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Tax debate could table September marijuana vote

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“We’re not going to be taking it up on Monday. I would like to, but we’re not going to be,” Chair of the Senate Judiciary Committee Sen. Nicholas Scutari said.
“We’re not going to be taking it up on Monday. I would like to, but we’re not going to be,” Chair of the Senate Judiciary Committee Sen. Nicholas Scutari said. - ()

A September vote for how to legalize and regulate adult-use marijuana is unlikely, following disputes over an appropriate tax structure, officials said.

Sen. Nicholas Scutari, D-22nd District, said a vote legalizing recreational use of marijuana will not be brought up at Monday’s meeting for the Senate Judiciary Committee, which he chairs and where it would have to be heard before going to the Senate floor.

“We’re not going to be taking it up on Monday. I would like to, but we’re not going to be,” Scutari said.

The development appears to dampen prospects for a September vote, which had been the goal of lawmakers including Scutari and Senate President Stephen Sweeney, D-3rd District. Gov. Phil Murphy has indicated he would like to sign something by the end of the year.

Scott Rudder, president of the New Jersey CannaBusiness Association, said at an NJBIZ marijuana panel Tuesday that lawmakers were “98 percent” done with drafting the legislation and that only the tax structure is standing as a major roadblock to legislation.

A copy of the draft legislation, dated Sept. 12 and obtained by NJBIZ, shows the rate at 10 percent, which lawmakers said is vital to prevent buyers from seeking lower-priced cannabis in the black market.

“This is a little bit like sports betting. We want to make sure, if we’re going to do it, we eliminate to the best of our abilities the black market.”

- Gov. Phil Murphy

In a prior version of the draft legislation, cannabis would be taxed at 10 percent in the first year of legalization, 15 percent in the second, 20 percent in the third and 25 percent in the fourth.

Murphy initially stood by the 25 percent tax rate.

In Carteret on Tuesday, Murphy said he did not want the state to price itself out of the market.

“This is a little bit like sports betting. We want to make sure, if we’re going to do it, we eliminate to the best of our abilities the black market,” Murphy said, adding that he had not “hardened a position on taxes” for legal cannabis.

The proposed 10 percent cap would be in addition to the state sales tax and a 2 percent levy municipalities would have the option of imposing on marijuana sales.

But Michael Cerra, assistant executive director of the New Jersey League of Municipalities, said the 2 percent levy is not enough; he is pushing for 5 percent.

“It is our belief that 2 percent is insufficient to offset costs and is an incentive for municipalities to opt out,” Cerra said. “Enforcement will fall almost entirely on municipal governments, which will need to absorb costs associated with law and code enforcement, health services, education and social services.”

There are two bills moving through the Legislature, one on adult-use marijuana and another expanding the state’s existing medical marijuana program.

The Sept. 12 version of the bill, sponsored by Sweeney and Scutari, calls for recreational cannabis to be regulated by a Cannabis Regulatory Commission, composed of five appointees from the governor.

Cannabis users have to be at least 21 years old. Licensed retailers and alternative treatment centers could operate a “cannabis consumption area,” which would be an enclosed, indoor space or an enclosed, exterior structure on the same property, separate from where the product is sold.

To address social justice concerns, the bill proposes mandating that 25 percent of the licenses are issued to disabled veteran, minority and women-owned businesses.

To boost small businesses, 10 percent of the licenses would be set aside for “micro businesses,” that is a business that can grow cannabis in a facility no more than 5,000 square feet, or produce no more than 2,000 pounds of marijuana per month.

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Daniel J. Munoz

Daniel J. Munoz


Daniel Munoz covers politics and state government for NJBIZ. You can contact him at dmunoz@njbiz.com.

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