Proposed: Cannabis tax revenue should flow to social justice programs

Listen to this article

Senate lawmakers introduced a constitutional amendment Dec. 1 that would require tax money from cannabis sales to flow to towns disproportionately hit by the war on drugs.

“Based on the testimony we heard in the Legislature, it is clear that we need to do more to ensure that revenues from the legalization of adult-use cannabis are used primarily to remedy the devastating and disproportionate impact of the ‘War on Drugs’ on predominantly Black and Brown communities in our state,” reads a statement from the three lawmakers sponsoring the measure.

Two of the sponsors, Senate President Stephen Sweeney, D-3rd District and Sen. Nicholas Scutari, D-22nd District, are sponsors of the now-stalled cannabis legalization bill.

Two other sponsors – Sen. Teresa Ruiz, D-29th District, and Sen. Sandra Cunningham, D-31st District – are sponsoring the decriminalization bill, which also stalled in the state Legislature.

Under the proposal, Senate Concurrent Resolution 138, the state would dedicate 70% of tax revenue from marijuana sales and the entirety of the “social equity excise fees” toward social justice reforms in communities targeted by marijuana prohibition, which proponents argue are typically lower-income, African American and Latino communities.

The remaining 30% would go toward the Cannabis Regulatory Commission – a five-member body that will regulate the new market – and toward training law enforcement personnel as drug recognition experts.

That 30% would also go toward “restorative justice programs” in the state’s “impact zones,” which the measure defines as communities with higher levels of crime and law enforcement activity, and higher levels of poverty and unemployment.

The matter of just how the tax revenue would be used to finance these kinds of social justice programs helped scuttle talks late last month, and now the Assembly and Senate each have conflicting legalization proposals.

Voters overwhelmingly approved the ballot question on Nov. 3 to legalize adult-use, recreational marijuana beginning Jan. 1, and to tax it at the 6.625% sales tax, plus an optional 2% excise tax from cities and local towns.

The CRC would handle licensure for facets of the industry such as distribution, wholesale, transportation, cultivation and retail. And they would prioritize licensing applications from women, minorities and veterans.

The so-called cultivation excise tax – now referred to as the “Social Equity Excise Fee,” comes out to a fraction of a percent and when tacked onto the sales tax, resulting in a 7% tax rate.

Lawmakers have maintained the tax rate needs to stay low, so it could allow the cannabis market to grow, and at a rate that the black market could be forced out of business.

Both sides clashed on whether to cap the number of licenses, something sought by Assembly lawmakers but opposed by the state Senate.

This constitutional amendment would not need Gov. Phil Murphy’s signature to go before the voters next November. Instead, both chambers would have to pass it by a simple majority in two separate voting sessions, or a single voting session with supermajority approval in both houses.

Should it go before the voters next year, it would just need a simple majority of at least 50%.

“Negotiations with the Senate and Governor are active and ongoing regarding adult-use cannabis enabling legislation,” Regina Wilder, a spokesperson for the Assembly Democrats Office, which controls the Assembly, said in an email. “We are confident we will reach consensus.”