With just days before Governor-elect Phil Murphy takes office, the marijuana legalization effort in New Jersey is in full swing. While Senator Scutari’s S-3195 officially expired at the end of 2017, the same language has been re-introduced in both houses of the legislature.
- Assembly Bill 1348 – introduced on 1/9 by Rep. Gusciora
- Senate Bill 830 – introduced on 1/11 by Sen. Scutari
These bills are identical to the bills introduced last year and have lots of blanks to fill in. The summary we published below in August remains accurate as of now. We expect a few details to change before a workable bill is eventually signed. A few big questions remain:
- How many licenses of each type will be allowed?
- How will licenses be distributed regionally?
- Will ownership be restricted to New Jersey residents?
These questions are just the tip of the iceberg and decisions will be made within the next few weeks. Now is the time to be vocal with your local representatives to show your support for a regulated market in your area.
To give the Governor another option to legalize cannabis and to allow for additional time for the regulated market to take shape, Rep. Carroll introduced a bill addressing the criminality without going so far as to establish a market.
- Assembly Bill 1557 – introduced on 1/7 by Rep. Carroll
While many outside the industry were concerned by the actions of Jeff Sessions a short time ago, everyone involved in the industry continues business as usual. New Jersey is no exception – full-speed ahead towards legalization!
If you or someone you know is looking to get involved on the business side of the New Jersey industry, you must attend the New Jersey Cannabis Symposium on the 25th at the NJ Performing Arts Center in Newark.
Use the coupon code “NJCSBSC” to save $50.
All updates to the bills mentioned above and any additional bills introduced will be posted here. Bookmark and share this post!
Original post from August 2017:
While many people, myself included, have been saying that New Jersey is going rec in 2018, we now have a real glimpse of what the new program could look like. Introduced by Rep. Nicholas Scutari in May of this year, the NJ S-3195 bill is 65 pages long and outlines everything from who will oversee the program to what happens to the current MMJ ATCs.
I’ve combed through the bill start to finish, so let’s breakdown what the bill says and means, what it’s intended to do, and why you should care.
All facts and numbers are accurate as of August 2017, though they are subject to change, as the NJ Bill S-3195 has been proposed but not yet enacted. The bill could change between now and the time it is proposed to the new Governor. However, we have strong reason to believe the bill is final and will be proposed and signed by future Governor Phil Murphy in late January 2018.
Why now? Follow the money.
- NJ faces a $687MM budget shortfall for Fiscal Year 2018.
- NJ spends $127MM a year on marijuana enforcement and arrests someone every 22 minutes for a marijuana crime
- Colorado, a state with 60% of the population of NJ took in $200MM in tax revenue in 2016, only the 3rd year of legalization.
- If the bill passes Q1 2018 as it is expected, NJ can expect at least a $325MM budget swing and likely a more realistic $500MM swing.
When you account for the criminal justice savings and the tax revenue from cannabis sales, the numbers don’t lie. If NJ were to follow the same metrics as Colorado, the numbers will likely be higher considering population and access. NJ has nearly twice the population of Colorado and a transit system connecting 25MM more consumers. While some might argue that NJ to CO is not an equal comparison due to the “destination state” status of Colorado, NJ’s Jersey Shore definitely sees its fair share of tourists. Colorado saw 77.7MM visitors in 2015 and NJ saw 25% more, 98MM in 2016. (sources: http://www.denverpost.com/2016/07/20/record-colorado-tourism-2015/ , http://www.nj.com/politics/index.ssf/2017/03/garden_state_tourists_spent_44b_in_2016.html )
- Immediately upon enactment of and prior to the effective date of the bill, possession of up to 50 grams of marijuana is limited to a $100 civil violation, and is not subject to arrest.
Once enacted, the bill would allow persons 21 and over to:
- Purchase, possess, use & transport up to one ounce of dried cannabis, 1 pound of solid marijuana infused products, 72 ounces of liquid marijuana infused products, 7 grams of non-infused concentrate and up to 6 immature plants (*though it expressly prohibits anyone other than a licensed cultivation facility from cultivating)
- Manufacture, sell, and possess marijuana accessories
- Lease property to licensed marijuana establishments
What about the MMJ program?
- Allows licensed ATC’s to apply for a retail permit to operate immediately upon approval. It’ll be interesting to see how the provisions affecting current ATCs evolve since all ATCs are vertically integrated by NJ’s Compassionate Use Medical Marijuana Act of 2009 and this bill prohibits vertical integration by any company or individual.
- Explicitly prohibits excise tax on medical sales
- Changes nothing else relating to the current MMJ program
Who will oversee New Jersey’s marijuana legalization effort?
- The bill creates a Division of Marijuana Enforcement within the Department of Law and Public Safety of NJ – joins departments like the State Police and Alcohol Beverage Control, DMV etc.
a) Gives Dept of Marijuana Enforcement powers to create rules/regulations to enact the law and oversee it including the establishment of fees and fines
b) Establishes a director to head the department who is appointed by the Governor. The position is held until the successor is appointed in the next administration.
- Creates a Marijuana Regulation Review Commission which will consist of 3 members
a) A member appointed by the Governor who serves as the presiding officer
b) One Senator appointed by the President of the Senate
c) One member of the General Assembly appointed by the Speaker of the General Assembly
How quickly will all of this happen?
- The bill requires the Department of Marijuana Enforcement to establish rules and regulations within 1 year of enactment.
- Department must start accepting applications within 1 year of the bill being enacted. When applications are released and submitted there is a maximum 90 day period for the state to review and award licenses.
- The department doesn’t have nearly a year to develop rules and regulations due to a key provision in the bill. If the new department fails to define all regulations before 1 year from enactment date, local municipalities have to create their own regulations for the program. The local governments can then issue their own permits instead of the Department of Marijuana Enforcement. Since local governments will need time to develop these guidelines, the Department of Marijuana Enforcement will have to signal serious progress like a proposed draft within 5-6 months of enactment.
- Ideally, staff for the Department will be hired between the time the bill is signed and the date it is enacted will could be a few months.
“Not in my backyard!”
- Local governments can prohibit marijuana establishments but must do so within one year of the bill being enacted. If no ordinance is enacted within 1 year, they must allow the establishments for 5 years. At the end of 5 years and then every 5 years, the local government may elect to prohibit the establishments.
Types of “Marijuana Establishments” (New Jersey’s term)
- The bill proposes 5 license types:
a) Class 1 – marijuana producer
• Product manufacturing
b) Class 2 – wholesale
c) Class 3 – retail
d) Class 4 – transportation
Ban on Vertical Integration – An interesting provision prohibits vertical integration. Individuals or companies can’t hold more than 3 licenses of any type.
How many licenses will there be?
- There will be at least one retail store per county. The department will determine the number of licenses based upon population distribution and must take into consideration seasonal fluctuations (think the Jersey Shore) and must have enough stores in place to:
a) Provide adequate access of usable marijuana to discourage purchases from the illegal market
b) Ensure adequate supply to serve the market demands of the county during peak season
- The department will determine the number of cultivation and product manufacturing licenses deemed necessary to produce for retail stores.
- Mature plant canopy size is regulated for the cultivation facility and it can be increased with each annual renewal.
- There are no limits on immature plants or seeds.
What’s this going to cost?
- Permit fees for the processing facility, wholesale, retail and transportation facilities are determined by square footage. The annual permit fee of the cultivation facility will be based on the canopy size of the mature plants in the facility.
- An excise tax will be levied upon all sales. To undermine the illegal market and help encourage participation in the legal market, taxes will escalate gradually over 5 years starting at 7%, then rising each year until 25% though the taxes can be altered to ensure the illegal market is undercut completely. Maintains NO tax for medical marijuana.
a) Year 1: 7%
b) Starting Year 2: 10%
c) Starting Year 3: 15%
d) Starting Year 4: 20%
e) Starting Year 5: 25%
f) *1%, 2%, and 3% of the taxes in Years 1, 2 and 3 onward go directly toward the local government/municipality where the marijuana establishment is located
Advertising Restrictions Abound
- Specific and restrictive advertising rules prohibiting advertising towards children. Examples include:
a) No advertising on TV, Radio or Internet between 6am and 10pm
b) No advertising where more than 20% of the audience can be reasonably expected to be underage
c) No event sponsorship where the audience could be more than 20% underage
- Dosage limits for edibles of 10mg per serving and 100mg per package
No personally identifiable tracking on purchases
- Privacy advocates will be thrilled to learn that no personally identifiable information has to be collected during a transaction, only the same info required to purchase alcohol in NJ which is your DOB.
Other rules and regulations will include:
- A residency requirement for 2 years for anyone applying for a marijuana license of any kind
- A methodical approach to ensure women and minority owned businesses are fairly represented
- 24/7 state-based Seed to sale traceability
- A new type of licensed worker will be created called a marijuana handler. This person will have to undergo a background check / FBI fingerprint.
- The Department will hold at least 2 information sessions per county to educate citizens about the responsibilities, opportunities, requirements, obligations, and process for application for license to operate a marijuana establishment.
Know your (New) rights!
- Bill explicitly protects consumers of cannabis from discrimination of student enrollment, employment and housing unless permitting the individual would jeopardize federal funding or cause the landlord, employer or school to break federal law.
- The Controlled Dangerous Substance act and all bills similar that pertain to marijuana have amendments proposed to decriminalize marijuana within the bill.
- Redefines what constitutes a reasonable articulable suspicion of a crime: no longer is the odor of marijuana or burnt marijuana a reason to search unless more than one ounce is visible or if the officer is investigating whether a person is driving under the influence of marijuana.
Have questions about the bill and what it means for NJ? Don’t hesitate to reach out.