sales total and overall Q2 sales total.