Photo Credit: MARC SCHWARZ
What did we learn from Monday’s hearings and committee votes on Bills S2703 and S10/S2426 that will legalize marijuana and expand the medical marijuana program?
- Everything marijuana-related will be overseen by the to-be-created Cannabis Regulatory Commission.
- Senate President Stephen Sweeney mostly stuck to his guns and the proposed tax rate is 12 percent, including sales tax, plus a max of 2 percent for municipalities.
- As always, the devil will be in the details – and a lot of them are still being worked out.
Here are nine key takeaways:
- This process isn’t over. The bills may have passed through committee, but now it must go before the entire Senate and Assembly. And then it has to be signed by Governor Murphy. Before that happens, expect language in parts of the bills to be amended/rewritten. The earliest a vote could be taken is Dec. 17, though there’s considerable debate it will happen then. A strong possibility if the bill does end up on the Governor’s desk is he that he will issue a conditional veto, so the remaining sticking points – tax rates, power and make-up of the commission – are ironed out.
- The commission will have a lot of power. The Cannabis Regulatory Commission will “oversee the development, regulation, and enforcement of activities associated with the personal use of cannabis” and “assume responsibility from the Department of Health for the further development and expansion, regulation, and enforcement of activities associated with the medical use of cannabis.” That includes: granting licenses; adopting, amending and repealing regulations; and subpoena power. The five members are full-time employees and must establish an Office of Minority, Disabled Veterans, and Women Cannabis Business Development.
- Municipalities that have already said no, must say no again. All those towns that have preemptively passed ordinances banning cannabis businesses or sales in their borders must go through the process again. “The failure of a local governmental entity to enact an ordinance prohibiting the operation of one or more classes of cannabis establishment within 180 days following the adoption of the commission’s initial rules and regulations … shall result in any class of cannabis establishment that is not prohibited from operating within the local governmental entity as being permitted to operate therein.”
- Expect push-back from municipalities. The towns wanted a minimum 5 percent dedicated tax – this bill gives them up to 2 percent. It does provide for two years of funding to “reimburse the expenses incurred by any county or municipality for the training costs associated with the attendance and participation of a police officer from its law enforcement unit in a
program provided by an approved school … which trains and certifies the police officer as a Drug Recognition Expert for detecting, identifying, and apprehending drug-impaired motor vehicle operators.” One possibility is the rate is different for the various type of licenses. For example, the dispensaries would be taxed at a 5 percent rate, wholesale at 3 and grow and manufacturing at 1 percent each.
- Cannabis is in, marijuana is out. The word marijuana has been replaced in the bills by cannabis, which is the name of the plant. So the two bills are now the New Jersey Cannabis Regulatory and Expungement Aid Modernization Act and the New Jersey Compassionate Use Medical Cannabis Act. In previous drafts, they were the New Jersey Marijuana Legalization Act and the New Jersey Compassionate Use Medical Marijuana Act.
- Keeping it Jersey. Applicant for any of the four types of licenses must have “at least one significantly involved person who has resided in this State for at least two years as of the date of the
application.” And for a microbusiness, “100 percent of the ownership interest” must be from those who have resided in New Jersey for “at least the past two consecutive years.”
Medical marijuana taxes to disappear. The New Jersey Compassionate Use Medical Cannabis Act will phase out the tax beginning on July 1, 2020, with a max rate of 5 percent. On July 1, 2022, that will lower to 3 percent and then to 1 percent on July 1, 2023, before being eliminated altogether on July 1, 2024.
New products and forms are coming. The medical program will allow dried form, oral lozenges, topical formulations, transdermal, sublingual, tincture and edible forms, and “any other form as authorized by the executive director. Edible form shall include tablets, capsules, drops or syrups, oils, and any other form as authorized by the executive director.
Transparent pricing. Medical marijuana businesses will have to have a standard price list available on their website and will be liable for a $1,000 civil penalty for “each sale that occurs at a price that deviates from the entity’s current price list.” A medical cannabis dispensary may establish a “written policy for making medical cannabis available at a reduced price or without charge to qualifying patients who have a demonstrated financial hardship.”