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NJ Leaders are Putting State on Right Path for Cannabis Legalization

One of the most significant aspects of this measure is that it has been crafted to discourage consumers from turning or returning to the black market

Kelli Arthur Hykes
Kelli Arthur Hykes, senior associate in the government relations department at Weedmaps

For several months now, Assembly and Senate leaders and the governor have been working closely on a bill — expected to be introduced as early as today — that will essentially set the framework for cannabis legislation in the Garden State.

Getting this right is important — not just for medical cannabis patients and adult-use consumers, but for everyone in New Jersey. Key members in both houses in Trenton have looked at the successes and challenges that other states have encountered. They’ve studied those experiences and learned from them. At the same time, Gov. Phil Murphy has shown leadership and vision on this issue since he entered office. So if earlier versions and drafts of the bill language are any indication, New Jersey is on a solid path to a robust cannabis industry, where the legal market can thrive, and the illegal market can be greatly diminished.

The bill smartly addresses safe and fair access by not imposing caps on the number of licenses the state will grant to cannabis businesses, allowing leeway to meet market conditions and safety needs. The bill recognizes, for example, that too few retail access points drives patients and consumers directly back to the black market. Trenton has rightfully asked: What’s the point of legalizing cannabis if the laws that are created cannot completely eliminate any illegal market? A lack of caps on licensing also ensures that a broad and diverse population has the opportunity to participate in the industry, and that a legal market emerges to eliminate the current illegal market.

The bill imposes a 10 percent tax on cannabis sales, with the ability of jurisdictions to include a small (2 percent to 3 percent) local tax. Here again, the bill’s authors took an enlightened and informed approach, imposing a tax that will certainly benefit the state and local community’s coffers, but not at such a high rate that it diverts consumers from legal businesses to the cheaper, untaxed illegal market. If cannabis sales are not taxed at a reasonable rate, higher taxes will actually lessen the amount of revenue realized and create an environment that steers consumers back to an illegal marketplace. This tax scenario is fair, and won’t inadvertently encourage the illegal market. It also leaves the door open for the state to increase taxes as the industry becomes established. The bill wisely does not impose a tax on medical cannabis — a boon for seniors and the seriously ill.

Diversity as a driving concern

Diversity and social-equity issues have been driving concerns since legalization talks began, and the bill does a good job of addressing them. Cannabis legalization could and should be a powerful way to reverse the devastating impact the war on drugs had on underserved communities. In the past, cannabis was a sure way for people of color to go to jail. Now, it can be an entryway to the middle class. The bill expressly states that 25 percent of the licenses be issued to minorities, women, and disabled veterans. Ten percent of the licenses will go to microbusinesses.

Lawmakers have included in the bill provisions that individuals with past cannabis-related convictions be eligible for expungement and that the associated fees be reduced based on cannabis-tax revenue. Justice advocates and others have suggested that the bill could go further and encourage this specific effort’s success by giving local governments additional tools, including default zoning, a small, additional direct tax (since, as mentioned, the suggested rate is reasonably low), and the authority to customize programs specifically to local communities.

Also of concern: The imposed fines in the bill for a minor caught smoking cannabis in public ($500 for possession plus $250 for consumption) can easily escalate to jail time if those fines cannot be paid. That language should be revisited to include more intervention and counseling options. It is worth pointing out that youth usage actually has decreased in states that have legalized cannabis. We are hopeful that these ideas can be included as the bill makes its way to the governor’s desk.

The next steps are a public hearing, a full vote in the State legislature, and then Gov. Murphy’s signature. From there, in a relatively short period of time, New Jersey will be leading the nation in sensible and fair cannabis legislation.

Kelli Arthur Hykes is a senior associate in the government relations department at Weedmaps. She works with New Jersey legislators and local elected officials to help craft responsible, fair, and accessible cannabis policy.

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