New Jersey is poised to legalize adult-use marijuana within weeks, after Gov. Phil Murphy and state legislative leaders reportedly reached a tentative agreement on how to regulate and tax the program.
Murphy and state Senate President Steve Sweeney, both Democrats, had been deadlocked on a tax rate, with Murphy favoring a high retail sales rate.
The agreement reportedly calls for a sales tax based on weight or quantity, such as per ounce of marijuana sold.
“We’re extraordinarily excited,” Scott Rudder, president of the New Jersey CannaBusiness Association, told Marijuana Business Daily on Monday.
A tax on weight, NJ.com reported, protects against falling prices by keeping the tax the same regardless of price.
If the tax is $42 per ounce – said to be the tax rate that’s being discussed – it would stay the same whether the ounce cost $300, $150 or even $50.
Rudder said he hadn’t heard a specific tax number.
The current legislation will need to be amended, then passed by the full Legislature, a process that could be done within a few weeks, Rudder said.
“I do believe we have enough votes,” he said. “A lot of people are holding out giving their firm public position until they see a final bill.”
New Jersey’s adult-use cannabis industry is expected to generate upwards of $1 billion in sales a year once it matures.
Rudder said that based on the current bill and the tentative agreement, “we expect it to be a very robust industry and limited licensure to make sure we have a balanced approach.”
Here are a few details:
- A tax on weight would provide some revenue stability even if marijuana prices decline, as has been the case in other states that have legalized adult use.
- The current bill provides for licenses based on market demand and would permit marijuana delivery services.
- Many aspects of the industry would be left to a cannabis control commission, including defining those license limits.
“We’re going to see a lot of different entrepreneurial opportunities and opportunities to invest,” Rudder said. “The ancillary market is getting ramped up as well.”
Rudder said law, security, marketing firms and others already are regearing their business plans for an adult-use market.
Jeff Smith can be reached at [email protected]