In 2017, it seemed that legalizing marijuana for recreational consumption would be Gov. Phil Murphy’s easiest campaign promise to fulfill. After all, the governor and the two top legislative leaders, both Democrats, were on board — as were nearly two-thirds of New Jersey’s citizens. Legal weed would be signed, sealed and delivered in Murphy’s first 100 days in office.
But for a number of reasons, the Legislature couldn’t come up with the votes last year; instead, last month they put it to the voters, who overwhelmingly passed the measure. But legalizing marijuana still requires enabling legislation, and over the past several weeks internecine Democratic quarrels killed two versions of the bill.
On Thursday, lawmakers passed two cannabis bills: one that would legalize personal consumption and establish the ground rules for a new industry; the other would decriminalize possession. Both now await Murphy’s signature.
As tortured as the path to legalization has been, now the hard part really begins.
Come Jan. 1, the new laws go into effect with a host of unresolved issues. Those issues will be left for a newly formed Cannabis Regulatory Commission (CRC), as well as the state attorney general. At the heart of these future policy decisions is how to create a $1 billion industry that will overtake the current illicit market and create tax revenue that will be used to help the minority communities (impact zones) hardest hit by disparate treatment by law enforcement in the so-called war on drugs.
Here are some issues they will have to address:
- The legalization bill calls for a 7% sales tax, 70% of which would be dedicated to those minority communities. The bill also establishes guidelines for an additional “social justice excise fee” — left to the discretion of the commission — that would also be allocated to minority communities. There is skepticism among social advocates that these funds will be used as promised.
- There is also distrust in these circles that a fair share of licenses awarded to grow, process, sell and deliver recreational marijuana will go to minority applicants. The commission will determine who will prosper in this new industry.
- How much tax is too much tax? Will the higher cost of legal marijuana give the black market a competitive edge? How many cultivating licenses will satisfy demand without overproduction, which could encourage growers to sell into the black market?
- How vigorously will police go after sellers and buyers who eschew the new legal market, which will be considerably more expensive? Will these arrests result in the same disparate treatment for communities of color as before? Will they actively pursue people growing their own pot?
“We are in an historic moment as New Jersey contemplates legalizing adult-use cannabis. This moment requires us to take a hard look at the intersecting issues of policing, arrests, and collateral consequences,” Ami Kachalia, campaign strategist for the American Civil Liberties Union of New Jersey, testified Wednesday before Assembly lawmakers. “Our model will be the first in our region, and the ripple effects of the model will be looked to from other states poised to legalize.”
As dictated by the bill, many of these difficult decisions will fall to Dianna Houenou, who Murphy has appointed to chair the new commission. Social advocates are generally heartened by this choice; Houenou was a leading voice for equity and justice as the former policy counsel for the ACLU-NJ.
Cannabis and criminal justice
“In my time as an advocate pushing for cannabis legalization, I was very much involved in thinking about the movement toward criminal justice reform … This is only one piece of a large criminal justice work that has to be done,” Houenou told NJ Spotlight News Wednesday. “I really want the goal of the commission to be that we instill a culture where every decision we make is through the lens of equity.”
Her first order of business, she said, will be to “hit the pavement” — virtually or otherwise — and visit the communities affected by the adverse effects of prohibition. “Input from the community and stakeholders is going to be crucial in repairing the harms that have been inflicted,” she said.
Murphy has insisted from the outset that his sole motivation for legalizing weed was to right the wrong that criminalization has inflicted on Black and brown citizens since it was banned in 1937 and then designated as a Schedule 1 dangerous drug in the ‘70s.
“In 2018 alone, 36,050 arrests were made for cannabis-related offenses. This averages out to one arrest every fifteen minutes,” Kachalia testified Wednesday before the Assembly. “In addition to these alarming arrest rates, data reveals entrenched racial-disparity rates in arrests. Black people in New Jersey were arrested for cannabis possession at a rate 3.45 times higher than white people, despite similar rates of use.”
Senate, Assembly out-of-sync
After the voters approved a constitutional amendment on Nov. 3 to legalize and tax marijuana, the bill that had languished for over a year was revived. But it was loudly criticized by many social-justice advocates because it contained no language specifying how the money would be directed to minority communities that were hardest hit by the war on drugs. It was also vague as to how it would encourage and mandate minority participation. The bill was put forth and pulled, not once but twice. In the flurry of amendments, fissures developed between the Senate and the Assembly.
Meanwhile, the governor’s office was quietly pushing for additional tax revenue, which resulted in the last-minute addition of the “social-justice excise fee.” But there was still no guarantee how that money would be spent; it would be subject to yearly budget proposals.
As a result, Senate President Steve Sweeney proposed an additional constitutional amendment — the only way to dedicate funds. Neither Assembly Speaker Craig Coughlin nor Murphy have endorsed the plan. The same holds true for social-advocacy groups. Sweeney said Wednesday he will introduce the amendment next year.
Expungement still unresolved
Another funding issue Kachalia fears has fallen through the cracks is that there are no provisions in the current bill to provide assistance and funding for citizens to get their marijuana convictions expunged. “Last year’s bill (authorizing expungement for low-level marijuana convictions) directed a portion of the sales tax revenue collected from legalization to fund cannabis-related expungements, and we urge that this funding be restored,” she said. “Expungements must be easily accessible and available at no-cost to those with prior cannabis-related records.”
Jessica F. Gonzalez, general counsel of Minorities for Medical Marijuana, is “encouraged in principle” with the current bill, which will require intense scrutiny as it plays out. Gonzalez wrote a letter last week sent to legislators, on behalf of a coalition of 34 advocacy organizations, including the ACLU and the New Jersey Cannabis Association. It urges state leaders to embrace a policy being used in other states, the inclusion of a “Cannabis Equity Applicant Status,” which would provide a competitive advantage to individuals residing in impact zones and those with prior cannabis-related records and their immediate families. The ACLU-NJ wants the CRC to mandate that at least one-third of all licenses are awarded to these applicants.
Gonzalez points to Oakland, California, as the gold standard for this program, where 50% of all licenses must go to those who meet those standards.
Ensuring impact zones get their share
The group also urges that the new Office of Minority, Disabled Veterans and Women Cannabis Business Development oversee the allocation of the excise fee and the 70% of cannabis-tax revenue designated to community reinvestment in impact-zone communities. “Explicit language is necessary to ensure a portion of tax revenue is allocated towards community reinvestment for Cannabis Equity Applicants,” the letter states.
“There are a lot of good ideas being discussed — ideas that can be implemented by the (Cannabis Regulation Commission) later,” said William Caruso, a lawyer, lobbyist and cannabis advocate for over a decade. “We have to create opportunities for people in the black market to come into the legal market.”
Currently, the price of marijuana sold at the state’s medical dispensaries is far higher than that of the black market. Dominating market share will be a primary concern for the CRC. Kachalia believes the CRC should lift the cap on grower’s licenses. The bill limits them to 37 for the first two years. The limit does not apply to micro-licenses, which can be given to businesses with 10 or fewer employees.
“License caps will drive prices up by limiting competition in the industry, limit revenue raised for community reinvestment through the Social Equity Excise Fee and hamper entry into the industry for New Jerseyans,” she said.
Houenou agrees. She was against caps when she was with the ACLU, and she still is. “The governor and I support an open market place,” she said. It is “how you build an industry that is diverse and inclusive and also drives down prices.”
The black market also adds another conundrum for state officials — particularly law enforcement.
Disconnect rather than debate
An exchange during an Assembly committee hearing Wednesday illustrates the ongoing disconnect between legislators and advocates.
Emphasizing that there are no provisions for homegrown pot in the bill, advocate Patrick Duffy asked, “What happens if someone grows their own? Are they going to be arrested and put in prison?”
“I’m not an attorney; I’m a lawmaker,” replied Deputy Speaker John J. Burzichelli, chairman of the Assembly Appropriations Committee. “That’s for law enforcement to figure out.”
“You’re punting,” Duffy shot back.
A spokesman for the attorney general’s office, Peter Asteltine, said that “once the Legislature and governor take final action on these measures, the attorney general expects to issue additional guidance, which will, among other things, address enforcement issues related to the unregulated marijuana market.”
“As an advocate, I supported home grow,” Houenou said. “This is an ongoing process … We have to be willing to revisit our laws.”
As for competing with the black market, Kachalia believes the CRC should lift the 37-license cap on growers. “License caps will drive prices up by limiting competition in the industry, limit revenue raised for community reinvestment through the Social Equity Excise Fee, and hamper entry into the industry for New Jerseyans,” she said.
Houenou said she is open to learning more about Kachalia’s plan. “We have to put all options on the table.”