A truly historic Election Day full of notable events included the passage of a referendum measure in New Jersey which amends the State Constitution to legalize the use and sale of cannabis beyond the current medical marijuana regime in New Jersey. The vital next step in the process of creating a legal general-use marijuana sales framework in New jersey is the passage of legislation regulating this industry. This legislation is currently being debated in the New Jersey State House. Here is detailed information on the legislation changes:
More Grow Sites for Medical Marijuana License Holders
Currently, medical marijuana license holders are permitted to operate up to three dispensaries, but only one grow site. It is anticipated this will be insufficient to meet the expected increase in demand for legal, adult-use cannabis, without crowding out current medical users. The proposed legislation will allow medical marijuana license holders to open two additional cultivation sites, in hopes of alleviating the expected initial crush of demand.
Increased Number of Licenses
The present medical marijuana legislation permits the New Jersey Cannabis Regulatory Commission to award only 12 licenses for medical marijuana operation. Again, this will not be enough to meet the increased demand when New Jersey goes from approximately 100,000 medical marijuana users to an anticipated 1,000,000+ recreational users. Therefore, the cap on the number of licenses the Commission can award is being eliminated. The number of licenses will be at the discretion of the Commission.
Reservation of Licenses
While the proposed legislation removes the cap on the number of licenses awarded, it also places other restrictions on the composition of licenses in New Jersey. It will be required that 15% of licenses be reserved for racial minorities, with another 15% being set aside for women and veterans. Another 35% of licenses will be reserved for conditional licenses, a shortened process whereby the applicant can receive an expedited license in exchange for certification that the license holder will make up the remaining requirements in an abbreviated time period in comparison to the normal licensure process. Finally, microbusinesses, defined in the legislation as entities with ten or fewer employees, will make up 25% of the license pool.
Municipal Taxes
Under the proposed legislation, municipalities would be able to enact their own 2% tax, which could be applied to growers, processors, wholesalers, retailers, and even customers. Note that the constitutional amend which made way for legalized cannabis caps retail taxes on cannabis sales at 6.625%, the present state sales tax.
Despite the overwhelming support in New Jersey for the ballot initiative, the nuts and bolts of cannabis legalization in New Jersey is still a legal area in a high state of flux. Negotiations are ongoing in the state legislature and there is a great deal of dispute over tax revenues and how those revenues will be distributed – especially the portion of the revenues which will be re-invested in minority communities. That fight will likely delay legalization legislation for a bit, but the voters have spoken. It is expected that a legalization regime will be in place early next year.
The attorneys at The Law Offices of Andrew Dressel LLC are monitoring the progress of legalization legislation and stand prepared to advise our clients on the final outcome of the legislative process. If you are interested in starting a business in the New Jersey cannabis industry please reach out to our attorneys by either calling at 848.202.9323 or contacting us through email at andrew@dressellaw.com. We look forward to helping you with whatever inquiries you may have.