NJ recreational cannabis could have “ripple effect,” but pressure is mounting for enabling legislation

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Bethan Rose Jenkins, Cannabis News Writer/Editorial

The State of New Jersey has joined 15 other U.S. states that have, so far, enacted recreational cannabis laws. Since New Jersey’s adult-use cannabis law was adopted on Election Day, industry insiders have predicted that a legal market may prompt a snowball effect along the East Coast and further afield.

Home to almost nine million people, New Jersey stands a good chance at luring a large number of recreational cannabis consumers within the state’s borders alone. The successful vote by two-thirds of state voters puts New Jersey in a position to harness $850 million-$950 million in annual sales revenue ly the year 2024; according to a Marijuana Business Daily forecast.

“New Jersey is one giant step closer to a fully functioning cannabis market,” said New Jersey CannaBusiness Association President Scott Rudder in an official statement on November 9. “This is welcome news at a time when our state desperately needs an economic boost. I commend the Legislature and bill sponsors for acting promptly to ensure our state will have no further delays in establishing a robust and flourishing cannabis industry.”

However, obstacles remain, with lawmakers and administration officials racing to ensure the constitutional amendments are firmly in place by the Jan. 1, 2021 effective date. Once legislation is properly hashed out, the state will emerge as the only adult-use cannabis market located between Massachusetts and Washington, D.C.

New Jersey’s recreational cannabis industry could encounter problems 

On Thursday, November 12, the Senate Judiciary Committee passed a bill NJ S2535 (20R) to decriminalize cannabis possession up to the amount of six ounces. Since lawmakers and the Murphy administration must now terminate cannabis-related arrests and legal cases before the effective date, there’s a lot of work still to be done. 

On that same day, Marijuana Business Daily hosted a Passholder Days Forum called “Election Week 2020: What’s at Stake for Cannabis?” The partner and co-chairman Cole Schotz – a cannabis law group based in the state named Rob DiPisa appeared at the election panel, where he discussed his views on the recently-passed legalization. 

DiPisa says that the new law is likely to spark a “ripple effect” that would create a wave of change across Maryland and Virginia. He anticipates that New York Governor Andrew Cuomo will initiate a recreational legalization proposal amid the April budgeting process. On the other hand, since New York’s medical cannabis market faces even harsher regulations than New Jersey’s medical cannabis program, launching one won’t be easy. 

“The state needs to loosen the regulations and get the medical [cannabis] program “firing on all cylinders,” DiPisa said. Although he sees major potential in New Jersey’s recreational cannabis market, DiPisa noted that obstacles must be overcome.

The big concern is, when adult use comes online, are those operators going to be able to serve that big wave of demand, not only in New Jersey but from neighboring states?” asked DiPiso, who makes a valid point considering the fact that just 12 existing medical cannabis operators will have first dibs at serving the recreational market.

New Jersey’s recreational cannabis law placed on legislative fast track

One week after the successful vote to legalize recreational cannabis in New Jersey, the Senate Judiciary Committee and the Assembly Oversight, Reform and Federal Relations Committee advanced NJ S21 (20R) / NJ A21 (20R). This legalization bill was placed on the legislative fast track, before a six-hour long testimony resulted in it being approved.

Leading Democrats in New Jersey have expressed their desires for the committees to push forward with enabling legislation in a timely manner. However, until this happens, the drug will still be illegal statewide. Something that is interfering with the rollout of enabling legislation is the subject of cannabis tax policies Gov. Phil Murphy, Assembly Speaker Craig Coughlin and Senate President Steve Sweeney disagree

On Monday, November 9, a statement was issued by Coughlin demanding that “an additional user fee” be imposed on cannabis consumers in the state. Should his wish be granted, the constitutional amendment could be violated. A 6.625 percent cap is in place for retail taxes on sales of recreational cannabis in New Jersey. Furthermore, an extra two percent tax can be imposed by local governments on all cannabis-related transactions; inclusive of cultivation and wholesale transactions.

Murphy’s regular COVID-19 press conference also took place on November 9. During the conference, the Governor agreed with Coughlin’s recommendation, stating that he has backed the idea of introducing excise taxes “from day one”, albeit at the cultivation level.

Soon after Murphy’s press conference came to an end, a joint statement was issued by Sweeney in collaboration with lead sponsor Sen. Nicholas Scutari (D-Union) and Sen. Teresa Ruiz (D-Essex) to prevent new cannabis taxes from being imposed. They each share an opinion on additional taxes: they should not be imposed, since they could make the cost of cannabis difficult to afford for communities hardest hit by the War on Drugs.

“Believe it or not, people are asking for money,” Scutari said during the hearing. “My Republican colleagues could probably agree we don’t want to overtax or overburden a product before it’s being sold because we’re already competing with the black market. If we overprice the product before it’s sold, no one will buy it legally.”

Last year’s bill to legalize recreational cannabis in New Jersey NJ S2703 (18R) was also delayed due to similar disputes. The preceding bill serves as the foundational text for the 2020 enabling legislation.