Judge striking gavel in courtroom with American flag draped on desk, symbolizing legal decisions in New Jersey Cannabis 2020

New Jersey Lawmakers Attempt to Fast-Track 2020 Cannabis Recreational Market

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In 2020, New Jersey voters approved a constitutional amendment to legalize marijuana, positioning the state as the fourth most populated state to legalize recreational cannabis. This monumental decision will pave the way for a new industry, potentially creating thousands of jobs and generating over $126 million in annual tax revenue once the market is established.

However, adults 21 and older will need to exercise patience before they can legally purchase and consume cannabis. While legalization is passed, New Jersey must still establish the rules and regulations governing the cannabis market. The state will also set up the licensing and application processes, which will be followed by a comprehensive review of applications and site inspections. This process could take years to complete. However, the introduction of the Marijuana Sales Bill (S-21/A-21) on November 5, 2020, might accelerate the timeline and get cannabis products onto the shelves sooner.

The Marijuana Sales Bill and Its Potential Impact

The bill, introduced by Sen. Nick Scutari (D) and Senate President Stephen Sweeney (D), provides the first detailed framework for how New Jersey’s cannabis market could function. Lawmakers hope to pass this legislation by November 16, 2020, and it could allow the state’s nine existing medical marijuana companies to sell excess cannabis to recreational users. However, the biggest hurdle is that there is currently no excess cannabis supply. Diverting medical marijuana to the recreational market could lead to shortages for patients who rely on cannabis for medical purposes.

New Jersey’s medical marijuana program, established in 2010, has registered over 80,000 patients. COVID-19 challenges and an expanded list of approved medical conditions have recently increased demand, creating further supply constraints. Many dispensaries in New Jersey are struggling to meet the rising demand for medical marijuana while also anticipating the additional pressure of recreational users. In a recent webinar, Sen. Scutari acknowledged that no current operators are fully prepared to start selling adult-use cannabis, emphasizing the need for additional infrastructure and operational readiness.

Key Features of New Jersey’s 2020 Recreational Cannabis Legislation

The new legislation allows adults aged 21 and older to purchase and possess up to an ounce of cannabis or five grams of cannabis concentrate. Retail dispensaries will be allowed to operate statewide, although local jurisdictions can impose temporary or permanent moratoriums. Importantly, delivery services will be permitted statewide, regardless of local bans. Additionally, dispensaries may allow on-site consumption, provided they have local approval.

A 6.625% state sales tax and a 2% municipal tax will be levied on cannabis purchases, making New Jersey’s cannabis tax the lowest in the nation. This relatively low tax rate aims to attract consumers away from the illicit market and into the regulated, legal market. Legal cannabis businesses will be required to follow stringent operational regulations, ensuring that all cannabis products undergo. Quality control and laboratory testing will be standard to meet high standards for safety and purity.

Competition from the Illicit Market

The legal cannabis market faces a major challenge from the black market, where illicit operators often undercut prices and sidestep regulations. These illegal vendors do not adhere to packaging, labeling, or lab-testing requirements, which are designed to ensure product safety. Scott Rudder, former New Jersey legislator and president of the CannaBusiness Association, commented on this issue, stating, “People are selling it on the street at a much lower rate. We want to make sure that our prices are much more attractive to people who want to go to a legal market and buy something they can trust.”

Despite these challenges, New Jersey is poised to become one of the largest adult-use cannabis markets in the world.

Preparing for New Jersey’s Recreational Cannabis Market in 2020 and Beyond

Although New Jersey has not yet begun issuing cannabis licenses, now is the perfect time for entrepreneurs to start planning. As the market moves swiftly, gaining a head start can provide a significant competitive advantage. Whether you’re drafting your business plan or scouting potential locations, starting early will give you the edge when the state begins accepting applications.

Explore business opportunities in New Jersey’s recreational cannabis market. Contact us today to learn more.

Andy is an Operations Advisor at Catalyst BC.

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