New Jersey's legal cannabis market expected to be worth $850 million said advocates pushing for the state to get into the act. Speakers at Cannabis World Congress and Business Exposition, declared their unified position outlines marijuana regulation in New Jersey as lawmakers plan to approve a new state budget.
Gov. Phil Murphy, who has championed legal cannabis, is counting on $80 million in tax revenue from recreational marijuana in his proposed budget for the year beginning July 1.
Will it happen?
Our proprietary SP+GTM algorithm declares "yes!" to the proposition based on a lower tax rate more inline with Sen. Nicholas Scutari than Murphy’s. The current bill to legalize marijuana in New Jersey, by Scutari, sets an initial 7 percent tax rate on sales that would reach 25 percent after five years. Murphy has proposed an initial tax of 25 percent, but Scutari's position appears to be prevailing. A lower tax rate would not eliminate the black market on a competitive price basis, but will give law enforcement an excuse to raid known illegal dealers.
Scutari's bill doesn't set a cap on the number of marijuana retailers in the state. However, it does give cities strong powers to decide where and to whom permits to operate marijuana businesses go, which marijuana advocates called a recipe for corruption. The opportunity for favoritism and corruption are likely in such a scheme.
New Jersey would be the 10th state to allow adults to buy and use marijuana without medical conditions. Murphy's push for legalization has drawn opposition from many Republican lawmakers and some Democrats, particularly members of the Legislative Black Caucus. Sen. Ron Rice, the head of the caucus, favors lifting criminal penalties for possessing small amounts of marijuana rather than establishing a legal marketplace.
From our analysis, we project 120 legal dispensaries in New Jersey, based on the probable level of anticipated revenue. New Jersey permits sales to adults could reach $850 million a year in 2022, or about 2.4 percent of the total U.S. market. If attainable it would be slightly below the state's current 2.8 percent share of the U.S. population. From our forecasts, we don’t believe $850 million a year in collective cannabis sales is likely, but the amount is being used by the state legislators to determine the number of legal dispensaries.