The Election of Phil Murphy Has Businesses & Consumers Asking: “When Will Cannabis Be Legalized in New Jersey?”
The election of Phil Murphy has poised New Jersey’s cannabis industry for rapid growth. Not surprisingly, businesses and consumers are eager for an implementation timetable. When asked, Governor-elect Murphy said “As soon as we can get there. We want to get this ball rolling. This is a 2018 priority.” Notwithstanding Murphy’s confirmation that cannabis legalization will be a primary legislative goal for next year, it may take one to two years to establish the necessary statutory and regulatory structure to support a fully legalized cannabis industry in New Jersey.
In May 2017, Senator Nick Scutari introduced Senate Bill 3195 to legalize, regulate, and tax cannabis. S3195 would allow New Jersey residents over 21 to possess up to 1 ounce of cannabis, 16 ounces of infused solid products, or 72 ounces in liquid form.
A seven percent tax would be levied upon cannabis or cannabis products sold or otherwise transferred by a cannabis retailer to a consumer. To encourage early participation in and development of cannabis establishments and to undermine the illicit cannabis market, the tax would escalate annually over a three-year period, increasing to 10 percent in the second year, 15 percent in the third, 20 percent in the fourth, and 25 percent in the fifth. Cannabis intended for sale at medical cannabis centers pursuant to the New Jersey Compassionate Use Medical Cannabis Act would no longer be taxed.
S3195 also addresses licensing, establishing several different classes of licenses for producers, processors, wholesalers, retailers, and transporters. All prospective licensees must complete application requirements, meet residency requirements, and undergo a criminal history record background check.
Senator Scutari’s proposed framework is comprehensive, but he has acknowledged that the bill is still a work in progress and he plans to incorporate the feedback he has received to date and reintroduce the bill in January.
Enacting a Regulatory Framework
Once S3195 is signed into law, regulations will be required to implement its provisions. The bill currently calls for a new agency, the Division of Marijuana Enforcement (DME), to promulgate regulations within one year of the enactment of the bill. S3195 also currently would require the DME to accept license applications one year after its issuance of the implementing regulations.
The Murphy administration has a sizable financial incentive to work quickly, as legalizing cannabis is predicted to generate $300 million in state tax revenue. To begin the flow of these funds, S3195 provides that an NJ medical cannabis dispensary operating in good standing at the time the bill is signed into law can immediately apply for a license to distribute cannabis to persons who are not medical cannabis patients. “There might be a way that we might temporarily allow the medical shops to sell to the public so it might allow that to be done immediately while the other shops are getting up to speed and growing their product and getting ready,” Scutari said. “We are working on that concept but it is a possibility.”
Moving Forward
Proactive interested parties are undeterred by the likelihood that it will be many months before New Jersey’s legal cannabis industry is launched. Instead, they are taking advantage of the available time to prepare their business plans and familiarize themselves with the numerous areas of law that will be implicated by the license application process and ongoing cannabis industry compliance.
This article is a part of a series pertaining to cannabis legalization in New Jersey and the United States at large. Prior articles in this series are below:
If you have any questions or if you 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.
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