Legalized Recreational Pot Edges Forward in New Jersey

Defining Votes Next Week in Senate, Assembly
Mar 20, 2019

Monday, March 25, could be a date that will live in infamy in New Jersey, or a day that will result in celebrations. It all depends on your view of legalized recreational marijuana.

Legislation that would legalize use and possession of up to an ounce of pot for adults 21 years of age or older, and allow for the sale of up to an ounce per transaction in state-registered stores, advanced through the Assembly Appropriations Committee (6-1, with two abstentions) and the Senate Judiciary Committee (6-4, with one abstention), on March 18. The bill is now expected to go before both the full Senate and Assembly on March 25.

The legislation would also allow the state to tax marijuana at the rate of $42 an ounce; and would allow municipalities to collect a 3 percent excise tax from retail shops in which pot is sold, 2 percent from cultivators, and 1 percent from wholesalers.

Original legislation had called for a 2 percent municipal excise tax for retail shops. The New Jersey League of Municipalities had argued for a 5 percent excise tax.

It is still far from certain that the bill will pass, especially in the Senate. But it is almost certain a number of amendments will be considered as Gov. Phil Murphy, Senate President Stephen Sweeney and Assembly Speaker Craig Coughlin – all Democrats – attempt to entice legislators to vote yes. So the details of the 175-page bill could change.

Will the final version of the bill allow municipalities to “opt-out”? In other words, will it allow municipalities to ban cannabis establishments such as growing facilities, warehouses and storefronts?

An opt-out provision seems to be key to pushing the legislation through the Assembly and Senate to reach the governor’s desk. Some 58 municipalities in New Jersey, including Barnegat Township and Surf City borough, have already passed ordinances banning the sale and growing of weed within their borders. But reports indicate those ordinances would have to be replaced by a state requirement to officially opt out with New Jersey. If a municipality does opt out, it would be unable to change its status for five years. In other words, if a town saw a neighboring town reaping benefits from the proposed 3 percent excise tax on sales, it couldn’t suddenly say, “Hey, we want to make money, too!”

An opt-out provision would follow Colorado’s lead, where recreational marijuana has been legal since 2014. According to the Colorado Municipal League, 176 of that state’s 271 municipalities had banned the retail sale of marijuana by April 2017.

Even if Murphy is able to affix his signature to a bill in the coming weeks, don’t expect to be able to go to a retail establishment and buy a bag of weed anytime soon. The current bill calls for a five-person Cannabis Regulatory Commission, with three members appointed by the governor with Senate consent, and two members selected by the Senate president and Assembly speaker. Regulators must then come up with guidelines for the number of growing, processing, wholesale and retail licenses to be sold, along with advertising rules, among other likely issues. That process is expected to take up to a year.

In many ways, the pot regulations would likely follow New Jersey’s alcohol regulations. For example, the number of retail shops allowed in a municipality would likely be pegged to population, following the example of liquor licenses.

One thing municipalities would not be able to ban is possession of less than an ounce of pot by residents and visitors. That, too, follows the alcohol template.

New Jersey has approximately 30 “dry” municipalities, most famously Ocean City in Cape May County, which bills itself as “America’s Greatest Family Resort.” Dry means no alcohol can be sold in those towns. But dry towns in New Jersey are not allowed to forbid the possession, consumption or transportation of alcohol by adults 21 years of age or older.

— Rick Mellerup

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