NJ Gov. Murphy, Sweeney have deal on legal weed taxes. Here's what we know.
Gov. Phil Murphy and Senate President Stephen Sweeney have reached an agreement on how to tax legal weed, possibly overcoming a hurdle that had kept a marijuana legalization bill from advancing in Trenton.
The agreement gives the Cannabis Regulatory Commission the power to charge a fee on cultivators equal to a 7% sales tax immediately, instead of the 6.625% sales tax rate.
And nine months later, the commission could decide to charge a set fee that depends on the average price of an ounce of legal marijuana, according to officials in the Murphy administration and the Senate Democrats' office.
The fee would be applied to cultivators, one of six types of licenses for those in the weed businesses, and would be reevaluated each year.
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The agreement, however, does not yet have the signoff from Assembly Speaker Craig Coughlin, the sources said. Coughlin, D-Middlesex, has supported an additional fee, in line with Murphy, while Sweeney said last week that he opposed an additional tax.
“I think we made good progress," Murphy said when asked about the deal during a coronavirus briefing on Monday. "I’m optimistic, and I wanted to give a shoutout to the Senate president and speaker and their teams, who have been in good spirit to try and find that common ground.”
Sweeney said Monday that he agreed to the fees because they would not immediately burden a young industry.
"We're giving the industry a chance to grow, pardon the pun," he said. "This isn’t automatic. The commission has to look at the conditions and determine if it should assess a fee or not.”
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Regardless of the tax rate, Sweeney said, the marijuana industry couldn't fix the state budget, which is racked with debt and pension payments. For example, a 7% initial sales tax rate would generate $3 million or $4 million more than a 6.625% tax rate, he said.
"The goal is to create an industry that’s healthy," he said. "I want to see 43,000 people working this industry. That’s what we projected. They're the tax dollars I care about."
A 216-page bill that sets the basic rules for the marijuana industry stalled in Trenton last week over the tax disagreement, with Murphy, Coughlin and advocacy groups pushing for a revenue booster that would specifically benefit communities of color, which were disproportionately harmed by the war on drugs.
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Under the constitutional amendment alone, which was overwhelmingly passed by voters earlier this month, legal weed would be subject to the 6.625% sales tax. Any additional taxes or fees agreed to Monday would be levied on top of the sales tax.
Lawmakers are rushing to pass the bill before Jan. 1, the effective date of the constitutional amendment passed by voters. The bill had been slated for a vote on Monday but was pulled from the agenda.
It appeared that a companion bill, which would decriminalize up to 6 ounces of marijuana and lower the penalties for possession of psychedelic mushrooms, was following the same fate in Trenton's hands.
The bill was scheduled for votes in both the Senate and Assembly on Monday, but the Assembly couldn't agree on provisions of the bill and its vote was canceled.
The Senate passed the decriminalization bill, and Sweeney set another voting session for next week to discuss the legalization bill.
Stacey Barchenger is a reporter in the New Jersey Statehouse. For unlimited access to her work covering New Jersey’s lawmakers and political power structure, please subscribe or activate your digital account today.