Marijuana Tax in New Jersey? It Could be $42 an Ounce

By Nick Corasaniti


Feb. 19, 2019

A dispensary in Secaucus, N.J., grows marijuana for medical purposes. State elected leaders are now trying to legalize recreational marijuana.


Gov. Philip D. Murphy and Democratic legislative leaders in New Jersey have reached an agreement that could place the state on a path to legalizing recreational marijuana this year if they are able to win enough support in the state legislature.

The agreement, which establishes how marijuana would be taxed and sets parameters on a committee to regulate the drug, marks a significant step forward for Mr. Murphy’s promise to introduce the roughly $50 billion national recreational cannabis market to a major population center on the East Coast and on New York City’s doorstep.

But while the state legislature is controlled by Democrats and has embraced a progressive agenda, such as raising the minimum hourly wage to $15, efforts to legalize marijuana has divided lawmakers. Some African-American legislators, led by Ronald L. Rice, a state senator from Newark, are wary of supporting legalization because of the impact it may have on low-income and minority neighborhoods. Also, most Republicans in both chambers oppose legalization.

“The most important aspect of it is we don’t necessarily have all the votes lined up yet,” said Nicholas Scutari, a state senator from northern New Jersey who has been the architect of a bill to legalize marijuana.

Mr. Murphy said on Tuesday he’s optimistic that the legislation could get passed.

“We’re still trying to machine this to get it over the goal line, but I think we’re all working really hard to get this done,” Mr. Murphy told reporters. “We’ve said all along that this is not a light lift.”

Craig Coughlin, the speaker of the Assembly, said the legalization effort is a major undertaking.

“This is a seismic shift in public policy and the creation of a new industry,” Mr. Coughlin said. “Those are both demanding items, and so we want to make sure we get it right and we want to make sure that we have a bill in place that people can support.”

In the Assembly, whose members face an election year in November, some Democrats are concerned about how a vote for legalizing marijuana could affect their campaigns.

A poll from Monmouth University released on Monday may ease their anxiety. According to the poll, 62 percent of residents support legalizing recreational marijuana while 32 percent oppose the idea.

With New York also considering legalizing recreational marijuana, a speedy passage of legislation is a concern for New Jersey, according to the poll.

“A major reason for public support of the current proposal is the expectation it will boost tax revenues,” said Patrick Murray, the director of the Monmouth University Polling Institute. “The pressure is on, with nearby states also looking into legalization. New Jersey will need to stay ahead of the curve if it wants to maximize the expected economic benefits.”

Mr. Scutari pointed to the poll as a reason legalization may gain traction in the legislature. “People should be afraid to vote against it,” he said.

In the senate, a handful of Republicans could be swayed to support legalization, giving proponents a cushion if they are not able to attract enough Democrats.

The lack of certainty around legalization despite news of agreement among political leaders is somewhat unusual in New Jersey. Typically, the governor and legislative leaders negotiate behind closed doors and announce an agreement on a bill when passage is essentially guaranteed, as was the case with the minimum wage raise.

But with marijuana legalization, reports in the media surfaced about an agreement without a final bill or guaranteed support, reflecting the interest in the issue. New Jersey is seeking to become the 11th state to legalize marijuana and only the second to do it through legislation instead of through a ballot measure.

The agreement calls for taxing marijuana by weight, at $42 an ounce, rather than by a set percentage. Stephen M. Sweeney, the senate president, had supported a 12 percent tax, while Mr. Murphy wanted a tax closer to 25 percent.

The issue of how to tax the drug had been the biggest hurdle separating Mr. Murphy and the legislature.

“Weight by volume is probably the way to the future in terms of how cannabis is going to be taxed,” said Mr. Scutari.

The governor and legislative leaders also reached an agreement on the set up for a five-member cannabis regulatory commission: Mr. Murphy would get three appointments, while the legislature would make two appointments. The commission would be in charge of approving licenses for dispensaries, among other policies.

Legislative leaders said they still need to reach agreement on other aspects of legalizing marijuana, including the initial number of licenses to be distributed and how many public consumption sites would be allowed.

“We have not ironed out the finer points of the bill, we haven’t formalized it into language yet, so I wouldn’t say that we have a complete agreement just yet,” Mr. Scutari said. “Some of the major sticking points between the legislature and the governor have been agreed to.”

Though Mr. Murphy had hoped to pass a bill legalizing recreational marijuana last year, negotiations quickly became bogged down by political squabbles in Trenton.

Mr. Scutari said he did not anticipate many other major changes to the bill he sponsored last year that set the backbone for legal marijuana, including delivery, public lounges for consumers and prohibiting the growing of cannabis in homes. He still wants to add a provision allowing the state’s medical marijuana dispensaries to begin selling recreational marijuana on the same day that Mr. Murphy signs a bill into law.

“This will jump start and immediately start to get people out of the black market,” Mr. Scutari said. “If people can go to a legalized facility and buy it on Day 1, we’re going to encourage that to happen.”

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