AFP-NJ Suggests Reforms to S-2703 in Letter to State Legislators

Oct 16, 2018 by AFP

Dear Senator / Assembly Member:

On behalf of tens of thousands of Americans for Prosperity activists in New Jersey, and over 3.2 million activists across the nation, I write today to applaud the opportunity S-2703 represents for our state, and to highlight needed areas for reform within the legislation.

S-2703 would legalize the cultivation, sale, and possession of cannabis in regulated amounts statewide. Legalization lends the prospect of economic and fiscal advantages for New Jersey, as we can become the next state to join an industry projected to grow to nearly $50 billion over the next decade, creating thousands of jobs, and generating hundreds of millions in tax revenue.

Legalizing cannabis in New Jersey will also help redress the harm done to our citizens, particularly the most vulnerable, by no longer banning a substance less dangerous than alcohol. S-2703 and companion legislation will importantly give those convicted of cannabis-related offenses the opportunity to expunge their records of cannabis possession offenses that should no longer be crimes. Redirecting the nearly $130 million in limited police resources we spend each year on marijuana enforcement towards dangerous crimes will also keep New Jerseyans safer. Colorado and Washington law enforcement have already enjoyed higher success rates in solving violent crime, burglary, and motor vehicle theft cases have since legalization.

While Americans for Prosperity recognizes the broad economic and criminal justice benefits of legalizing marijuana, lawmakers should keep New Jersey’s legal cannabis market as viable as possible to ensure the black market does not re-emerge and defeat the original purpose of the bill. While the bill has good provisions that support this goal, several others could undermine the legislation’s intention and need to be reformed.

A draft version of S-2703 is right to limit the state excise tax on marijuana to 10 percent. (A different draft includes 12%.) In other states, prohibitively high taxes on legal cannabis products have only produced a continued incentive for the black market. The bill’s current tax rate can still bring a revenue windfall, while avoiding the law enforcement costs that higher rates would undoubtedly incur.

Additionally, the bill is right to instruct the Cannabis Regulatory Commission to avoid creating “unreasonably impracticable” regulations on legal marijuana businesses. Regulations on the legal industry should be limited to protecting public health and maintaining legal compliance. Unfortunately, several provisions of this legislation directly undermine these goals.

Arbitrary dosage limits: The bill limits cannabis product servings to 10 milligrams of active THC, and any edible products to 100 milligrams of THC in total. These are arbitrary amounts. Whatever the ideal dosage, the Commission should set them overtime based on evidence.
License quotas: We support the updated bill keeping an open number of licenses in place based on market demand. However, requiring 10 percent of licensees to be microbusinesses and a further 10 percent to have conditional licenses may delay the growth of the legal market by denying qualified applicants to comply with the quota. New Jersey shouldn’t risk supporting black markets in the name of arbitrary limits with no economic basis. We support the opportunities that simpler microbusiness and conditional licensing processes present for smaller entrepreneurs, but New Jersey should promote these through education, not legal mandates. Further, without a license cap in place, there is no need for a “points-based” application system when an applicant’s ability to meet the requirements put forth should be sufficient.
Unfair eligibility restrictions: The bill mandates investors in cannabis businesses have adjusted gross single and joint incomes between $200,000 and $400,000, respectively, as well as ban those who received federal state financial assistance in the past five years. Excluding investors because of their income or ability to lift themselves from public assistance to start a business attacks specific groups of people while serving no relevant policy purpose.
Advertising and sales limits: The bill imposes a host of arbitrary restrictions on cannabis businesses’ advertising that are practically impossible to comply with, not based in evidence. The legislation should set a broad goal of stopping advertising targeted towards minors and allow the Commission to use its expertise to discover the best processes to accomplish this that are reasonable for businesses. Additionally, the bill bans cannabis retailers from selling other products, like drinks or snacks alongside cannabis products. This unreasonable restriction does not advance public safety and merely protects convenience stores from competition.
Burdensome owner/employee regulations: The bill requires occupational licensing and background for cannabis industry workers, a practice New Jersey does not require for liquor store workers. S-2703 also creates an onerous laundry list of requirements for cannabis deliveries that should be determined by the Commission based on evidence, not laid out in statute. The bill further requires every licensee to sign a labor peace agreement, a special interest carve-out which has no bearing on an applicant’s qualifications nor on protecting public health. These restrictions raise costs for smaller businesses, create barriers for prospective employees, do little to advance public safety or legal compliance, and merely fuel black markets.
State limits on cultivation: The bill assigns the Commission the impossible task of accurately determining cannabis demand to set a canopy growth limit statewide. Demand is a dynamic concept fueled by changing market conditions and subjective wants which aren’t constant any given day, let alone year. Letting the market supply changing demand organically, while ensuring legal compliance and public health is the best way to approach this problem.
Cultivation and consumption restrictions: Finally, the bill prohibits agricultural lands to be used to grow cannabis, another crop people consume. This arbitrary restriction limits farmers’ economic options and serves no relevant policy purpose. Neither does prohibiting cannabis possession on university campuses or hospitals, which already regulate the substances allowed on their premises. Similarly, hospital patients should be free from the fear of legal penalty if a medical emergency arises requiring their hospitalization while they possess marijuana.