In November, Democratic lawmakers dropped the bill for legalizing recreational marijuana in New Jersey through the Senate. Previously, the senate failed to legalize adult-use marijuana in the state in March 2019. Instead, NJ voters will now decide on this matter on the November 2020 ballot. However, to be considered for the ballot, both houses will have to pass the resolution by 60% majority in one year or a simple majority in two consecutive years.
New Jersey can expect dispensaries in late 2021
Per an Asbury Park Press report, New Jersey may be the 12 state to legalize recreational marijuana in the US. If approved by voters in the ballot, recreational marijuana will become legal in New Jersey effective January 1, 2021. However, the Cannabis Regulatory Commission may require a few months to formulate rules and guidelines governing recreational marijuana dispensaries in New Jersey.
As reported by The Cannabis Advisory, in the case of recreational marijuana legalization, experts expect annual marijuana sales to be $850 million by 2022. The estimate seems reasonable considering that Colorado and Washington’s annual marijuana sales crossed the $1.0 billion mark. Both of these states legalized recreational marijuana in 2014.
According to Asbury Park Press, excluding Illinois and Vermont, all the remaining states have legalized adult-use marijuana through a ballot. However, states required 12 months to 18 months from the time of ballot approval to open up recreational marijuana dispensaries.
New Jersey may pay the lowest tax rate for recreational marijuana
As reported by Asbury Park Press, New Jersey can become a state with the lowest taxes imposed on the legal cannabis industry. The resolution intended for the November 2020 ballot includes a state sales tax of 6.625%. Municipalities may also impose an additional transfer tax up to 2%. The resultant 8.625% tax will be the lowest imposed on legal cannabis dispensaries in the US. It is possible that New Jersey may impose additional excise tax during future legislation related to recreational marijuana.
Per Asbury Park Press, New Jersey will be mostly levying taxes lower than the average tax rate. The average tax rate levied by 11 other states is 26%. New Jersey’s Senator Nicholas Scutari claimed that the low taxes were one of the ways of stifling the black market. Currently, Michigan has the lowest tax rate of 16%. Washington has the highest tax rate of 43% on recreational marijuana.
Curaleaf dominates New Jersey’s legal cannabis market
Curaleaf (CURLF) reported robust revenue growth as well as an expansion of retail operations in New Jersey in the third quarter. The company ranks highest in terms of revenues and market share in New Jersey’s legal cannabis segment. The company is working to convert its New Jersey operations into a for-profit entity by the end of 2019.
According to the third-quarter earnings call, in October 2019, the company expanded its presence in New Jersey. The company bought a 128,000-square-foot warehouse and 21 acres of land. The company plans to build a facility in this property by 2020. This will allow Curaleaf (CURLF) to leverage the growing opportunity and retain its market leadership. Although New Jersey has yet not legalized recreational marijuana, it definitely liberalized medical marijuana laws. Curaleaf plans to rapidly increase the number of dispensaries to benefit from the projected doubling of medical marijuana patients in the state by 2020.
According to the third-quarter earnings call, the company’s dispensary on the east coast was the one with the highest sales and cash flows in New Jersey. Also, the company completed its first wholesale order of vaporizers, thereby entering the Northern New Jersey market.
Cannabis players to benefit from the legalization
In December 2018, TerrAscend Corp (TRSSF) announced that its majority-owned subsidiary, NETA NJ, LLC, secured one of the only six permits to apply for a vertically integrated license in New Jersey. TerrAscend Corp is a portfolio company of Canopy Rivers.This, in turn, is the venture capital arm of Canopy Growth (CGC).