Seven out of ten New Jersey voters this month affirmed that we must decriminalize marijuana. The state’s Attorney General quickly announced that all marijuana prosecutions are paused while we wait for cannabis industry legislation. Now the state government is scrambling to find ways to generate massive amounts of tax revenue from the drug. Much regulation will follow within a year or so. Meanwhile, what does this mean to us?
Note these ten key points that summarize how the change will affect us:
1. Government’s specific intent is to generate lots of tax revenue from this legal change. That means much new regulation, administration and enforcement is required. It will take time -perhaps a year or so – for this regulation and functional transition to occur.
2. New Jersey lawmakers have a vested interest in keeping the price of marijuana low to maximize tax revenue.
3. New Jersey policymakers have announced their intention to make opportunities available to small businesses, minorities and women. That is a significant change in direction for the industry and effectively means “affirmative action”.
4. New Jersey policymakers want the new industry to boost depressed neighborhoods (like ours in a Millville and Bridgeton) but local government may be less enthusiastic. Some local governments have already taken action to block marijuana businesses from struggling downtown areas.
5. The untaxed illegal black market will always be the major market force. An estimate of 70% is reasonable. Taxes will be the greatest economic driver of future growth of the illegal market.
6. States that border New Jersey do not have a viable plan to legalize marijuana in the near future, so interstate transactions including “marijuana tourism” will be significant.
7. Marijuana must be grown in New Jersey to be legal in New Jersey. Importation will still be a crime (not to mention issues of exportation that would be prosecuted under other states’ laws). The point is that cannabis will be a modern agricultural industry here.
8. There are plenty of economic risks. New Jersey is well positioned to learn from the lessons and problems that surfaced in California and Colorado.
9. Home grow interest will surge. That impact is being felt already. Major companies like Scott’s are already ahead of the curve in developing a division to cater to this market. Much opportunity still exists.
10. The NJCPA Cannabis Interest Group has been a major force in the education process in this state transition and continues to draft and influence future state regulation. The focus right now is to “decouple” state tax law surrounding cannabis from federal ta law. The second major emphasis is to advise small businesses entering the market.
Disclosures: I am a member of the NJCPA Cannabis Interest Group because this issue significantly impacts the future of small businesses. I am a contributor to the NJCPA Political Action Committee that attempts to influence education on cannabis issues. I do not use or endorse the use of cannabis but I do have personal and professional interests in the emerging cannabis industry.