New Jersey Delays Legalization of Recreational Cannabis

The canceling of the New Jersey Assembly vote to legalize recreational cannabis reinforces the difficulty in using the state legislature, rather than the ballot, to legalize marijuana. Lawmakers represent constituents and interests that they represent when drafting and enacting legislation. Whereas, voters act on what is put before them, and they will generally accept the conditions. In this instance, the redistribution of future cannabis revenues has scuttled New Jersey’s progress.

New Jersey’s proposed legislation to legalize recreational cannabis is progressive, and goes further than most states in designating a percentage of licenses for women, minorities and disabled vets. The legislation also automatically provides for the expungement of prior convictions. As we see it, everyone in New Jersey wants their slice of the pie. The problem is that, unlike Trivial Pursuit, it is very difficult to place all of the pieces together side-by-side given the different incentives and motivations for the state, legislatures, advocates and residents.

In the ideal world advocacy and social justice would drive the industry’s build out and pricing. However, states that allow local municipalities to opt-out introduce a new level of inequality and over-concentration of cannabis activity in economically disadvantaged municipalities. New Jersey’s legislation attempts to address social injustice and economic equality by providing persons who live in a disadvantaged area and earn less than $200,000 with priority in the application process. This solution has two problems. First, it would promote an over-concentration of cannabis facilities in economically disadvantaged areas. Second, the income cap is probably too high to capture economically disadvantaged persons. We question why the legislation does not require municipalities, especially those such as Jersey City or Hoboken, to adopt a social equity program prior to establishing the license allocation process. Using this approach, those persons would be able to benefit from opening a cannabis establishment in someone else’s backyard.

Finally, we believe that the state and local interest in generating tax revenues creates a conflict with providing licenses to mom and pop shops. Established national businesses that have access to lots of capital can accelerate the sales in the state, and increase tax revenues. We believe that it would be in the best interest of all parties to encourage these national businesses to infuse capital and know how into these social equity licenses, which could benefit both the advocates and the revenue seekers. Perhaps only the New Jersey voter will be able to solve this problem, and legalize recreational cannabis in November.

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