Weed Legalization 3.0: How New Jersey Could Be the Tipping Point for Legal Marijuana

There’s not a lot America can agree on at the moment, but the U.S. is clearly over the war on drugs. Last week, Oregon decriminalized the possession of all drugs, deep-red Mississippi approved medical marijuana, and South Dakota – which in previous years couldn’t even get medical pot on the ballot – fully legalized, along with Arizona (though let’s be honest, no one is particularly surprised about that.)

The most influential legalization measure, however, was probably New Jersey, which passed its Question 1 proposed constitutional amendment with more than two-thirds of the vote. It wasn’t particularly shocking, as polling indicated 65 percent of voters supported it. But a lot of questions about how the industry will be built and who will profit from it.

New Jersey had been waiting for a while, but had been slowly building an infrastructure, aggressively researching the best methods for legalization since Phil Murphy beat Chris Christie in 2017. Jackie Cornell, who is now the chief of policy and health innovations for cannabis company 1906, was the state’s deputy health commissioner when Murphy took office in 2018, and remembers him being energized to improve access immediately.

“One of the things Governor Murphy did, like the third day on the job, was call for a complete overhaul of the medical marijuana program,” says Cornell. The Senate and General Assembly were able to come together for a reinvigoration of the medical program, which passed in 2019 and has since increased access to more than 95,000 patients in the state. That’s not to say the rollout has been going great. Right now, there are only 12 licenses for cannabis businesses so far, and while an additional 24 available licenses currently being held up in court. Given the rising demand, prices have surged, while supply has dwindled. “The existing operators can hardly meet the demand of patient populations,” she says.

And despite Murphy’s campaign promises, adult-use legalization was still out of reach. When a 2019 bill languished in the legislature, advocates decided there was only one way to sort this out: by taking it to the people – and the people overwhelmingly approve. Getting a bill passed will be just the first step; it could be over a year before the first recreational cannabis sales are made in the state. Virtual hearings began on Monday, November 9th, and Rolling Stone will continue to share what we learn. But for now, here’s a rundown of what we know so far.

What was on New Jersey Question 1?

The language on the ballot question was itself very simple: “Do you approve amending the Constitution to legalize a controlled form of marijuana called ‘cannabis’?” It would only apply to adults 21 and older and it would be subject to the state’s standard 6.625 percent sales tax. That’s it. All other details of the program will be hammered out by the state legislature, and enforced by the State’s Cannabis Commission.

So what will the law look like?

Given how much work was put into the 2019 legislation, the final bill will probably closely resemble that one. “There was a group of people researching pretty deeply, what [the bill] should be,” says Chris Beals, CEO of Weedmaps, a website and technology company that works with cannabis companies around the country, including in New Jersey. “Ultimately when that stalled out, the ballot initiative was a way to take the will of the people. I suspect [the new law] would have a lot of similarities to the old legislation.” There will also probably be input from the newly created New Jersey Cannabis Regulatory Commission. Last Thursday, five assembly-members introduced a bill, A-21, which will be the jumping off point for discussions. “New Jersey could be the model for the East Coast and even further, the rest of the country,” says Charlana McKeithen, founder and director of Garden State NORML. “If we get this bill right.”

Who’s the Cannabis Regulatory Commission, and what do they do?

For the first decade of medical weed – when patient rosters stayed below 20,000  – the health department was in charge of regulation. But as part of the 2019 overhaul, the legislature established the Cannabis Commission, a board of five people – one appointed by the state senate president, one by the speaker of the assembly, and three by the governor. It will be their job to implement the legislation that Gov. Murphy eventually signs.

Though the creation of the commission had been put on the back-burner for several months, Murphy announced the initial picks on Friday. Dianna Houenou, chair of the commission, previously worked for the Governor’s office, and also on cannabis legalization issues for the ACLU. “Since day one, we have said that the legalization of recreational marijuana must prioritize the communities marginalized and decimated by the failed War on Drugs,” Murphy said. “I know that Dianna is the perfect person to lead our state’s effort to create a marketplace for recreational marijuana that is equitable, fair, and inclusive of all communities.”

So what can we expect?

As far as the business end goes, the current bill calls for six kinds of licenses – cultivation, processing, wholesale, distribution, retail, and delivery, as well as “micro-licenses” in each of these categories, in order to make sure that small businesses, not just mega-grows and dispensary chains, will exist in the state. (There will also be a program to secure licenses for people with limited access to capital, and for women and people from some communities targeted by police during the war on drugs.) The number of each type of license will presumably be determined by the legislature, says McKeithen.

Next, taxation: One way that legal marijuana has been sold to voters across the country is by convincing them that the tax revenue on weed is too good to pass up. But if you make those taxes too high, you risk turning people to the black market (as has happened in California). “The thing to remember about cannabis legalization, and a lot of folks forget this, is that you’re not starting the sale of cannabis whole cloth,” says Beales. “The purpose of legalization is to bring [the illicit market] into a state licensed system.”

This is a real risk in New Jersey, which has a booming illicit market, and where the pre-tax price of medical weed can be double other states. All it says in the ballot initiative is that the state will charge standard sales tax (right now, that’s 6.625 percent) and municipalities are allowed to charge an additional tax. Some drafts have capped that additional tax at just two percent – but McKeithen says that doesn’t mean much at this point. “Right now, we’re at the hands of the legislators,” she says.

Finally, there’s expungement, process in which old convictions – which can prevent folks from getting federal loans, jobs, and benefits – are taken off a person’s record. Given that the vast majority of people arrested for these low-level, non-violent offenses were (and are) people of color, it has become a rallying cry of progressives who saw early legalization efforts benefit rich white folks, and not those who’d been most negatively impacted by the war on drugs. The 2019 draft of the bill calls for everyone with a cannabis conviction, under a certain threshold, to be eligible to apply for expungement.

However, advocates were quick to point out that the 2020 version that was introduced this week, A-21, doesn’t mention expungement at all – and diverts most of the money made by cannabis directly to police departments. During the Monday morning hearing, Rev. Charles Boyer, founding director of Salvation and Social Justice, called for a reevaluation of who will benefit from the bill. “This bill has been shaped by the industry, and shaped by law enforcement,” he said. “What it does lack is real, robust shape from the people most devastated by the drug war.” He called for additional excise tax to pay for community programs, as well as a higher percentage of licenses to go to the minority communities that have been hardest hit by cannabis prohibition. At the hearing, numerous people on the two-and-a-half-hour call addressed how the bill was lacking in that area. Jessica Gonzales, speaking on behalf of Minorities For Medical Marijuana, put it succinctly: “In 206 pages, nearly 90,000 words, the word ‘social equity‘ does not appear once.”

How will this affect the region?

New England was the first push legal pot into the East Coast, with both Maine and Massachusetts going fully legal in 2016. (Vermont, like Washington, D.C., has legalized but does not have a system established for sales.) But as far as the Northeast, legalization stalled out in 2019. But with New Jersey legal, Pennsylvania, New York, and Connecticut could all flip soon. “We see New Jersey as potentially being the lynchpin for the Northeast,” says Bayern.

Pennsylvania has had medical marijuana since 2016, and they’ve built a robust system of dispensaries. And over the past few months, Lieutenant Governor John Fetterman, backed by Governor Tom Wolf, has been making the case to fully legalize. According to industry site Cannabiswire, members of the state legislature are hoping to pass SB 350 – which would establish a legal market and expunge a number of cannabis-related convictions – by the end of the session on November 30th. “This bill will mean we won’t have to cut school funding, fire departments will still operate at the same capacity,” State Senator Sharif Street told the publication. “And other government programs that citizens rely on will keep aiding Pennsylvanians.” The hurdle? A Republican-led General Assembly, which will have to get on board.

New York is also expected to move quickly. There had been some movement on legalization in 2019, but Governor Andrew Cuomo – who has long been reticent when it comes to marijuana – put it on the back burner as soon as Covid-19 hit. Two weeks ago he discussed it again, asking the legislature to include a legalization measure in the January budget. The thought of all the “cross-border sales,” says Beals, could ensure this. “Currently, folks in Albany are keenly aware of this because a large number of purchasers in Western Massachusetts” – where recreational dispensaries are legal – “appear to be coming from upstate New York.” With legalization in New Jersey, the entire New York City metropolitan area will soon have access. Until then – just remember it’s not legal until January 1st, 2021.

Correction: This article previously stated that New Jersey has 12 licensed cannabis businesses, out of a total of 24 licenses available. It has been updated to clarify that there are 24 additional licenses that have not been awarded.