But there is one potential stumbling block: a tax. Lawmakers are talking about a pretty hefty tax that they want to impose on the drug once it becomes available commercially.
Murphy and lawmakers say they're looking at Oct 29 as the day the state Legislature should pass a bill legalizing marijuana in New Jersey. It's not clear if the governor would actually sign it that day, or right afterward.
Efforts to legalize and tax the recreational use of marijuana have so far stalled in the state House, but New Jersey legislators aren’t giving up yet.
On Tuesday, Democratic lawmakers from the state Senate met to discuss a bill that legislative leaders say will bring their legalization efforts to fruition.
As The Record reports, Senate President Steve Sweeney has said he wants to have a bill passed by the end of the month, and Democrats are working to meet that goal.
Scutari, D-22nd District, is one of the state Legislature’s key advocates for legalizing recreational marijuana and a primary sponsor of the 120-page bill. He told NJBIZ on Thursday that he still believes New Jersey’s cannabis tax rate can be the “lowest in the country.”
Different drafts of the bill have called for a tax rate as low as 10 percent, or for the rate to be increased to 25 percent over a four-year period. Scutari said lawmakers have not agreed on a formal rate.
When it comes to devising the tax rate for adult-use marijuana, the New Jersey Legislature can take one of three approaches:
1. Establish a set rate. The bill that appears headed to introduction currently calls for a 10 percent tax plus up to an additional 2 percent for municipalities.
2. A graduated rate. Language in previous draft legislation called for an initial 10 percent rate that rose 5 percent a year until reaching 25 percent in year 4.
3. The opposite approach. Start with a 25 percent rate and lower it to 10 percent by year four.
As wrangling continues over a bill to legalize recreational marijuana in New Jersey, which proponents say could generate $80 million to $100 million in annual revenues, the New Jersey State League of Municipalities is warning mayors that time is of the essence to protect their towns against costs—and to reach for their slice of the pie.
Meanwhile, many Pascack Valley and Northern Valley municipalities have come out strongly against legalization and local sales.
Some proponents of legalization don’t see this as such a bad thing, however. As the bill’s timeline gets drawn out, so does the bill itself, with added features like expungement of records for low-level marijuana offenders and the leg up it would give small businesses who want to enter the cannabis space. Had there been no delays, social clubs wouldn’t be a possibility either.
1. Recognize There is a Limit to the Tax Burden the Industry Can Bear
When the details of the legislation were first made public last week, there were reports almost immediately that the proposed initial 10 percent tax rate was too low for Governor Phil Murphy.
That 10 percent rate would be the lowest in the country among states that allow recreational marijuana sales.
Determining the appropriate rate requires legislators to weigh two critical but competing factors: revenue versus black market. It’s an issue directly addressed in the bill: