Atlantic City’s cannabis boom is colliding with a hard reality: there may now be more dispensaries than the market can reasonably sustain.

Since New Jersey’s adult-use sales launched in April 2022, the state’s cannabis industry has expanded rapidly, surpassing $1 billion in combined medical and recreational sales in 2024. Local leaders in Atlantic City initially embraced cannabis as a new pillar for tourism and job creation, designating a “Green Zone” near the resort town’s core and welcoming dozens of applicants.

That enthusiasm helped fuel a surge of operators. By late 2024, the Greater Atlantic City Chamber warned that nine cannabis businesses already operated within a 25-block Green Zone and roughly 50 applications were somewhere in the pipeline—with proposals that, in some cases, clustered four shops on a single block. More recently, local reporting and community commentary have put the current count at around 15 recreational dispensaries, with additional licenses still pending.

Existing retailers say the crowding is starting to hurt. In a recent video interview, the founder of Legal Distribution, one of the city’s licensed shops, described “too many Atlantic City cannabis stores” and pointed to an “intense level of competition” that is driving down sales and margins, while unlicensed sellers continue to operate openly on and around the Boardwalk. Legal operators argue they face high compliance costs, local taxes, and security requirements that illicit competitors simply ignore.

Concerns over saturation prompted the city to commission a market study from Stockton University. That research, summarized by local media and a South Jersey radio outlet, concluded that Atlantic City risked overbuilding its cannabis retail sector and recommended a dynamic cap of 16 dispensaries to stabilize the market and protect social equity goals.

City officials have now acted. In November 2025, Atlantic City adopted a Cannabis Retailer Cap Ordinance limiting the number of Class 5 retailers to 16—12 standard licenses and four microbusinesses. NBC10 Philadelphia reported that the cap follows complaints from shop owners who say the market is already “too crowded” and that recreational storefronts are not generating the level of business once predicted.

For operators, the challenge now is market share, not simply getting licensed. A compact resort city with fewer than 40,000 residents must support a double-digit number of dispensaries that largely depend on weekend and seasonal tourism, all while competing with illegal sellers and surrounding municipalities. With more stores chasing the same pool of customers, price compression is intensifying, promotional spending is rising, and smaller, undercapitalized businesses face greater risk of closure.

Business advocates warn that a wave of failures could leave empty storefronts and undermine the very revitalization cannabis was meant to support. The Greater Atlantic City Chamber has urged “balance, not saturation,” calling for data-driven license caps, buffer zones between shops, and stronger coordination with state regulators.

For now, the new cap offers a ceiling but not a cure-all. Dispensaries will still be competing in a crowded field where differentiation—through pricing, product mix, branding, and tourist-oriented experiences—will likely determine who survives Atlantic City’s cannabis shakeout.