As you are aware, Governor Murphy identified the legalization of the adult use of marijuana as a top priority for his Administration. Senate President Sweeney also supports this and has publicly indicated that there is sufficient support in the Senate to advance enabling this legislation; and, Speaker Coughlin recently stated that he also supports legalization. With the State’s three leaders all on record in support, it is virtually certain that legalization will be realized in the near future. Significant issues remain, however, and there is some disagreement over the form of such a bill, though it is expected that a bill will head to the Governor this fall.
The purpose of this letter is to update mayors on where this issue stands, the role the League has taken and our suggestions and, for your consideration and action, League taskforce recommendations to the Legislature
While a number of bills have been introduced, it is best to view them as conversation starters. No one has yet to see a consensus bill. We note that every bill and concept proposed for discussion includes an “opt-out” provision for municipalities, meaning marijuana would be legalized in all municipalities unless a municipality takes affirmative action to opt-out. Further, recent press reports indicate a consensus among legislative sponsors on a number of provisions, including:
- A local option tax of up to 2% to be retained by the host municipality;
- The creation of a 5-member commission to oversee marijuana regulations, permitting and an enforcement division. The Governor would appoint three members, and the Legislature would appoint the remaining two; and,
- Automatic eligibility for those convicted of marijuana possession for criminal record expungement; individuals would still need to go through a process for expungement.
We note that these press accounts indicate support among the involved Legislators and do not reference the Murphy Administration.
Other press accounts and word of mouth indicate that a bill to expand the State’s medical marijuana program would move concurrently with an adult, recreational use bill. Additionally, it is generally reported that a total tax on the industry would be about 25%, not including any local option tax. It is also likely that there will be four distinct types of licenses: 1) growth/cultivation; 2) manufacturing; 3) transportation/distribution and, 4) retail. It is our understanding that homegrown products will not be authorized. We expect that a municipality will have the option to opt-out of any or all of the four license types.
What the League Has Done
Earlier this year, League President Jim Cassella, Mayor of East Rutherford, appointed a Task Force on this issue to protect municipal interest. The Task Force subdivided into four subcommittees to examine the discrete issue, including Budget and Finance, Land Use, Quality of Life and Public Safety. League staff reached out to its counterparts in other states to learn what worked, what did not and their advice on how to proceed. While there was no consensus on the larger legalization issue, there were some recommendations and guiding principles developed to safeguard the interests of local governments and property taxpayers in the event, now likely, that adult, recreational use of marijuana is legalized.
The League reached out to partners such as the New Jersey Urban Mayors Association (NJUMA) and the New Jersey Conference of Mayors (NJCM) and met with the prime Senate sponsor, Senator Nick Scutari in early August.
The League, NJUMA and NJCM followed up with the Senator about a week later with a series of comments and recommendations. In our correspondence, we stated that all three organizations are generally supportive of the expansion of medical marijuana and decriminalization, but are not prepared to support the current legislative proposals for the legalization of recreational marijuana. And if such a bill advances there should be provisions that support and protect the interest of New Jersey’s municipalities. In doing so, we offered the following comments:
Revenues and the Local Option Tax
Recognizing that municipalities will likely only opt in with assurance of projected revenues, we recommend the following:
- Any legislation authorizes municipalities to implement a local excise tax of up to 5% on any or all of the four proposed licenses;
- Licensees should be required, as a condition of the license, to enter into a host benefit agreement with the municipality. The framework for this would be similar to the model used in Massachusetts;
- There should be a mechanism in place to verify that the revenues collected as a result of a local excise tax are being returned appropriately to the host municipality;
- Licensees should also be subject to any local license or mercantile fees, as would be the case with any other business.
- Of revenues collected by the state, we further suggest the following:
- Portions of this funding be dedicated for specific purposes to assist local law and health enforcement and public safety, including funding for Drug Recognition Experts (DREs); and,
- The development of a statewide DUI protocol.
Comments: As noted above, the Legislative sponsors, according to press reports, agree with a 2% local option tax. A municipality which chooses to opt-in should be assured that revenues will offset the costs of enforcement. Otherwise, other taxpayers in the community will subsidize the industry. Based on our discussions with Mayors and with our fellow Leagues in states that have legalized marijuana, we believe that 2% is insufficient to offset costs and is an incentive for municipalities to opt-out.
We urge you to contact your Legislators and ask that if they support legalization, to also support an up-to 5% local option tax.
Local Enforcement of Land Use, Zoning and Planning, and Health
We appreciate that municipalities will have the ability to opt-out. We asked that bill language be clear in stating that all local zoning controls remain in place as well so that a level playing field is maintained amongst all businesses in the community, including:
- That bill language also be clear that “right to farm” does not apply to any of the four proposed licenses;
- Clarification that cultivation is not permitted on farmland preserved with taxpayer dollars; and,
- Clarify that retail license does not transfer for special events, such as a farmers market.
As with land use controls, we ask for language to assure that local health codes continue to govern. Health officers should be afforded the same rights to inspect and begin appropriate disciplinary action for violations.
Comments: The ability to opt-out is critical as it provides local votes their final say on legalization. But the ability to opt-out alone is not sufficient to protect local enforcement of zoning. While none of the current bills extend right-to-farm protections to the industry, specific language to clarify that point, is appropriate. It should be made clear that local controls and enforcement prevail for this industry, just as it does with any other.
While there may not be a consensus opinion amongst municipalities on legalization, we recognize that legalization of recreational use is almost a certainty in the near future. As a result, working with the NJUMA and NJCM, we have advanced a number of common-sense recommendations to keep taxpayers whole, protect local planning and retain the autonomy of local health officers.
Please take immediate action: speak to your Legislators on this issue now and let them know how you feel. There are issues apparent in any legislation that would legalize the recreational use of marijuana that would impact all municipalities regardless of whether you would opt-in or opt-out. So no matter your position on the issue, please advise your Legislators of the concerns and recommendation covered in this correspondence. In particular, it is critical to communicate that the suggested 2% option tax is insufficient and should be changed so that municipalities can choose to implement an up to 5% fee.
James Cassella, NJLM President Colleen Mahr, NJLM First President Mayor, East Rutherford Mayor, Fanwood
James Perry, NJLM 2nd Vice President Janice Kovach, NJLM 3rd Vice President Committeeman, Hardwick Mayor, Clinton Town
Contact: Michael F. Cerra, Assistant Executive Director, email@example.com or 609-695-3481 x120