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New Jersey Sets $42-Per-Ounce Tax Rate on Recreational Cannabis

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[dropcap class=”kp-dropcap”]N[/dropcap]ew Jersey is set to legalize cannabis for recreational use within a few weeks after Gov. Phil Murphy and state legislative leaders reached an agreement on how to regulate and tax the program. Gov. Murphy and Senate President Steve Sweeney had been deadlocked on a tax rate, with Murphy favoring a higher retail sales rate. Democratic state Sen. Nicholas Scutari said the leaders agree on a $42-per-ounce tax rate on recreational cannabis. If approved, it could be one of the lowest tax rates on cannabis in the country.

The suggested tax system protects the state from a sudden loss of revenue should the price of cannabis drop, as has occurred in other legal states—the $42 tax rate would be the same whether the ounce of cannabis cost $50 or $300. After the bills are finalized, Democratic leaders will have to convince enough lawmakers to vote for the bills. Then the state will have to set up rules and regulations for the cannabis industry.

“I think the best-case scenario is you’re going to have marijuana actually available legally, January,” Sweeney told reporters Thursday. “That’s the fastest you’re going to get it.”

Under the new proposal, the governor will appoint three members to the new five-member Cannabis Regulatory Commission without requiring confirmation from the Senate. Scutari said the Senate president and speaker would likely appoint the other two members. Gov. Murphy was initially against the idea of creating a standalone commission.

New Jersey’s adult-use cannabis industry is expected to reach $1 billion in sales per year once the market fully matures. A recent poll from Monmouth University found that 62 percent of New Jersey residents polled support cannabis legalization, up from the 53 percent that supported legal cannabis last September.

 

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