Local excise tax remains in question as leaders approach marijuana deal

By Sam Sutton

02/16/2019 09:00 PM EDT

Significant details of a bill to legalize recreational cannabis in New Jersey still need to be finalized, even though Gov. Phil Murphy, state Senate President Steve Sweeney and Assembly Speaker Craig Coughlin have reached a broad agreement on key elements of the measure, three sources close to the discussions said Saturday.

There still isn’t a consensus on the rate at which local governments could tax recreational cannabis sales, which the current bill caps at 2 percent. Local governments, led by the New Jersey State League of Municipalities, Newark Mayor Ras Baraka and Jersey City Mayor Steven Fulop, want to impose a tax as high as 5 percent to pay for some of the necessary changes that will come with legalized pot.

“That’s still being worked out,” said state Sen. Nicholas Scutari (D-Union), the legalization bill’s lead sponsor and a central player in negotiations between the governor’s office, Sweeney (D-Gloucester) and Coughlin (D-Middlesex).

“We still believe that the flexibility to pass an up to 5 [percent] local excise is appropriate,” Michael Cerra, assistant executive director for the League of Municipalities, said in an email. “We don’t view … that as a line in the sand however and hope that since it now appears that the other major issues are close to resolution that we can have that discussion.”

Scutari emphasized that while the principal players have agreed on a framework for the bill, NJ S2703 (18R), there are still elements that need to be hashed out. Another point being discussed, he said, would give the commission tasked with regulating the industry the authority to review cannabis sales tax rates in the future.

Under terms agreed to this week, the Senate will waive the advice and consent process for Murphy’s three picks to the five-member Cannabis Regulatory Commission. The parties also agreed to a $42 per-ounce tax on recreational cannabis sales, as opposed to basing the tax on a percentage of the sales price, sources close to the talks said.

Disagreements over taxation and regulation were the primary stumbling blocks to getting Murphy on board with the legislation. With an agreement in place, all three leaders will start whipping votes in support of the bill.