Atlantic City has formally moved to rein in its booming cannabis retail scene, adopting a new ordinance that limits how many dispensaries can operate within the resort town’s borders.

At its October 22, 2025, meeting, the Atlantic City Council unanimously approved Ordinance No. 87 of 2025, known locally as the Cannabis Retailer Cap Ordinance. The measure sets a hard ceiling of 16 retail cannabis licenses within the city: 12 standard Class 5 retail licenses and four Class 5 microbusiness retail licenses.

The cap comes after months of concern from local officials, business owners, and residents that the city’s fast-growing legal cannabis market was becoming oversaturated. A legal update from law firm Cooper Levenson notes that as of June 2025, a city-commissioned study counted 15 operating cannabis retailers in Atlantic City, with dozens more projects somewhere in the approval pipeline. City records cited in that analysis show the council had previously issued 47 resolutions of support for Class 5 retailers, with 16 retailers ultimately opening.

Those numbers fueled worries that too many stores were vying for the same pool of customers, especially as unlicensed sellers and public consumption on the Boardwalk remain visible challenges. A recent report from local outlet Downbeach Buzz highlighted complaints from licensed operators who say the market feels “overloaded” and that illicit sales are undercutting compliant businesses.

The new cap is grounded in a market study prepared for the city by Stockton University cannabis professor Rob Mejia. According to the Cooper Levenson summary, the report explicitly recommended an “immediate cap of 16 dispensaries” to stabilize the market and protect the viability of existing shops. The study was based largely on surveys of operating retailers, with full participation from current licensees and roughly 80% of them supporting some form of cap.

Mejia’s report also advised that businesses that already held full approvals should be grandfathered while the city set clear timelines for them to open. However, attorneys reviewing the ordinance note that the final version adopted by council does not include explicit grandfathering language, leaving uncertainty for prospective retailers that have invested in sites but are not yet operating.

The local cap exists within New Jersey’s broader adult-use cannabis framework, where state regulators issue licenses and municipalities retain significant power over whether and how many businesses may operate within their borders. The New Jersey Cannabis Regulatory Commission allows towns to limit or prohibit certain license types, even though adult-use cannabis has been legal for adults 21 and older since 2021.

Atlantic City is not acting alone. Surrounding municipalities, including Egg Harbor Township, are weighing similar steps to control cannabis business density, according to regional legal analysis. Meanwhile, the Casino Reinvestment Development Authority (CRDA), which oversees land use in the city’s tourism district, has proposed separate rules that would require at least 200 feet of separation between cannabis businesses in that key area.

For now, the cap offers Atlantic City’s existing dispensaries a measure of market protection while signaling a more cautious approach to future cannabis growth. But with no clear roadmap yet for how pending applications will be treated under the new cap and continued pressure from both legal and illicit competitors, the city’s cannabis landscape is likely to remain a closely watched test case in New Jersey’s evolving industry.