Atlantic City's Cannabis Cap Raises Legal Questions as Dispensaries Close and Investors Wait to Open

Cannabis industry consultant Stephen Weiss says businesses have invested hundreds of thousands of dollars based on earlier approvals. Independent research confirms the city adopted a 16-dispensary limit despite warnings that existing applicants needed protection.

ATLANTIC CITY, N.J. — Atlantic City's effort to control its rapidly expanding cannabis industry is creating a new dilemma: What happens to entrepreneurs who received approvals and invested substantial money preparing to open dispensaries before the city imposed a limit on the number of businesses?

Cannabis industry consultant and event promoter Stephen Weiss says the answer could determine whether Atlantic City faces additional lawsuits, even as existing dispensaries struggle to remain profitable and several have already closed.

During an extensive interview with Scott Cronick on News Talk 1400 & 92.3 WOND, Weiss questioned how the city intends to enforce its 16-dispensary cap while treating businesses that have spent years navigating municipal and state approvals fairly.

Independent research by South Jersey NewsBeat confirms that Atlantic City Council adopted Ordinance 87 on October 22, 2025, establishing a maximum of 16 retail cannabis dispensaries: 12 standard retail licenses and four microbusiness licenses.

The ordinance followed a city-commissioned study that warned about oversaturation but also specifically recommended protecting businesses that had already received approvals to avoid potential legal disputes.

That distinction has become increasingly important as the cannabis market contracts and some prospective operators remain uncertain about their ability to open.

"We put in three years and a quarter million dollars," Weiss said of a planned dispensary called Slammin' Sammy's, where he serves as a consultant. "It's not that we feel we can do it better. We just feel we deserve the opportunity to do so."

City Study Warned of Both Oversaturation and Potential Lawsuits

A June 23, 2025, research report commissioned by Atlantic City provides important context for the current controversy.

The study, titled "Determining a Cap on Cannabis Dispensaries in Atlantic City," was prepared by Stockton University cannabis professor Rob Mejia and graduate researcher Da-Quan Patterson.

Researchers examined the local market, surveyed operators, reviewed licensing information and analyzed the effect of tourism and seasonal demand.

At the time, Atlantic City had 15 operating dispensaries and approximately 24 additional locations with CRDA approvals identified in the study.

The researchers concluded that the number of cannabis retailers was growing faster than the market could comfortably support.

Their recommendation was a flexible cap of 16 dispensaries, with periodic reviews to determine whether the limit should change.

But the report also addressed the issue now being raised by Weiss.

It recommended that the city protect businesses that had already received full approvals and establish firm opening deadlines, potentially 120 to 180 days, for conditionally licensed operators.

The researchers specifically warned that the city would need legal review to avoid potential lawsuits involving businesses affected by the cap.

Atlantic City Council subsequently adopted the 16-store limit.

The ordinance establishes the numerical cap, but the version reviewed by South Jersey NewsBeat does not itself clearly explain how every previously approved but unopened business would be treated.

That leaves important questions about the implementation of the ordinance, existing approvals and any separate grandfathering provisions or administrative policies.

Weiss Says Businesses Were Encouraged to Invest

Weiss told Cronick that he became involved in Atlantic City's cannabis industry after organizing cannabis-related entertainment events and working with dispensaries.

His company, Northstep, previously organized events at Bourré and later developed cannabis-themed boat cruises involving local dispensaries.

He now advises the planned Slammin' Sammy's dispensary, which he described as a small social equity business.

According to Weiss, the project has involved approximately $250,000 in investment over three years.

He said the business pursued approvals through the city's Cannabis Review Board, City Council and the Casino Reinvestment Development Authority.

The CRDA has a separate land-use approval role within Atlantic City's Tourism District.

Weiss said the lengthy process required substantial financial commitments before the business could begin generating revenue.

"We were given permission," he told Cronick. "We went to the Cannabis Review Board."

He said the business subsequently pursued the additional approvals and construction work needed to open.

For Weiss, the issue is not whether Atlantic City has too many dispensaries.

He agrees that it does.

His objection is to the possibility that businesses already deep into the approval process could be prevented from opening after making substantial investments.

"I believe 16 is too many," Weiss said.

But he argued that existing applicants should be allowed to complete their projects if they have met the necessary requirements.

"Don't let the government say that, oh, you spent all that money too bad," he said.

Seven Dispensaries Reportedly Closed

Weiss estimated that seven Atlantic City dispensaries have closed, leaving approximately 11 operating businesses.

Those numbers have not been independently confirmed through a complete, current inventory of operating storefronts.

The New Jersey Cannabis Regulatory Commission maintains a list of licensed businesses, but holding an active license does not necessarily establish that a storefront is currently open and conducting sales.

Weiss described several local businesses as struggling with high overhead, intense competition and limited opportunities to distinguish themselves from competitors.

He identified High Rollers at the Claridge and MPX as examples of operators he believes are better positioned to survive because of their resources or established business operations.

He also discussed smaller dispensaries, including Juniper Lane, Peaches Garden and Rolling Green.

His assessments were based on his experience and observations, not independently verified financial statements.

The broader financial pressures, however, are supported by the city's own research.

The 2025 study found that some Atlantic City dispensaries generated annual revenues exceeding $5 million, while smaller operators reported substantially lower sales.

Researchers found that monthly revenue could decline approximately 25% to 35% between peak summer periods and the winter offseason.

Operators reported substantial fixed expenses, including rent, security, staffing, insurance and regulatory compliance.

The report identified monthly rents ranging from $5,000 to $15,000 and startup costs frequently exceeding $300,000 to $500,000.

Those expenses can make it difficult for smaller businesses to survive prolonged periods of weak sales.

Most Dispensary Operators Supported a Cap

The Stockton-associated research also provides an important counterpoint to concerns raised by prospective operators.

Researchers surveyed all 15 dispensaries operating in Atlantic City at the time of the study.

Twelve supported establishing a cap.

Thirteen supported protecting existing licenses or approvals, according to the report's survey summary.

The results suggest that many existing operators wanted limits on additional competition while also recognizing the need to address businesses already in the approval pipeline.

The report found that Atlantic City's relatively small permanent population, heavy dependence on tourism and concentration of dispensaries along a limited number of commercial corridors contributed to the market's challenges.

Researchers also warned that businesses often sell similar products, making it difficult to compete on anything other than price.

The city ultimately adopted the study's recommended limit of 16 dispensaries.

What remains less clear is how that policy is being applied to applicants who received municipal support or CRDA approvals before the ordinance was adopted.

How Many More Dispensaries Could Open?

Weiss said the number of potential additional dispensaries is difficult to determine because businesses are at different stages of the approval process.

He estimated that as many as 22 projects could have received some form of prior approval, although he acknowledged that the actual number likely to open is substantially smaller.

He said some properties previously associated with dispensary proposals are now being advertised for rent.

Other applicants may have abandoned their plans because of financial problems, delays or concerns about the market.

Weiss said he personally knows of several businesses still working toward opening.

The city's 2025 study identified approximately 24 additional locations with CRDA approvals at that time, lending support to the broader concern about a substantial development pipeline.

However, those historical figures do not establish how many businesses remain eligible to open in October 2026.

Nor does receiving a CRDA land-use approval necessarily mean a business has completed every municipal and state requirement needed to begin operating.

The distinction is important because businesses with different levels of approval may have different legal rights.

Weiss said the city should publish a clear accounting of which businesses have approvals, which remain active and what deadlines apply.

Potential Lawsuits Could Create Another Financial Problem

Weiss believes Atlantic City could face litigation if it prevents businesses with substantial prior approvals from opening.

During the interview, Cronick questioned whether the city could expose itself to lawsuits from investors who relied on municipal approvals.

"You're absolutely right," Weiss responded.

He suggested the city should identify applicants that have made meaningful progress, establish reasonable deadlines and allow qualified businesses to complete the process.

His position is that the market, rather than additional government restrictions on previously approved projects, should determine which businesses ultimately survive.

The potential for litigation is not merely hypothetical in the broader cannabis industry.

Atlantic City is already confronting a separate claim involving Sweet Leaf dispensary owner Victor Diaz.

An October 1 notice of claim seeks more than $5 million in damages related to allegations of improper conduct involving suspended city official Kashawn McKinley.

Diaz alleges that misconduct connected to the city's cannabis regulatory process damaged his business and contributed to its closure.

Those allegations have not been established in court.

The Sweet Leaf dispute concerns alleged misconduct in the approval and regulatory process, not the legality of the 16-dispensary cap itself.

Nevertheless, it demonstrates the potential financial consequences of disputes involving cannabis licensing decisions.

Whether another applicant could successfully sue over the cap would depend on the specific approvals received, the applicable law, any grandfathering protections and the city's actions.

An investment in a proposed dispensary does not automatically guarantee a legal right to open.

Federal Corruption Case Adds to Questions About Oversight

The cannabis industry's regulatory challenges have become more complicated following federal corruption charges against McKinley, who served as Atlantic City's director of constituent services and played a prominent role in the city's cannabis approval process.

In September, federal prosecutors charged McKinley with honest services fraud and two counts of soliciting bribes.

According to the U.S. Attorney's Office, McKinley allegedly solicited more than $20,000 in cash and marijuana in exchange for helping a cannabis business owner obtain approvals and resolve municipal fee issues.

Prosecutors also alleged that he participated in an improper effort to reclassify a dispensary as a microbusiness, substantially reducing its annual municipal fees.

McKinley was suspended without pay following the charges.

He is presumed innocent unless proven guilty.

Weiss discussed his own professional relationship with McKinley during the WOND interview.

He said McKinley helped him navigate city procedures related to cannabis events and business approvals.

Weiss also disclosed that he was briefly questioned by federal investigators.

"I was actually questioned briefly by the FBI because I came up in a wiretap," Weiss said.

He explained that his communications with McKinley involved cannabis events and related matters.

Weiss emphasized that McKinley never requested improper payments from him or his business partners.

"Cash never asked me to do anything illegal. I never asked him to do anything illegal," Weiss said.

He also stated that neither he nor his partners had been asked for money in exchange for official assistance.

Weiss's account does not establish wrongdoing on his part, and there is no indication from his interview that he has been accused of a crime.

The federal case is separate from the dispensary cap dispute, although both involve questions about Atlantic City's cannabis regulatory system.

Cannabis Tourism Has Not Developed as Expected

Beyond the licensing controversy, Weiss believes Atlantic City's cannabis industry has struggled because the city focused too heavily on retail dispensaries and not enough on creating experiences that would attract visitors.

He argued that the city needs more opportunities for cannabis-related entertainment, consumption and tourism.

"Nobody needed a place to go to buy marijuana," Weiss said. "We needed a place to go to enjoy our marijuana."

He suggested that cannabis lounges, concerts and other entertainment experiences could help distinguish Atlantic City from competing markets.

Current state and local regulations limit where cannabis can be sold and consumed, and Weiss acknowledged that developing compliant events has been challenging.

The city's commissioned study reached a similar conclusion about the need for additional tourism-related opportunities.

Researchers recommended exploring cannabis consumption lounges, entertainment partnerships and public education initiatives.

They argued that Atlantic City's tourism economy could potentially support cannabis-related attractions beyond conventional retail sales.

However, those opportunities would require compliance with state regulations and applicable local restrictions.

Weiss Says Market May Ultimately Support Only Five or Six

Despite his involvement in a planned dispensary, Weiss does not believe Atlantic City needs substantially more cannabis retailers.

When Cronick asked how many dispensaries the market could realistically support, Weiss suggested five or six might be appropriate under current conditions.

He said the number could potentially increase if cannabis sales were permitted on the Boardwalk or if the city developed a stronger cannabis tourism industry.

He also predicted that the number of surviving dispensaries could decline further as businesses compete for a limited customer base.

Those estimates are Weiss's opinions, not projections established by the city's study.

Still, they illustrate the unusual position facing prospective operators: Some acknowledge that the market is oversaturated while maintaining that businesses already granted approvals deserve the opportunity to compete.

Weiss said the city should not guarantee anyone's financial success.

Instead, he wants officials to clarify the rules and allow businesses that have made substantial progress to finish what they started.

"I think the people that have already invested into this should be given that opportunity," he said.

Key Questions Remain for Atlantic City

The city's own research anticipated the conflict now being described by Weiss.

It recommended both a numerical cap and protections for businesses that had already received approvals.

More than a year after the study was completed, several important questions remain unanswered.

They include how many dispensaries are currently operating, how many unopened businesses still possess valid approvals, what constitutes sufficient progress toward opening and how the city intends to apply the cap to those businesses.

The city has not been shown to have publicly released a complete, current accounting resolving those questions.

The possibility of additional legal claims also raises questions about how much financial exposure Atlantic City could face if applicants challenge decisions affecting their investments.

For existing dispensaries, the concern is whether additional competition could further weaken an already difficult market.

For prospective operators, the concern is whether approvals obtained and investments made before the cap will be honored.

And for Atlantic City taxpayers, the question is whether the city can balance those competing interests without creating another expensive legal dispute.

The city's own research identified that challenge before the ordinance was adopted.

Now, as Weiss and other industry participants seek clarity, the practical consequences of the cap are becoming increasingly important.

Stephen Weiss discussed Atlantic City's cannabis industry and regulatory challenges during an interview on Off The Press with Scott Cronick, heard weekdays from 4 to 6 p.m. on News Talk 1400 & 92.3 WOND.