State leaders are now considering a proposal that would tax marijuana by weight, rather than an excise tax on the sale, according to multiple sources close to the discussions, who didn’t want their names used out of concern it could disrupt negotiations.
Details on the proposal are scant, but the new proposal could serve two purposes. Initially, it could help bridge the gap between the governor and legislative leaders on marijuana. Taxes and regulation are the two main issues separating the two sides and debate has largely stalled in January.
New Jersey’s lead is slipping
In New Jersey, Senate and Assembly panels approved identical legislation in December and sent the bills to the full Legislature for a vote.
Gov. Phil Murphy, a Democrat who expanded the state’s medical marijuana industry in his first year in office, wants to legalize recreational MJ. That has attracted the attention of cannabis entrepreneurs interested in expanding into the Garden State market.
But progress stalled toward the end of 2018 – particularly over the cannabis sales tax rate, which was set at 12% in the bill.
Meanwhile, across the mighty Hudson in New Jersey, Governor Phil Murphy, who made marijuana legalization a big part of his gubernatorial campaign in 2017 (New Jersey governors are elected in odd numbered years), renewed his call for legalization in his State of the State speech.
“By legalizing adult-use marijuana — first and foremost — we can reverse the inequality and unfairness left from years of failed drug policies and shift public safety resources to where they can do the most good,” he said.
Back on Nov. 26, both the state's Senate and Assembly overwhelmingly voted in favor of three bills that would legalize recreational weed within the state, expand the medical pot program, and speed up criminal expungements of low-level cannabis offenses. Although this vote didn't legalize recreational marijuana, it does signal genuine support among state legislators for such a move.
Gov. Andrew Cuomo recognizes that New York could be entering a competitive marketplace if the state government legalizes marijuana this year.
Speaking to reporters on Wednesday afternoon, the governor warned that any regulatory framework for recreational marijuana should factor in the cost of the drug in nearby states or on the black market.
"If you charge too much you will drive the business back to the illegal sales because it is just less expensive," he said.
Circle Thursday, Jan. 10, as a key date. It’s scheduled to be the second sit-down in the last few weeks between Murphy, Senate President Stephen Sweeney and Assembly Speaker Craig Coughlin. Marijuana legislation is reported to be one of the key talking points after the minimum-wage bill.
Odds are not high that they will leave that meeting with an agreement, but the sense is that progress is being made, according to several industry insiders.
The issues remain the same:
While the governor and state legislators weigh the minimum wage bill, another pending piece of legislation moving forward in the state capitol would legalize the personal use of recreational marijuana for individuals who are 21 or older, though certain components of the proposed measure still need to be ironed out.
Some lawmakers believe that taxing marijuana too high would create a black market that could sell pot at a cheaper price.
"You want to drive the black market out just like we did in sports betting," Murphy said, saying the debate will center on "what level do you price the tax that you feel confident that you push the black market out."
"We have different opinions on what that level is," said Murphy, who also said there needs to be some resolution on the social justice element of the legislation.
Two insiders with knowledge of the process told NJ Cannabis Media in essence the same thing: There appears to be too much work on key sticking points in the bills, particularly the adult-use legalization, and no clear-cut consensus that the bill will pass.
That work falls into two categories: 1. Issues with the details of the bill that have to be ironed out and 2. the politics of the bill.
The primary obstacle appears to be the Cannabis Regulatory Commission, the proposed five-person body that will basically oversee all aspects of the cannabis industry in New Jersey.
The Office of Legislative Services, a nonpartisan Statehouse bureau that assists with crafting and studying legislation, estimates that New Jersey would bring in a little over $210 million in state taxes from nearly $1.8 billion in annual marijuana sales according to its fiscal impact study of the legal weed bill.
That estimate was derived from comparing New Jersey and Colorado populations in 2017, as well as Colorado marijuana sales that year. It represents less than 1 percent of the nearly $38 million state budget,