The New Jersey cannabis vote has been delayed, it will not happen before the November mid-term elections. At least, Senate President Stephen Sweeney and Governor Phil Murphy agree on the latest version of the proposal. The October 4th draft, totaling 135 pages, contains the right balance of taxes, regulations, and eligibility to operate a marijuana business.
Based on our analysis of the situation, political consequences and the need to raise tax dollars while allowing the general public to remain in the mix, we project that by February 2019, the stars will be aligned for passage of the October 4th version. The bill that will be passed with a 12 percent tax on marijuana sales, with cities and towns allowed to add a 2 percent tax on their own, address the inequities in arrests, set a 25 percent goal of marijuana business licenses in “impact zones” that would be determined by poverty rates and other factors, and the expungement of past marijuana convictions.
Impact zones, also known by “opportunity zones” by Governor Murphy are essential to determine marijuana site locations, and a careful understanding of the proposed legislation has our attention. The following is an excerpt that brings into focus the importance of “impact zones.”
Alexander Banzhaf, Esq. is the author of the New Jersey Cannabis Counsel blog where he tracks and analyzes developments in New Jersey’s efforts to legalize recreational cannabis and the potential impact on cannabis businesses in New Jersey and is a member of the New Jersey Cannabusiness Association. In a piece dated, June 14, 2018, Mr. Banzhaf stated:
§ 45 of the Bill, titled “Impact Zones,” is the strongest action to date by legislators to push the much talked about the agenda of social justice. “Impact Zone” is a defined term in the Bill and “means any census tract that ranks in the top 33 percent of census tracts in the State for marijuana-related arrests and that ranks in the bottom 33 percent of census tracts in the State for median household income.” The Bill recognizes that impact zones tend to identify geographical areas where, without support, cannabis businesses may not succeed or otherwise benefit the community. To that end, the Bill requires that, to the extent possible, “at least 25% of the total licenses awarded for Class 4 Marijuana Retailer license” are to be awarded to applicants who qualify under one of the following three criteria, with preference given to those in the higher tiers:
Tier 1: the ownership of the dispensary has to involve at least 51% of individuals who live in an impact zone;
Tier 2: the ownership of the dispensary has to involve at least 20% of individuals who live in an impact zone; and
Tier 3: businesses which “incubate a Tier 1 or Tier 2 business by providing free lease space, financial support or other support identified by the division.”
Essentially, what § 45 does is provide incentive and assistance to entrepreneurs who wish to open a dispensary in an area of New Jersey that has historically had high volumes of cannabis arrests and low levels of household income. Potential dispensary owners who want to avail themselves of this benefit must be able to demonstrate residency in an impact zone for five of the last ten years. The Bill does not explicitly identify where impact zones are in New Jersey.
Potential cannabis entrepreneurs should evaluate whether they may live in an impact zone, as this could be a powerful tool for those seeking a dispensary license. Supplied by Alexander Banzhaf, Esq.
Our selection process and analysis executed at First Jersey Cannabis Corporation has isolated three “impact zones” that would be the ideal location for cannabis licensing.
All three of those cities include census tracts that Murphy has recommended be designated Opportunity Zones. These are the other communities with areas on the governor’s list:
Atlantic County — Atlantic City, Egg Harbor City, Egg Harbor Township, Pleasantville, and Somers Point;
Bergen County — Cliffside Park, Englewood, Fairview, Garfield, Hackensack, Lodi, South Hackensack, and Teterboro;
Burlington County — Burlington City, Palmyra, Pemberton Township, Riverside, and Willingboro;
Camden County – Lindenwold, Pennsauken and Pine Hill;
Cape May County — Lower Township, Wildwood, and West Wildwood;
Cumberland County — Bridgeton, Vineland, and Millville;
Essex County — East Orange, Irvington, and Orange;
Gloucester County — Deptford, Glassboro, and Woodbury;
Hudson County — Bayonne, Kearny, Jersey City, North Bergen, Union City, and West New York;
Hunterdon County — Flemington;
Mercer County — Hamilton;
Middlesex County — Carteret, Jamesburg, New Brunswick, Perth Amboy, and South River;
Monmouth County — Asbury Park, Freehold, Long Branch, Neptune City and Township, and Red Bank;
Morris County — Dover and Wharton;
Ocean County — Berkeley, Lakewood, and Manchester;
Passaic County — Clifton, Passaic City, Paterson, and Prospect Park;
Salem County — Carney’s Point and Salem City;
Somerset County — Bound Brook and North Plainfield;
Sussex County — Sussex Borough;
Union County — Elizabeth, Hillside, Plainfield, Linden, and Rahway;
Warren County — Phillipsburg.
Our location in Egg Harbor City in Atlantic County is an Opportunity Zones and qualifies as an impact zone, offers a degree of flexibility to proceed down the cannabis licensing trial.