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New Jersey lawmakers pass legalization bill

New Jersey narrowly passes bill to establish the state's adult-use Cannabis market.

New Jersey lawmakers have passed a bill that would establish the state’s adult-use Cannabis market. Legislators were tasked with crafting a legal pot program after voters emphatically passed a constitutional amendment to legalize, tax and regulate recreational Cannabis in November. 

The bill passed by relatively slim margins – particularly in the state Senate, where the vote was 23-17 in favor (a minimum of 21 votes are required for approval). Nonetheless, the legislation is an important step towards implementing adult-use retail sales in New Jersey, which could begin in as little as six months according to the bill’s timetable. 

The measure underwent a number of changes over the last month due to disagreements over several key components of the proposed law. After all, this is the same legislature that was unable to reach an agreement on legalization for years, before voters took up the issue on Election Day.

After a series of negotiations, lawmakers ultimately opted to cap the number of licensed cultivators at 37 for the first two years of the program. The Senate’s original bill did not limit licenses, while the Assembly insisted on restrictions. Those 37 license holders can open multiple locations as long as they have approval from each town – individual jurisdictions have the right to ban Cannabis businesses.

There are currently 12 medical Cannabis dispensaries operating in New Jersey and the new legislation would give those businesses the first opportunity to switch to adult-use sales.

Social equity was also a point of contention, as some lawmakers felt the bill did not do enough to benefit communities most impacted by marijuana prohibition. The final version of the measure earmarks 70 percent of state Cannabis sales tax revenue for areas disproportionately affected by the drug war. A social equity excise tax was also added after negotiations.

Speaking of taxes, in addition to New Jersey’s 6.625 percent state sales tax, individual jurisdictions can add up to a two percent tax on pot. Additionally, the bill establishes the option for regulators to add an excise tax on a sliding scale. If retail pot is selling for $350 or more, the tax would be $10 per ounce. If the price drops to $250 or less, the tax goes up to $60 per ounce.

Lawmakers must walk a fine line when it comes to taxing Cannabis. While the state obviously hopes to benefit from a financial windfall created by retail pot, the product must remain affordable enough to keep customers from returning to the black market. 

Early projections estimate that legal Cannabis in New Jersey could bring in nearly $1 billion in sales annually by 2024. But more immediately, legalization is expected to save the state around $127 million a year on marijuana-law enforcement. 

The measure, which passed the legislature December 17, now heads to Gov. Phil Murphy, who is expected to sign the bill into law.

Curiously, neither this legalization measure nor a separate decriminalization bill passed by the legislature and sent to the governor, take up the question of personal cultivation. At this point, growing pot at home without a permit from the state could result in jail time in New Jersey.

About Mike Gianakos

Mike is the former editor-in-chief of High Times magazine, where he also spearheaded video and podcasting for the company. He has produced a number of Cannabis-related podcasts, including Free Weed, and is currently the producer and co-host of Grow Bud Yourself. Mike is the senior editor for Northeast Leaf magazine. Email story ideas to mikeg@leafmagazines.com

This article was originally published in the January 2021 issue of Northeast Leaf.

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