NJ Cannabis Media -
December 3, 2018

Municipalities want higher tax rate, concerned about expungement costs

Written by Marc Schwarz

As soon as the ink dries on the New Jersey Cannabis Regulatory and Expungement Aid Modernization Act (S2703/A4497), it becomes a local issue – that was the message from the League of Municipalities to its members and stake holders.

Michael Cerra, assistant executive director and director of government affairs, provided a breakdown of the bill and its impact on municipalities during a 45-minute webinar Friday.

The key issues are tax rates, law enforcement issues and the costs of expungements.

The League has publicly stated that it wants a 5 percent municipal tax; the current language provides a max of 2 percent.

Cerra explained the League’s position on why 2 percent isn’t enough.

“Based on outreach that we did to other state leagues where legalization has occurred, implementation costs fall heavily on municipalities, particularly in the early years – Year 1 and 2,” he said, citing expenditures on law enforcement, public welfare questions, parking, transportation and other services.

Earlier in the week, Executive Director Michael Darcy expressed to NJ Cannabis Media some of the League’s concerns – particularly regarding the costs of the expungement process which is a key component to the legislation.

“At this point, the big thing for us is we now have a bill to actually analyze and get into the details on, whereas before there was conversation, discussion of concepts. Now everyone is working off the same sheet of paper,” he said. “If anything, I think the concerns have been growing. While the current bill is clear that the excise tax is remitted directly to the municipality – that’s helpful – the question of how expungement is reimbursed is a little less so. Our concerns with that mechanism is a new area to focus on.”

While many municipalities have passed ordinances banning cannabis businesses and sales within their borders, those ordinances will be null and void if S2703 is passed.

“While we would normally argue that state statute shouldn’t invalidate municipal ordinances, because this is a new law and a new industry, any existing ordinance would likely need to be revised and updated to reflect the current statute,” Cerra said.

He also suggested that all municipalities should take up a measure in the 180-day window provided by the state once the industry rules are established by the Cannabis Regulatory Commission.

“Whether you choose to opt in or opt out, you probably want to take some sort of pro-active action so your local ordinances govern your decisions,” he said. “Even if you choose to opt in and you miss the 180-day deadline, Section 20 lays out that growing, cultivating, processing and selling are permitted use in all industrial zones, that retail sales are conditional use in commercial or retail zones, subject to conditions of local zoning boards.”








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