May 23, 2016
Legalizing and regulating marijuana for adults in New Jersey would generate a minimum of $300 million in new tax revenues annually, according to a report by advocates that will be released Tuesday morning at the statehouse in Trenton.
The report, by New Jersey Policy Perspective and New Jersey United for Marijuana Reform, claims that estimate is conservative. Based on a 25 percent tax on retail marijuana sold only to adults, the overall economic impact would be far greater once other benefits are factored in, including job creation, additional income and business tax revenue, tax revenue from the sale of marijuana-related accessories, and property and agricultural taxes, it said.
About 365,000 adults in New Jersey – about 4 percent of the state’s population – use marijuana on a monthly basis, consuming an estimated 2.5 million ounces of marijuana annually, the report said, citing surveys by the federal government that track marijuana consumption in the United States.
It is estimated that New Jerseyans spend as much as $869 million on marijuana every year in the illegal marketplace, where the estimated average price is $343 per ounce. More than $850 million is poured into the underground marijuana economy, according to the report, which said direct sales of pot in a legal and regulated marketplace would result in sales totaling about $1.2 billion annually.
That estimate assumes that 10 percent of marijuana users living in Pennsylvania and New York counties bordering New Jersey would participate in the legal marketplace, said the report, noting that higher out-of-state sales are likely if New Jersey legalizes pot before its neighbors.
New Jersey Policy Perspective is a nonpartisan, nonprofit organization that conducts research on public policy issues in New Jersey. New Jersey United for Marijuana Reform is a partnership of public safety, medical, civil rights, faith, political and criminal justice reform organizations and individuals committed to changing New Jersey’s laws to legalize, tax and regulate marijuana like alcohol for adults.
"New Jersey has long needed to reform its marijuana laws. Our current system of prohibition has failed our state by wasting precious state and local resources, furthering injustice and funding an illegal market that will sell to any buyer," the report begins. "Legalizing, taxing, and regulating marijuana will increase public safety, improve our criminal justice system, enhance racial justice, protect young people, save resources, bolster public health, and generate revenue."
The report, written by Brandon McKoy, policy analyst for New Jersey Policy Perspective, and Ari Rosmarin, public policy director for the American Civil Liberties Union of New Jersey, relies on available data, conservative assumptions and the experiences of other states across the country that have legalized marijuana.
The report makes the following recommendations, once marijuana is legalized by the state legislature:
• Introduce a low retail tax that increases gradually over three years.
• Keep the tax rate flexible enough to permit for adjustments to maximize revenue while encouraging pricing competitive enough to degrade the illegal marketplace.
• Use tax revenue for critical state needs, such as drug education and treatment, and justice reinvestment.