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Advocates in New Jersey are currently debating whether the state’s Marijuana Regulatory Commission should raise the fee directing revenue from recreational cannabis sales to fund social equity initiatives and support communities affected by past drug policies. The commission is set to meet soon to determine the fee rate that will apply starting January 1. Presently, the fee is set at $1.24 per ounce.
Four years since New Jersey legalized recreational cannabis, some advocates argue that it is time to increase the fee to $30 per ounce. New Jersey has some of the lowest marijuana taxation in the nation, according to Marleina Ubel, a senior policy analyst at New Jersey Policy Perspective. She suggested that a cost of $30 would be practical and reasonable for companies.
Ubel stressed that the money raised by this tax is essential for the communities that were most negatively impacted by previous drug restrictions. She suggested that the revenue may be used to support after-school programs and other initiatives that would assist in reviving these areas.
The fee is a required part of the state’s cannabis legalization law and is collected based on the amount of cannabis produced. The law allows the commission to adjust the fee every year, capping it at a specific maximum as the market grows.
Although the commission has the authority to set and modify this fee, it can only recommend how the funds should be used, with final spending decisions falling on the governor and the Legislature. Part of the revenue must be directed toward initiatives that discourage youth from marijuana use.
The commission has conducted public talks on possible applications of the money over the last three years, coming up with ideas such as legal aid, expungement programs, social support services, and larger community reinvestment projects. None of the social equity fee funds have been used yet.
Proponents of the increase contend that without a larger fee, the program cannot have the desired effect. The American Civil Liberties Union of New Jersey’s Ami Kachalia also supports increasing the charge to the suggested $30 per ounce. She believes this adjustment would enhance the state’s commitment to social justice by funneling more resources into Latinx and Black communities, who faced the brunt of discriminatory drug enforcement policies.
Not all parties support the fee hike, as some worry it may harm the growing market. Raising the tax, they contend, would encourage growers to raise wholesale prices, which would then force retailers and manufacturers to pass the higher expenses on to customers. This might then encourage more individuals to buy cannabis from unlicensed vendors.
Cannabis firms, such as Aurora Cannabis Inc. (NASDAQ: ACB) (TSX: ACB), operating in different markets will be hoping that any fees added onto marijuana products in New Jersey don’t make the final product too costly for the people to afford since this would be counterproductive to all parties concerned.
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