Inside Atlantic City’s Cannabis Economy: Growth, Limits, and Local Impact
Atlantic City has spent the past decade trying to diversify beyond casino gaming, and legal cannabis has quickly become one of the city’s most visible “new economy” bets. With a steady flow of weekenders, convention traffic, and seasonal tourism, cannabis retail fits naturally into the resort-city playbook: it’s a high-demand consumer product that can generate local taxes, support jobs, and pull spending into neighborhoods that don’t always benefit from boardwalk foot traffic.
A fast-growing state market that spills into shore towns
New Jersey’s regulated cannabis market has scaled rapidly since adult-use sales began in April 2022. By the end of 2024, the state reported more than $1.0 billion in combined medicinal and recreational sales for the year and more than $2.0 billion in total revenue since the start of adult-use sales. That growth matters for Atlantic City because it helps normalize cannabis as a mainstream retail category—one that tourists increasingly expect to find near hotels, entertainment districts, and nightlife.
The New Jersey Cannabis Regulatory Commission’s 2024 Annual Report also frames cannabis as a real employment and revenue engine statewide, citing $2.01B in gross sales, $64.5M in state tax revenue (2024), and 10,245 approved cannabis business employees. Even if Atlantic City captures only a slice of that momentum, the local spillover can be meaningful: payroll, vendor contracts, security services, construction and buildouts, marketing, accounting, and other ancillary spending.
Local tax dollars: small percentages that add up
For municipalities, the economic impact isn’t just indirect. Atlantic City has the ability to collect local cannabis-related taxes on top of statewide collections. The city code authorizes a 2% transfer tax on receipts from sales by cannabis retailers (and other license types) and also describes a user tax structure for certain license holders, with the 2% rate applied across multiple cannabis business categories and 1% for wholesalers.
Atlantic City also has a 2% medical cannabis transfer tax structure in its local code. For a city balancing public-safety costs, infrastructure needs, and tourism services, even modest percentage-based revenue streams can help—especially when they come from visitors spending discretionary dollars.
Jobs and “retail clustering”—and why the city moved to slow it down
A cannabis storefront is more than a cashier counter. Dispensaries typically require managers, inventory and compliance staff, security, budtenders, and ongoing vendor relationships. But Atlantic City’s experience has also shown a downside: rapid clustering can trigger a race to the bottom on pricing, compress margins, and cause churn—particularly in a seasonal tourism market.
That’s a key reason the city adopted a cap. In November 2025, local reporting described Atlantic City approving a limit of 16 cannabis dispensaries, reflecting concerns that the market was becoming overcrowded and that some operators were struggling to meet expectations. A separate write-up summarizing a Stockton University-led analysis said the study recommended an “immediate cap of 16,” noting that as of mid-2025 there were about 15 operating retailers and that the cap should be periodically re-evaluated.
Read the latest news on dispensary caps here.
What this means going forward
Economically, Atlantic City’s cannabis sector is now entering a more mature phase: less “gold rush,” more policy calibration. The city’s upside is clear—local tax revenue, jobs, and tourism-adjacent spending—while the cap signals an attempt to protect business viability so cannabis remains a stable contributor rather than a boom-and-bust sidebar. In the near term, the biggest economic gains are likely to come from sustainable operators, smart location planning, and cannabis commerce that complements (instead of cannibalizes) the city’s broader entertainment economy.