We’re less than a decade into the marijuana legalization experiment in America, and the biggest threat to legal weed to emerge in that time isn’t law enforcement raids, but excessive taxes levied by city and state governments thirsty for a source of free money (and unwilling to do something radical, like, raise taxes on high-earning individuals or corporations).
In New Jersey, where legalization is barely a week old, this lesson appears to be going unheeded. One prominent lawmaker is already plotting a way to add taxes beyond what a voter-approved initiative allows, and is selling it via a Madison Avenue technique: Rebranding!
Instead of a “sin tax,” what if we called levies on cannabis a “user fee”? And what if we diverted cannabis user fees to law enforcement?
This isn’t exactly what the voters approved on Election Day—and this is vastly unpopular with some of the legalization and social-justice advocates who passed the bill—but this is what New Jersey lawmakers are doing.
If you pay extra money to use cannabis in New Jersey, do you pay a tax, or a "user fee"? Either way, ... [+]
High taxes have been blamed across the country for legal cannabis markets’ failures to meet revenue expectations. High taxes—and local governments’ choice to ban legal cannabis sales—are generally understood as the main reason why the illegal market in California may be as much as five times larger than the legal market, as one member of the state Legislature estimated last summer.
Despite all this, governments continue to look to marijuana legalization as a solution to budget woes exacerbated by the COVID-19 pandemic.
In New York, Gov. Andrew Cuomo has openly mused using cannabis taxes to pay to fix New York City’s very old, very creaking, very crowded (at least when there’s not a pandemic) subway.
And, back in California, lawmakers upset that the country’s oldest cannabis market hasn’t filled public coffers to bursting have spent the last year pushing for more cops and law-enforcement options, rather than lower taxes.
Across the Hudson River in New Jersey, lawmakers’ hands are somewhat tied. Question 1, approved by a 2-to-1 margin on Election Day, capped state sales taxes at 6.625 percent, and allowed local jurisdictions to add additional taxes of no more than 2 percent.
Among the dedicated set-asides for New Jersey weed taxes would be law enforcement. Police agencies across the state would be able to use cannabis tax money to “reimburse expenses incurred by any county or municipality for the training costs associated with the attendance and participation of a police officer in a Drug Recognition Expert program for detecting, identifying, and apprehending drug-impaired motor vehicle operators,” according to SB 21, the enactment legislation.
But when and if recreational sales begin—sometime after January 1, 2021, and sales only begin if SB 21 or competing legislation enabling sales and possession limits pass the state Legislature—total weed taxes would be capped at 8.625 percent.
That would some of the lowest in the country on recreational weed. That might actually work! That’s the kind of tax burden most cannabis merchants say would make them competitive with the “traditional” illicit market.
And this may be why New Jersey General Assembly Speaker Craig Coughlin is suggesting New Jersey pile more taxes on cannabis users, but calling for it via the careful euphemism of “an additional user fee.”
What, exactly, does he mean? How much would it be, who would pay for it—and can he do this? phone call and an email sent to Coughlin’s office on Wednesday were not immediately returned.
Advocates involved with the legalization campaign said they’re similarly left in the dark on the details, but the intent is clear: Legalization is an ATM.
“The ballot measure itself didn’t really outline much of the specifics, so it left a lot of discretion up to the Legislature,” one said. “Which, we are seeing, is turning into a complete shit show.”
The unanswered questions but clearly stated desires around generating more money for law enforcement from marijuana users are one of a pile of concerns for social-justice advocates.
They say that the New Jersey legalization enactment bill conveniently ignores questions of racial equity and restorative justice. Nor does it guarantee any cannabis tax monies will go towards education, job-training, or other efforts needed in struggling communities.
Just expensive store-bought cannabis, funding the police.
“Once again, we put in effort and resources, only to have the legislature stare with greed in their eyes at an endeavor that should be an opportunity for social justice,” the Coalition for Cannabis Justice in New Jersey said in a press release Monday.
State lawmakers have said they want to pass the enactment bill by November 16.
