“In many ways, municipalities hold the fate of statewide social equity efforts in their hands.”
By Jessica Gonzales and Joe Johnson, New Jersey Monitor
New Jersey made history on November 3, 2020, when more than 67 percent of voters approved adult-use cannabis legalization via ballot initiative.
With that vote, residents passed the baton to legislators to hammer out the details, then to regulators to set statewide rules for implementation, and, finally, to New Jersey’s 565 municipalities to set their own rules, beginning with whether to opt in or out of allowing cannabis establishments.
Municipalities are the driving force in determining whether legalization will live up to its potential for equity and racial justice, or whether it becomes a missed opportunity that favors the rich and powerful. It’s imperative that municipalities adopt policies to reinvest in communities and create meaningful, inclusive opportunities for New Jerseyans.
New Jersey’s legislative and regulatory framework broke new ground for justice, with a deliberately non-competitive licensing scheme; no caps imposed on number of micro-cultivation, manufacturing, and retail licenses; relatively low application fees, beginning at $100; and priority application status for communities most harmed by prohibition. Importantly, the law stipulates that 100 percent of the discretionary cultivation excise fee and 70 percent of retail tax revenue must be appropriated for community reinvestment in municipalities defined as impact zones, a monumental step toward addressing the harms of the drug war, which disproportionately targeted communities of color, especially Black communities.
Municipalities have authority in their towns over the number and types of licenses awarded, business locations, application fees, and criteria to satisfy the legal requirement for “proof of local support.” All municipalities that opt in have the power to implement a maximum two percent cannabis sales tax to support local initiatives. Some municipalities, like Jersey City, have dedicated that revenue to public schools and social programs. Communities elsewhere have pointed to housing assistance, child care, tuition, and harm reduction programs, among other initiatives.
Unfortunately, the patchwork of municipal policies enacted so far has created a limited and limiting licensing scheme locally that does not exist on the state level.
Most of the approximately 100 municipalities that opted in have raised excessive barriers to entry. Many have imposed caps on licenses, with some issuing only two per town. Prohibitive local application fees can range from $2,500 to $10,000 for initial approval, and upwards of $30,000 for renewal. Some towns require municipal licensing applications that differ significantly from the state’s, doubling costs for professional preparation amid other expenses. Many towns heavily restrict zoning, which can choke businesses from commerce and lead to exploitation from landlords and corruption. Many municipalities do not have a system for priority review or approval for communities harmed by cannabis prohibition, and a lack of transparency conceals whether the processes are fair. And, while many towns have implemented the two percent local tax, few have determined which initiatives it will support.
There is a better way. We need municipalities to pass inclusive ordinances and to replace existing ones that take the wrong approach. Municipalities, and their residents, benefit from emulating the state’s low licensing fees or using a sliding scale, avoiding arbitrarily low caps on the number of businesses, allowing businesses to operate in a range of areas, and offering business assistance to create a more inclusive industry.
In many ways, municipalities hold the fate of statewide social equity efforts in their hands.
Our towns can cement the core principles of fairness, opportunity, and racial justice by working in concert with the New Jersey Cannabis Regulatory Commission to lower, not heighten, barriers to entry. We can seize on the potential of this emerging industry, but only if we honor the promises of equity and access at every level of government.
Jessica Gonzalez is an associate at the law firm Hiller, PC, where she serves as a cannabis and intellectual property attorney. Joe Johnson is policy counsel at the ACLU of New Jersey.
Photo courtesy of Mike Latimer.