New Jersey became the 14th state to legalize recreational cannabis. Three bills were signed on February 22, 2021 regulating the use of recreational cannabis. This will reduce penalties for underage use and decriminalizing the use or possession of up to six ounces of cannabis. This signing comes 100 days after voters approved a constitutional amendment legalizing cannabis in November.
“This legislation will establish an industry that brings equity and economic opportunity to our communities, while establishing minimum standards for safe products and allowing law enforcement to focus their resources on real public safety matters.”
Governor Murphy
New Jersey Cannabis Market
New Jersey’s economy struggled in 2020 and their spending increased due to the COVID-19 response. Governor Murphy stated New Jersey needs as much as $20 billion in federal relief. The establishment of a regulated cannabis market could provide a needed boost to the economy. The cannabis market is expected to produce $126 million, per year, in revenue.
Impact of Cannabis Legalization
Other states feeling the financial impact of the pandemic are seeking relief in the form of cannabis regulation. The Governor of New York stated his support for legalization in January.
“This is a year where we do need the funding and a lot of New Yorkers are struggling. This year will give us the momentum to get it over the goal line.”
Andrew Cuomo
Additionally, cannabis legalization in New Jersey could push neighboring states like Pennsylvania to legalize. For the first time in history, a bill to legalize recreational cannabis has Republican support in the Pennsylvania Senate.
Medical Marijuana
Currently, there are over 50,000 medical marijuana patients and only 13 medical marijuana dispensaries open in New Jersey. These businesses could begin dispensing recreational cannabis immediately following the approval of cannabis rules. However, they must prove recreational cannabis sales will not limit their supply of medical marijuana to patients and caregivers.
Cannabis Legislation
The newly signed bill states legislators have 180 days to develop cannabis guidelines. Otherwise, within 45 days of all five members of a Cannabis Regulatory Commission (CRC) being appointed.
Cannabis taxes and fees were also established. Including a 7% enhanced state sales tax and a fluctuating social justice excise fee between $10-$60. This is dependent upon the current market value of adult-use cannabis. As the market value increases, so does the social justice excise fee and vise versa. The bills also allow for municipalities to tax cannabis businesses an additional 2% sales tax. Though municipalities can ban cannabis businesses within their borders, they cannot ban the delivery of cannabis products to consumers.
Cannabis Business Licenses
The legislation allocates at least 25% of the total licenses to social equity applicants. Or those who employ at least 25% of their employees from “impact zones”. Or municipalities negatively impacted by unemployment, poverty or past marijuana enforcement activity. Another 30% of total licenses will be designated to businesses owned by women, minorities or disabled veterans.
The legislation established six licensed business classes: cultivator, manufacturer, wholesaler, distributor, retailer, and delivery. The CRC will be authorized to determine the maximum number of cannabis businesses by class based on market demand. It is expected that licenses will be limited and application rounds will be extremely competitive.
It will likely take some time for the state to license its first recreational dispensaries. However, many are hopeful legalization delays are over. The quick establishment of the CRC could increase access to cannabis throughout New Jersey. As well as boost the state’s economy, and influence legalization efforts in neighboring states.
How can Sapphire Risk help?
If you are looking to start a cannabis business, it will be important to hire a licensed cannabis consultant. Having a professional on your team ensures applications receive the highest possible scores and are approved to open for business.
Tony Gallo and the team at Sapphire Risk Advisory Group has over 30 years of security experience and expertise. Contact us for further information how to protect you, your employees and your business from looting. Follow us on Facebook or connect with us on LinkedIn to receive further security updates.
Check out some other relevant articles for more industry news:
Legalizing Cannabis: Which State is Next?
How to obtain a Cannabis Cultivation Facility
How Can Dispensaries Protect Themselves from Looters?
