The Garden State is About to get Greener
In the last gubernatorial election, Phil Murphy made recreational cannabis part of his platform. He originally planned to legalize it within his first 100 days in office. Now, over a year later, we’re finally in the home stretch. Although the majority of the New Jersey Legislature is made up of Democrats, Murphy and colleagues have had difficulty working out the details of such a program.
Then, on the evening of Feb. 15, Murphy, Senate President Steve Sweeney (D-Gloucester), and Assembly Speaker Craig Coughlin (D-Middlesex) reached an agreement on the broad measures of the program. State Sen. Nicholas Scutari (D-Union) played a critical role in the negotiations. Some details still need to be worked out. But the essential issues have been ironed out.
One area of contention was how to tax recreational cannabis. The original rate proposed was 12%, one of the lowest in the country. In his 2018-19 budget, the Murphy administration proposed a 25% sales tax. That rate, negotiated by Murphy and Sweeney, quickly became controversial. Many saw it as too high.
Taxation & Regulation
As per Friday’s deal, the state will now charge a flat $42 tax per ounce sold. That way, no matter what the price per ounce, the tax haul remains unchanged. For a $300 ounce, for instance, $42 would be a 14% rate. But on a $200 ounce, $42 would be a 21% tax rate.
This helps protect the state against falling prices, which has been an issue in more mature markets, such as Oregon and Colorado. Scutari, who will sponsor the legislation, said the bill wasn’t finalized. But the two major sticking points taxation and regulation, have been worked out.
The other major issue was providing oversight. The governor was nervous about supporting an independent cannabis regulatory commission, according to public statements made by Sweeney. Because of this, legislators will now allow the governor to select three of the five commissioners. With lawmakers now on the same page, they’ll soon be able to clear up the details and gather enough votes to get the bill to pass. According to Politico that vote could come as early as the end of February, clearing the way for difficult budget negotiations that are just around the corner.
Support and Expungement
How does the electorate feel? A recent Monmouth University poll shows that 62% of New Jerseyans support the legalization, while 32% are against it. That’s nearly a 2-to-1 margin. 74% of respondents also said they backed the governor’s plan of expungement or erasing the criminal record of any state resident convicted of a drug crime related to cannabis. That’s important because such a conviction can bar someone from access to student loans, certain jobs, and even housing.
According to Gov. Murphy, the increased tax revenue is one reason why so many New Jerseyans are supporting legalization. “The pressure is on with nearby states also looking into legalization,” Murphy said. Those states are New York and Pennsylvania. “New Jersey will need to stay ahead of the curve if it wants to maximize the expected economic benefits.”
Should Jersey legalize first, it’ll see an estimated $1 million boost to its economy, due to visitors from neighboring states. As for expungement, experts say that aspect, although crucial, will likely overwhelm an already byzantine and overburdened state expungement system.
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To learn more about legalization in New Jersey, click here: