New Jersey has been known as the Garden State since 1876 for its various crops, from corn and tomatoes to soybeans and hay. And, if all goes to plan, the state will soon be welcoming another crop: cannabis.
All signs are indicating the increased acceptance of marijuana in New Jersey, with a governor who campaigned on legalization, hearings held on the topic, and bills proposed in the State Legislature. Although Gov. Phil Murphy’s original plan of legalizing cannabis for recreational use within his first 100 days in office fell through, there have still been significant strides, and many experts and political wonks believe 2019 will be the year Jersey sees recreational cannabis legalization.
There are, however, several issues that still need to be ironed out before any bill lands on Murphy’s desk, such as the tax rate for legal sales, plans to expunge the criminal records of former pot offenders, and what the retail market would exactly look like and who would regulate it. Despite the remaining hurdles, the state’s chances of going green are looking good and lawmakers are not giving up.
How Close Is New Jersey to Passing a Legalization Bill?
Lawmakers in New Jersey were unable to pass a legalization bill in 2018, but they were able to propose several iterations of cannabis legislation and even managed to get one bill approved through committees in both the state Senate and Assembly – the first step in turning a bill into a law.
The current bill — titled S2703 or the “New Jersey Cannabis Regulatory and Expungement Aid Modernization Act,” which was introduced by Democratic State Senator Nicholas Scutari — aims to legalize the possession and use of marijuana while also creating a regulated commercial market. The bill has a tax rate of 12 percent on marijuana sales, with the option of taxing an additional two percent paid to municipalities where marijuana businesses operate. This would be one of the lowest tax rates in the nation for legalized marijuana.
If the bill is passed in the committees, it will then have to go through a full vote in both the Senate and Assembly. If it passes both houses, it will then have to be signed by Gov. Murphy before being made a law. Gov. Murphy, however, has reportedly said he’d rather see a tax rate of 25 percent on marijuana sales. (Murphy declined to speak on record for this article through a spokesperson, citing policy on not commenting on pending legislation.)
Scutari, who has been at the forefront of marijuana legalization discussions, said the 12 percent rate in the current bill was the product of hours of negotiations between the Senate and Assembly. The idea behind the lower rate, he said, is to curb the black market.
“The tax rate is something I think we’re committed to keeping low, at least in the initial offering of the product, so we can make that sure people are not priced out of legal marijuana shops,” Scutari told MERRY JANE in a phone interview. “We don’t want it to become too expensive a product that people will just buy it on the street.”
Besides squelching the black market, a lower tax rate on marijuana could be a welcome proposal in New Jersey, a state known for its high property taxes.
“I had different iterations of the bill that had higher tax rates, but they were graduated,” Scutari said. “I think this is a good rate to start at, and let’s have New Jersey lead the country in low taxes in some areas — that would be great. There might be a necessity to raise the tax on that product overtime, and we’ll see how that works.”
Senate President Stephen Sweeney, also a Democrat, agreed.
“It’s important to control the tax rate to keep cannabis affordable for consumers, to compete with other states, and to prevent people from going to illegal drug dealers,” said Sweeney, who sponsored the legislation with Scutari. “The rate we have proposed includes 12 percent for the state, which would help run and regulate the program, and two percent for local government, to offset any of their costs. I believe this is a responsible rate that will serve our needs.”
Sweeney, along with Scutari and Assembly Speaker Craig Coughlin, will be major players as legalization discussions continue to materialize in 2019.
Coughlin, a Democrat, said the efforts made in 2018 were an “important step forward,” adding that negotiations will continue throughout the new year.
“We will continue working the bills towards passage to create a well-regulated and inclusive marijuana industry that is rooted in social and economic justice,” he said in a statement.
What Will Reefer Retail Look Like?
Another major hold up on a recreational marijuana vote is the structure of the retail market and who will control it.
Scutari’s bill calls for the creation of a Cannabis Regulatory Commission comprised of five full-time members dedicated to overseeing the entire legal industry in New Jersey. The commission would enforce rules, issue licenses, and also control the medicinal program, which was expanded this past year under Governor Murphy to be more inclusive.
Although New Jersey would only be the second state following Vermont to legalize marijuana through the Legislature, as opposed to a ballot vote, the concept of a regulatory commission focused on the marijuana market mirrors Massachusetts, which established the Cannabis Control Commission after legalizing adult-use in 2016 through a ballot measure.
Steve Gormley, CEO of International Cannabrands — a company that invests in and partners with cannabis visionaries — told MERRY JANE that New Jersey’s recreational industry would resemble Massachusetts in other aspects, too.
With talk of legalization, dozens of New Jersey municipalities have already successfully banned any recreational marijuana-related business from operating in their towns. Gormley said the same has occurred in Massachusetts, which also saw “dry towns” pop up where local municipalities forbade marijuana sales.
“When you look at that, it will be like a patchwork,” Gormley said. He added that New Jersey is like Massachusetts because they are both affluent states with strong urban communities and rural areas, unlike Vermont, which has a much smaller population and is less demographically complex.
Gormley also noted that New Jersey will present an interesting opportunity to investors, given its proximity to New York City and Philadelphia.
“My feeling is that if I were an investor and I was looking at where to start in terms of creating a robust market in New Jersey, I would obviously look at Atlantic City because you’ve got a great number of tourists that are coming in and out of that market, largely from New York,” Gormley explained. He added that the city could create what he called a “green mile” with a number of marijuana businesses centrally located and easily accessible by tourists.
He also pointed to some of the “Manhattan bedroom communities” like Hoboken and Jersey City, as well as the greater Newark area, as contenders for strong recreational markets.
“Markets outside of New York City would do tremendously well, both on the dispensary retail level and in terms of delivery services if the state progressed to that point and you were able to do that,” Gormley said.
Gormley told MERRY JANE that if New Jersey does sign a recreational marijuana bill into law, his company, which owns JuJu Royal vapes, would look towards the state for possible investment opportunities.
“New Jersey has one of the most affluent populations in the country, a good portion of the northern part of the state’s DNA is essentially New York,” he said. “It’s a very compelling market with a very desirable consumer base.”
Gormley certainly won’t be alone.
Diversity in New Jersey’s Nascent Legal Industry
Faye Coleman is the CEO of Pure Genesis Health, or PGHealth LLC, a company that is looking to become the premier women-and-minority-owned medical marijuana facility in New Jersey.
Similar to the goals set in Massachusetts of including minority populations in the recreational market, if Scutari’s bill is passed, it would also establish the Office of Minority, Disabled Veterans, and Women Cannabis Business Development within the Cannabis Regulatory Commission, which would focus on promoting diversity in the nascent industry.
Coleman said the language in the bill mentioning “goals” of including minority, women, and disabled veterans in the industry should be worded as a requirement, as opposed to a goal.
Her organization, which was founded on the premise of health and wellness, is interested in applying for a license in the recreational market, as well.
“We’re looking to do 50,000 square feet for cultivation and extraction,” she said, before noting her interest in the impact zones that are currently mentioned in the bill.
Scutari’s bill would “prioritize” applicants who are current residents of an impact zone, or who present a plan to employ a select number of employees who reside in an impact zone. The bill defines impact zones as areas with populations over 120,000 “where past criminal marijuana enterprises contributed to higher concentrations of law enforcement activity, unemployment, and poverty within parts of or throughout these zones.”
Coleman said the impact zones are important because it can be a way to give back to the communities most affected by prohibition and the War on Drugs.
“What we’re seeing in this business is it has become a very closed community in terms of ownership within the cannabis industry, which has been dominated by primarily by white males,” she said.
Although Coleman believes the minority participation portion of the bill could be more strongly worded, she did, however, commend the bill’s inclusion of an on-site consumption proposal.
She said on-site consumption is important because some people in public housing facilities who wish to medicate with marijuana will not be able to do so, as the houses are under federal regulation. Onsite consumption has also been flagged as a way to attract tourists, an idea being deliberated upon by the Las Vegas City Council, which could influence cities in New Jersey, such as Atlantic City.
This brings into question the effects recreational marijuana would have on employees and employers in New Jersey.
How Legalization Will Affect Employment and Criminal Records in the Garden State
Michelle Lee Flores, an employment lawyer practicing for the past 25 years in California, said it will be important for both employees and employers to become informed about the state’s marijuana policy if a legalization bill is passed.
“What is that law and how is that going to impact me as an employee or me as an employer?” she said. “It does differentiate from state to state.”
She said most recreational marijuana policies state that the law will not affect how employers choose to treat employees — or, in other words, the ultimate choice will come down to each individual employer.
“For example, some laws will say something like, ‘Although under the state recreational use is legal, it does not affect any of the current policies that are in place by an employer,’” Flores said. “It’s really about becoming informed.”
The New Jersey bill introduced by Sen. Scutari states that it does not require an employer “to amend or repeal, or affect, restrict or preempt the rights and obligations of employers to maintain a drug and alcohol-free workplace” if marijuana is legalized recreationally.
Coleman is involved with Diasporic Alliance for Cannabis Opportunities, or DACO, an organization founded to engage and educate the minority community about the cannabis industry. The group held an event in Philadelphia in October to promote its message of inclusivity in the world of cannabis. But one of the other main issues the group focuses on is expungement, which is another aspect accounted for in the proposed legalization bill.
“Right now, nobody is in agreement in terms of expungement and where it needs to be,” Coleman said. Currently, the bill is written so that people previously convicted of minor pot misdemeanors, specifically for possession of an ounce or less, will have their records wiped.
“Anything in excess of that, those individuals are not included,” she said. Still, Coleman is confident that this will be rectified before the bill is passed. “It is incumbent upon us to continue to advocate for making certain that we can increase and improve on that expungement.”
Still, Scutari and the other major players in the New Jersey recreational marijuana movement see the importance of including expungement in any legalization measure.
“Part of the language in my bill says that people with simple possession charges will be automatically eligible for expungement,” Scutari told MERRY JANE. “There’s [also] another bill out there that talks about the expansion of opportunities for people who might be multiple offenders.”
He said expungement, like every other aspect of the bill he introduced, will likely be discussed and debated throughout the year and then possibly be amended.
“Expungement in New Jersey is a complicated process, and we’re well-overdue to try to streamline that process,” Scutari said.
Senate President Sweeney echoed that sentiment.
“The social justice implications are central to the conversation surrounding legalizing adult-use marijuana,” he told MERRY JANE. “The current bill we are considering takes into account many factors related to social justice to ensure it benefits communities that have been the target of disproportionate policing of marijuana use.”
Even though great strides have been made in New Jersey in terms of legalization and reform efforts, it’s fair to say that recreational legalization remains in a state of flux, and Scutari’s bill will likely see changes before any agreements are made or votes are taken.
“I’m not saying it’s perfect, we can always improve on it, but that’s the reason to do it through the legislative process rather than a constitutional amendment,” Scutari said, adding that he is confident the bill will pass in 2019.
“If the Governor wants it passed, and the Senate President, myself, and the Speaker of the Assembly, then it should pass,” he said.
Scutari said his bill could serve as a model to other states, and he sees it as “history in the making,” as others have quipped.
“We’ve got a bill that really will set the tone to be a model for others to look at,” he said. “New Jersey is poised to lead the East Coast in this area, and I’m hoping we’re going to be able to do just that.”
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