Legalizing Retail Sale & Recreational Marijuana Use In New Jersey – Lessons From Colorado

Lessons From Colorado About Marijuana Legalization

2016 appears to be the year that marijuana goes mainstream in America.  On November 8, Montana, North Dakota, Arkansas and Florida voted to legalize medical marijuana, and Maine, Massachusetts, Nevada and California passed measures legalizing recreational marijuana.  In total, 29 states have legalized medical marijuana or decriminalized marijuana possession and eight states and the District of Columbia allow the retail sale of recreational marijuana.    

New Jersey legalized medical marijuana in 2010, and Garden State lawmakers are now considering legalization of marijuana sale for recreational use. 

Most recently, Senate President Stephen Sweeney has declared his commitment to legalizing recreational use by 2018. President Sweeney’s statements follow his leadership of a delegation of New Jersey legislators to Colorado to “learn from the mistakes Colorado made” while going through the legalization process.

Insight from Colorado

Colorado legalized medical marijuana in 2006. In 2012, Colorado became one of the first states to decriminalize the personal use of marijuana for adults 21 and over and to create a regulatory framework for the commercial cultivation, manufacture, and retail sale of marijuana. At a 2015 conference, Colorado lawmakers shared the below insights regarding the legalization process with state legislators from around the country, many of which dovetail well with New Jersey’s ongoing initiatives and existing marijuana industry infrastructure. Here are those insights:

Legislation rather than referendum
Colorado lawmakers acknowledged that the most significant change they would make if given the opportunity to start all over again would be to legalize marijuana via legislation rather than voter referendum, citing the difficulty of amending the legal framework approved by voters. As previously posted and discussed above, legislation is already the preferred legalization option of New Jersey officials.

Revenue and tax projections Predicting how much money the legal marijuana will generate is an inexact science, as it is difficult to estimate how many consumers will switch from medical marijuana to retail marijuana and how many users will continue to rely on the black market. If Colorado is any example, however, revenue generated can be substantial. Retail marijuana sales in Colorado began on January 1, 2014. In the first year of implementation, legally sanctioned sales of marijuana (both medical and recreational) started slow and ultimately reached $699 million. In 2015, official sales rose significantly, topping $996 million. The sales also generated $135 million in tax revenue for the State of Colorado. New Jersey proponents of legalization have estimated that retail sale of marijuana could generate as much as $300 million in sales tax revenue for the cash-strapped state.

Effective roll-out
Officials in Colorado have also acknowledged that they should have given both state regulatory agencies and marijuana dispensaries more time to prepare. Examples include having adequate staff in place to process license applications and administer other regulatory requirements, as well as allowing adequate time for retailers to develop capacity to meet consumer demand. Legalization in New Jersey is highly unlikely until a new state administration takes office in 2018, which provides the state with the opportunity to carefully prepare industry actors.

Business considerations
Although recreational marijuana is legal in Colorado, Colorado’s marijuana laws include several protections for businesses. For instance, employers can still test workers for marijuana and make employment decisions based on the results. Businesses can also ban the use and possession of retail marijuana on their property. According to the Colorado legislators, tackling these issues up front helped resolve concerns from employers and property owners. Certain similar bills pertaining to medical marijuana use are currently being considered in New Jersey, and others pertaining to recreational use will no doubt be enacted.

Reconciling oversight over medical and recreational sales
Because Colorado had a robust medical marijuana market that was subject to stringent oversight, it had many of the tools in place to legalize recreational marijuana, i.e. established dispensaries and existing licensing requirements. Meanwhile, states like Washington that had little oversight over medical marijuana use have struggled to reconcile the two marijuana markets. New Jersey has a well-developed though overly stringent medical marijuana program already in place and will be able to leverage that infrastructure to support a legalized recreational marijuana industry in the state.

The Bottom Line

In summary, Colorado’s experience demonstrates that successful legalization and maintenance of a recreational marijuana program requires political will, careful planning, and effective allocation and use of sufficient administrative resources. New Jersey appears poised to take advantage of these lessons over the next year as legalization comes closer to becoming a reality in the Garden State.

This article is a part of a series covering marijuana legalization initiatives in New Jersey.  For more on this topic, check out:

• 11 Marijuana Legalization Bills Currently Pending in NJ Legislature
• Applying for a Medical Marijuana Dispensary License in New Jersey
• Will Legislature Pass Proposed Amendment to the Compassionate Use Medical Marijuana Act?

Otherwise, if you have any questions or would like to discuss the matter further, please contact me, Dan McKillop, at 201-806-3364.

Disclaimer: Possession, use, distribution, and/or sale of cannabis is a Federal crime and is subject to related Federal policy. Legal advice provided by Scarinci Hollenbeck, LLC is designed to counsel clients regarding the validity, scope, meaning, and application of existing and/or proposed cannabis law. Scarinci Hollenbeck, LLC will not provide assistance in circumventing Federal or state cannabis law or policy, and advice provided by our office should not be construed as such.