Less than a week after New Jersey voters overwhelmingly approved a referendum to legalize marijuana, state lawmakers are set to take up a new bill on just what the cannabis sales system will look like, including who will profit from the projected multibillion-dollar market.
On Monday, committees in both the state Senate and Assembly are scheduled to hold hearings on legislation to establish a regulatory framework for the new industry, covering matters such as taxes and licensing. Introduced Friday by Sen. Nick Scutari (D) and Senate President Stephen Sweeney (D), the 216-page bill provides the first detailed look at how New Jersey’s marijuana market might operate.
Some of the key provisions: Adults 21 and older could purchase and possess up to an ounce of marijuana or five grams of concentrated cannabis. Retail stores would be allowed statewide, but local jurisdictions could ban them. Delivery services could operate statewide regardless of local bans. Retailers could allow on-site consumption as long as they have local approval.
But unlike most other legal states, home cultivation wouldn’t be allowed under the bill, titled the “Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act.”
A Senate committee on Monday will also consider two separate bills to decriminalize cannabis possession in the short term.
Under the legalization plan, until newly licensed businesses are up and running—which is expected to take a year or more—existing medical marijuana dispensaries would be able to sell to adult consumers.
“We are at the goal line,” Scutari told NJ.com on Friday. Lawmakers hope the legislation and its Assembly counterpart will pass the full Legislature by November 16.
The effort to rush the bill into the end zone, however, has already raised concerns. Even some who supported the legalization referendum have called the current version of Scutari’s bill a missed opportunity for equity and social justice reforms.
“The bill was posted Friday less than 24 hours ago, giving the public 0 business days to review 200 pages,” ACLU of New Jersey posted to Twitter on Saturday. “More to come as we complete our review, but it seems key racial and social justice provisions need strengthening or are missing.”
The process must be transparent, democratic, and inclusive.
A hearing for legislation to make the vote law was scheduled for Monday Nov. 9. The bill was posted Friday less than 24 hours ago, giving the public 0 business days to review 200 pages.
— ACLU of New Jersey (@ACLUNJ) November 7, 2020
Among the issues critics raised with the bill are its use of tax revenue to fund local police departments, licensing rules that seem to give preference to deep-pocketed businesses and even requirements on customer IDs that could cause obstacles for residents of U.S. territories and members of Native American tribes.
Much of the current bill is taken from Scutari’s past efforts to legalize cannabis, although the senator has been working with Gov. Phil Murphy (D) and other officials to update the legislation in recent months. Both Scutari and the governor have touted legalization’s economic and social justice benefits.
Murphy named Dianna Houenou, a current administration staffer and former policy counsel to the ACLU of New Jersey, to lead the state’s Cannabis Regulatory Commission (CRC) on Friday. She made clear that social justice will be a key objective.
First Dispensaries, Then New Businesses
One of Scutari’s main goals with the bill’s speedy timeline is to begin legal sales as soon as possible. “The retail sales will be available at the medical stores as soon as they have the product,” Scutari told Marijuana Moment in an interview on Thursday. “That’s the first wave of legal availability. The second is obviously newly started regulated businesses. That takes quite a bit longer.”
Last month Scutari proposed a plan that would have opened dispensaries to all adults within just weeks after the election, though a top regulator said that was unrealistic. The state’s dispensaries have already struggled to keep up with existing patient demand.
In an attempt to remedy that, Scutari’s bill would allow each medical producer to open two more cultivation facilities. “There’s no reason why, in the next 90 days, they can’t grow any more product and get it out on the shelves,” he said. “I mean, not saying they will, but they could—it’s not a physical impossibility.”
As for new businesses, the state Cannabis Regulatory Commission would grant licenses to growers, processors, wholesalers, laboratory testing facilities, distributors, delivery services and retailers. At least 25 percent of licenses would go to microbusinesses, which are capped at 10 employees and include additional residency requirements.
Unlike in New Jersey’s medical marijuana system, there would be no set limit on the number of business licenses available. Customer demand would determine the number of licenses, and more could be added if needed.
In terms of equity, 15 percent of licenses would be reserved for minority-owned businesses, while another 15 percent would go to businesses owned by women or veterans. Applicants would also receive priority status for planning to hire employees from areas with high arrest, crime or unemployment rates. On top of that, 35 percent of licenses in each license category would be so-called conditional licenses, aimed at making the process more accessible to lower-income applicants.
A new office, the Office of Minority, Disabled Veterans and Women Cannabis Business Development, would promote inclusion of marginalized groups.
Karen O’Keefe, director of state policies for the Marijuana Policy Project, said the bill’s authors “include ambitious goals for minority ownership, but it is unclear how this would be realized apart from outreach.”
The application process itself could also tilt the scale in favor of wealthier companies, she added, which have an easier time covering the cost of rent and other business expenses while waiting for a license to be approved.
“The licensing system is based on a scored, point-based system that seems to require property and local approvals at the time of application,” O’Keefe said. “Requiring property at the time of applications — despite the fact that most applicants will presumably never get a license — requires deep pockets and is detrimental to equity goals.”
Taxes Fund Law Enforcement
The proposed legislation would set a relatively low tax rate on adult-use cannabis compared to other legal states. Only New Jersey’s 6.625 percent sales tax would apply, though municipalities could impose an additional 2 percent on the industry, which could be passed to consumers.
By contrast, most other states impose marijuana-specific excise taxes, with some rates exceeding 30 percent.
At first reading of NJ's #cannabis bill draft, not only does it only apply the sales tax meaning it raises a paltry amount of funds, the vast majority of those funds goes to *🥁 🥁 🥁* police departments!
You can't make this up. This is the height of dark comedy. #NJpol
— Brandon J. McKoy (@Brandon_McKoy) November 7, 2020
Revenue from taxes and licensing fees would go into a fund to pay for the Cannabis Regulatory Commission’s operating costs as well to reimburse local police departments for training officers to recognize impairment. The remainder of the revenue will go to the state’s general fund.
Social justice activists have hammered that plan, urging the state to reinvest tax revenue into communities that have been disproportionately stopped, searched, arrested, charged and convicted by law enforcement in New Jersey and around the country.
This all completely stems from lawmakers continuing to insist against a sensible tax structure that would ensure a healthy market while raising the resources to enable much needed community investments. To only apply the sales tax at 6.625% (& a max 2% local tax) is nonsensical.
— Brandon J. McKoy (@Brandon_McKoy) November 7, 2020
“When it comes to this bill,” Brandon J. McCoy, president of New Jersey Policy Perspective, said on Twitter, “#BlackLivesMatter is a punchline.”
Homegrow Still a No-Go
Consumers who want to opt out of the commercial system or simply try their hand at growing cannabis at home will be out of luck under Scutari’s proposal. While most other legal states do allow personal cultivation by adults, the senator told Marijuana Moment that he’s worried that homegrown cannabis would be sold illegally.
“It seems like it’s just an additional black market that ends up happening—people grow more than they need, they sell it,” Scutari said. “And it’s an impossibility to police.”
“We’re not ready to take that on right now,” the senator added. “After the market is mature and there’s a national model for how we’re going to deal with marijuana, then yeah, we may allow that.”
O’Keefe at Marijuana Policy Project noted a few other provisions of the legislation she’d like to see changed. First, while the bill would remove criminal penalties for minors in possession of marijuana, it would impose a $250 fine, which she called excessive.
The measure also requires customers to have a U.S. passport or state ID to enter a marijuana establishment. “This would prevent many individuals from DC, U.S. territories, Native American tribes, and other countries from purchasing cannabis while visiting New Jersey,” she said.
Scutari’s bill, S21, is scheduled for a public hearing before the Senate Judiciary Hearing on Monday at 10 a.m. The Assembly Oversight, Reform and Federal Relations Committee will consider the chamber’s companion version at the same time, and the Assembly Appropriations Committee is set to hear the legislation Thursday.
Meanwhile, a legislative committee is also set to consider two separate decriminalization bills on Monday. One measure would replace criminal penalties for possession of up to six ounces of marijuana with a warning. A subsequent violation would carry a $25 fine. A second measure, which was approved by the Assembly in June, would remove criminal penalties for smaller amounts.
In the meantime, New Jersey Attorney General Gurbir Grewal (D) issued a statement after the election urging police and prosecutors to exercise discretion around marijuana offenses.
Across the country this week, voters approved every major drug reform measure put before them, including marijuana measures in five states and decriminalization of psychedelic plants in Washington, DC. Oregon also approved a separate measures decriminalizing possession of all drugs and legalizing psilocybin for therapeutic use.
Congressman Earl Blumenauer (D-OR) told Marijuana Moment on Wednesday the overwhelming results are likely to encourage reform at the federal level.
Congressman Files New Marijuana Banking Reform Amendment To Large-Scale House Bill
The House sponsor of a bill to protect banks that work with state-legal marijuana businesses announced on Friday that he is seeking to attach an amendment containing the reform to a broader bill dealing with research and innovation in the tech and manufacturing sectors.
Rep. Ed Perlmutter (D-CO), sponsor of the Secure and Fair Enforcement (SAFE) Banking Act, has expressed interest in finding another vehicle to pursue his proposal after it was stripped from a separate defense bill late last year. The congressman’s legislation has cleared the House in five forms at this point, only to stall in the Senate.
His latest attempt to get the reform enacted is by filing an amendment with the SAFE Banking language to the America COMPETES Act, which does not deal specifically with cannabis issues as drafted but was introduced in the House this week.
“Cannabis-related businesses—big and small—and their employees are in desperate need of access to the banking system and access to capital in order to operate in an efficient, safe manner and compete in the growing global cannabis marketplace,” Perlmutter, who is retiring from Congress after this session and committed to passing his bill first, said in a press release.
I have filed #SAFEBanking as an amendment to #AmericaCOMPETES b/c cannabis-related businesses – big and small – are in desperate need of access to capital & the banking system in order to operate in an efficient, safe manner & compete in the growing global cannabis marketplace.
— Rep. Ed Perlmutter (@RepPerlmutter) January 28, 2022
“The SAFE Banking Act is the best opportunity to enact some type of federal cannabis reform this year and will serve as the first of many steps to help ensure cannabis businesses are treated the same as any other legal, legitimate business,” he said. “I will continue to pursue every possible avenue to get SAFE Banking over the finish line and signed into law.”
It remains to be seen whether the America COMPETES Act will serve as a more effective vehicle for the cannabis banking bill than the National Defense Authorization Act (NDAA), where the language was successfully attached on the House side but later removed amid bicameral negotiations. Perlmutter said at the time that Senate leadership, which is working on comprehensive legalization legislation, was to blame for the decision to remove his amendment from the proposal.
The new SAFE Banking Act amendment will still need to be made in order by the House Rules Committee in order to be formally be considered on the House floor when the body takes up the research and innovation package. The deadline to file amendments was Friday, and the panel is set to take them up starting on Tuesday.
Even some Republicans are scratching their heads about how Democrats have so far failed to pass the modest banking reform with majorities in both chambers and control of the White House. For example, Rep. Rand Paul (R-KY) criticized his Democratic colleagues over the issue last month.
In the interim, federal financial regulator Rodney Hood—a board member and former chairman of the federal National Credit Union Administration (NCUA)—recently said that marijuana legalization is not a question of “if” but “when,” and he’s again offering advice on how to navigate the federal-state conflict that has left many banks reluctant to work with cannabis businesses.
Ohio Lawmakers Will Be Forced To Consider Marijuana Legalization As State Validates Activist Signatures
Ohio activists have collected enough signatures to force the legislature to take up the issue of marijuana legalization, the secretary of state’s office confirmed on Friday.
This comes about two weeks after the Coalition to Regulate Marijuana Like Alcohol (CTRMLA) submitted a final round of signatures for the measure. The petitions’ formal validation triggers the legislative review of legalization, but it does not require lawmakers to enact the reform.
The legislature now has four months to consider the campaign’s cannabis reform proposal. Lawmakers can adopt the measure, reject it or pass an amended version. If they do not pass the measure, organizers can then collect an additional 132,887 valid signatures from registered voters to place the issue on the ballot in November.
CTRMLA previously submitted petitions for the initiative but the state said they were short some 13,000 signatures, requiring activists to go back and make up the difference.
“We are ready and eager to work with Ohio legislators over the next four months to legalize the adult use of marijuana in Ohio,” CTRMLA spokesman Tom Haren said in a press release. “We are also fully prepared to collect additional signatures and take this issue directly to voters on November 8, 2022, if legislators fail to act.”
The measure that lawmakers will be required to consider would legalize possession of up to 2.5 ounces of cannabis for adults 21 and older, and they could also have up to 15 grams of marijuana concentrates. Individuals could grow up to six plants for personal use, with a maximum 12 plants per household.
A 10 percent sales tax would be imposed on cannabis sales, with revenue being divided up to support social equity and jobs programs (36 percent), localities that allow adult-use marijuana enterprises to operate in their area (36 percent), education and substance misuse programs (25 percent) and administrative costs of implementing the system (three percent).
A Division of Cannabis Control would be established under the state Department of Commerce. It would have authority to “license, regulate, investigate, and penalize adult use cannabis operators, adult use testing laboratories, and individuals required to be licensed.”
The measure gives current medical cannabis businesses a head start in the recreational market. Regulators would need to begin issuing adult-use licenses to qualified applicants who operate existing medical operations within nine months of enactment.
The division would also be required to issue 40 recreational cultivator licenses and 50 adult-use retailer licenses “with a preference to applications who are participants under the cannabis social equity and jobs program.” And it would authorize regulators to issue additional licenses for the recreational market two years after the first operator is approved.
Individual municipalities would be able to opt out of allowing new recreational cannabis companies from opening in their area, but they could not block existing medical marijuana firms even if they want to add co-located adult-use operations. Employers could also maintain policies prohibiting workers from consuming cannabis for adult use.
Further, regulators would be required to “enter into an agreement with the Department of Mental Health and Addiction Services” to provide “cannabis addiction services,” which would involve “education and treatment for individuals with addiction issues related to cannabis or other controlled substances including opioids.”
With respect to social equity, some advocate are concerned about the lack of specific language on automatic expungements to clear the records of people with convictions for offenses that would be made legal under the legislation. That said, it does include a provision requiring regulators to “study and fund” criminal justice reform initiatives including expungements.
Ohio voters rejected a 2015 legalization initiative that faced criticism from many reform advocates because of an oligopolistic model that would’ve granted exclusive control over cannabis production to the very funders who paid to put the measure on the ballot.
Activists suspended a campaign to place another measure on the 2020 ballot due to the coronavirus pandemic.
Aside from the new voter initiative, state lawmakers from both parties are separately working to advance marijuana reform.
A legalization bill that was the first of its kind to be introduced in the Ohio legislature last year would legalize the possession, sale and cultivation of cannabis by adults. It’s being championed by Reps. Casey Weinstein (D) and Terrence Upchurch (D).
A pair of Ohio Republican lawmakers similarly filed a bill to legalize marijuana in the state in December. Reps. Jamie Callender (R) and Ron Ferguson (R) first announced their plan to push the legislative reform proposal in October and circulated a co-sponsorship memo to build support for the measure.
There are also additional local reform efforts underway in Ohio for 2022.
After voters in seven cities approved ballot measures to decriminalize marijuana possession during last November’s election—which builds on a slew of previous local reforms in the state—campaigns are now looking to enact decriminalization in Marietta, Rushville, Rutland, Shawnee, McArthur and Laurelville.
Ohio marijuana activists already successfully proved that they turned in enough valid signatures to put a local decriminalization initiative before Kent voters after having missed the 2021 ballot due to a verification error on the part of county officials. That measure is now expected to go before voters this November.
Top Federal Drug Official Says Marijuana Use ‘Stable’ Among Youth At Prohibitionist-Hosted Panel Sponsored By D.A.R.E.
A top federal drug official participated in a panel hosted by a prohibitionist group and sponsored by D.A.R.E.—and she again reiterated that data shows youth marijuana use has remained stable “despite the legalization in many states.”
While National Institute on Drug Abuse (NIDA) Director Nora Volkow expressed concerns about certain cannabis trends related to potency, commercialization and use by pregnant women, she affirmed that surveys funded by her own federal agency have demonstrated that adolescent marijuana use is “stable,” despite repeated arguments from prohibitionists that legalization would lead more young people to experiment with cannabis.
The event was hosted by Smart Approaches to Marijuana (SAM), an anti-legalization group. SAM President Kevin Sabet and the organization’s co-founder former Rep. Patrick Kennedy (D-RI) led the discussion.
“The higher the content of THC, the greater the likelihood that you will become addicted to the drug… The content of THC has gone up at least 4-fold.”
– Dr. Nora Volkow, M.D., Director of the National Institute on Drug Abuse (NIDA)
— SAM (@learnaboutsam) January 28, 2022
Sabet said that data on youth use has showed varying results in states that have legalized cannabis and asked Volkow to weigh in on the issue. She replied that federal data “have not been able to see large differences in terms of prevalence” of cannabis consumption among young people in legal and non-legal states.
The official made similar comments in an interview with Marijuana Moment late last year.
That said, Volkow said that they have seen some differences when it comes to consumption rates among adolescents for edible cannabis products.
“But the effects are not large, and one of the things that also certainly surprised me [is] the rate overall, the prevalence rates of marijuana use among teenagers, have been stable despite the legalization in many states,” she said, adding that there are some concerns about increased frequency of use and limitations in data collection with respect to dosages being taken.
Volkow also commented on a recent federally funded survey that found illicit drug use by young people has taken a significant plunge in the last year, though she largely attributed that to the reduced social interaction resulting from COVID-19 policies across the country.
“Interestingly what we’ve observed during the COVID pandemic is, across schools in the United States, the prevalence of drug use has gone down,” she said, “which likely very much reflects the fact that kids don’t have the opportunity to interact with others, and drug taking at that stage is a peer pressure behavior.”
The official also briefly addressed the fact that she feels criminalizing people over drugs in the first place is the wrong policy approach—a point she’s made repeatedly in interviews and blog posts.
She said that “criminalization has created a system for that allows a structural racism to be implemented, you can control people, and that’s a horrible policy. This criminalization actually opens up our eyes that well, yes, we need to change that.”
However, she said that “liberalizing and making the drugs widely available, with no counter messaging,” is not the alternative she would recommend.
“We need to provide them [addicts] with treatment, so just to say ok we are going to liberalize everything… and not support treatment for those people under those conditions, I actually think it is quite irresponsible.”
– Dr. Nora Volkow, M.D., Director of NIDA
— SAM (@learnaboutsam) January 28, 2022
While the SAM-hosted event did not touch specifically on psychedelics policy, Volkow has also recently discussed that issues, especially as data has shown an increase in use of the substances among adults.
She said people are going to keep using substances such as psilocybin—especially as the reform movement expands and there’s increased attention being drawn to the potential therapeutic benefits—and so researchers and regulators will need to keep up.
Volkow also mentioned that NIDA is “pleased” the Drug Enforcement Administration recently announced plans to significantly increase the quota of certain psychedelic drugs to be produced for use in research.
Photo courtesy of Philip Steffan.