Although legalizing marijuana is a relatively easy task — a state eliminates the prohibition standard and orders its police forces to stop busting people for weed — establishing a taxed and regulated system for the cannabis plant and its products has proven difficult for lawmakers in some parts of the country.
New Jersey has been battling it out for the past year over what legal weed should look, but it has been the issue of taxes that has prevented this move toward progressive territory from, well, actually moving. But there is a purported deal on the table right now between Governor Philip Murphy and legislative Democrats that could usher in legalization in the Garden State sometime this year. The only caveat, however, is the tax rate for tokers could be around $42 an ounce.
It has been Governor Murphy’s mission since he took office – legalize marijuana like beer and reap the benefits of the tax revenue. It’s a scheme that has been implemented and is working in several other states, including Colorado and California. Yet, when it comes to New Jersey, nobody seems to agree on how marijuana taxes should add up. Murphy says it’s “complicated” because the state has to create “an entire industry from scratch.” It’s a situation that is getting closer to being resolved. He told reporters this week that feels “optimistic” that the deal will get done soon.
But it might not be embraced by cannabis consumers.
The agreement would tax marijuana purchases by weight — $42 per ounce — instead of setting a percentage. This is apparently the middle line between a proposed 12 percent tax and Governor Murphy’s idea of somewhere closer to 25 percent. This shakes out to be around 14 percent for a $300 ounce or a 21 percent tax on a $200 ounce.
“Weight by volume is probably the way to the future in terms of how cannabis is going to be taxed,” Senator Nicholas Scutari told the New York Times.
While this tax scheme may be the way for lawmakers to get a recreational marijuana law on the books finally, it will do very little to snuff out the black market, according to a report from the New York Post. For that to happen, marijuana needs to be taxed more in line with how the state handles alcohol — 12 cents on beer, 85.7 cents on wine and $5.50 per gallon on hard liquor.
“Why would anybody buy the legal stuff?” wrote NY Post columnist John Crudele. “That’s especially true since having marijuana in your possession will be legal. At that sort of markup for the legal stuff, the street dealers are not only going to stay in business but also prosper,” he added.
But the votes are not necessarily in place yet to make this compromise a done deal. Most Republicans are still opposed to legalization, yet the proposed tax scheme is apparently swaying some to the other side. Governor Murphy says the bill is still in the works, but “we are machining it to get it over the goal line.”
If lawmakers can come to terms, allowing Murphy to sign a bill, there is hope that the transition from medical marijuana to recreational will be seamless. There is a proposal on the table that would allow dispensaries to begin slinging weed to adults 21 and over as soon as Murphy’s ink is dry. “If people can go to a legalized facility and buy it on Day 1, we’re going to encourage that to happen,” Senator Scutari said.