March 22, 2019

Final Vote on Marijuana Legalization Set for Monday, March 25

On Monday, the Assembly Appropriations Committee and the Senate Judiciary each amended and approved legislation that will legalize the adult use of recreational marijuana. The committees also approved legislation to expand the State’s medical marijuana program and to streamline the expungement process. All of these bills are schedule for final votes in the Assembly and Senate this Monday, March 25, though it appears there may not be sufficient support for final passage at this point in time.  

General Overview

A4497 and S2703 will legalize the adult use of recreational marijuana. Specifically, the possession or use of an ounce or less of marijuana would be legal for those 21 and over.
The bill establishes four licenses for cannabis establishments, including:

  1. Class 1,  Growth/Cultivation;
  2. Class 2, Processing
  3. Class 3, Wholesale
  4. Class 4, Retail.
The industry will be governed by a “Cannabis Regulatory Commission,” which will include 5 full-time Commissioners and an Executive Director. Three Commissioner would be direct appointment by the Governor and the remaining two seats would be appointed by the Governor, upon the recommendation of the Senate President and the Speaker of the General Assembly. 

The State Tax will be $42 per ounce, assessed at the cultivation stage.

Issues of Particular Interest to Local Governments

Local Taxation

Section 21 authorizes municipalities to adopt ordinances imposing a “transfer tax” on cannabis sales on licensed cannabis establishments (see definition in Section 3, page 4, lines 13-16).

Municipalities may enact a local tax up to:
  • 2% of the receipts from each sale by a cannabis grower, cultivators (Class 1 license);
  • 2% of the receipts from each sale by a cannabis  processor (Class 2 license);
  • 1% of the receipts from each sale by a cannabis  wholesaler (Class 3 license);  and/or,
  • 3% of the receipts from each sale by a cannabis retailer (Class 4).

Thus, the municipality may enact the appropriate transfer tax on any of the licensed cannabis establishments located in the municipality.

These taxes are in addition to the State cannabis excise tax of $42 per ounce.  Please note that no local transfer/user tax can be imposed on medical marijuana.

Per Section 22 (starting on page 56), the municipality may prohibit any or all of the 4 licenses within 180 days of the effective date of the Act.

For those who do not opt out, the local tax ordinance shall also include provisions for imposing a user tax, at the equivalent rate(s) set by the municipality, on any “concurrent license holder…operating more than one cannabis establishment.”  This language clarifies earlier concerns about the tax on businesses that holds more than one license within the municipality, commonly referred to as a vertically integrated operation.

Receipts from the transfer and user taxes shall be remitted by the cannabis establishment directly to the Chief Financial Officer of the municipality, in a matter proscribed by the municipality.

If there is nonpayment of the transfer/user tax, then the unpaid balance and accrued interest shall be a lien in the same manner as other unpaid municipal taxes, fees and charges.

Local Government Entity Regulations or Ordinances, Pages 56-58.

Section 22 (pages 56-58) authorizes municipalities to enact regulations governing the time of operation, location, manner and the number of cannabis establishments, as well as establish civil penalties for the violation of such ordinances and regulations.

A municipality may prohibit any one or more classes of cannabis licenses throughout the municipality, even if the municipality is within regions such as the Highlands, the Meadowlands or the Pinelands. In other words, a municipality could adopt an ordinance prohibiting retail establishments but permit cultivation operations.

On page 57, lines 11-14 it reads, “Only an ordinance to prohibit one or more classes of cannabis establishment enacted pursuant to the specific authority to do so by this section shall be valid and enforceable.”

Thus, any existing ordinances banning commercial marijuana sales or transactions will be null and void and the municipality will need to adopt a new ordinance to do so, which should reflect and reference this section of the law.

Municipalities will have 180 days from the effective date of the Act to opt out, by ordinance, of any one or all licenses. The League will prepare and make sample ordinance language that can be altered for your specific purposes.

To iIllustrate:


It is our understanding and that if you opt out within 180 days of the effective date of the Act, you may opt in later by ordinance.

When the State regulatory commission receives an application for initial licensing or a renewal for any cannabis establishment or an endorsement for a cannabis consumption area, it shall notify the municipality within 7 days of the application, unless the municipality has already prohibited the class of license.  In turn the municipality must determine and inform the Commission if the application complies with the local regulations regarding time, location, and manner of operations and number of establishments.

The bill language also clarifies that the municipality may impose a local license requirement or endorsement requirement.

If and when this legislation becomes law, we would recommend a review of your zoning ordinance to make sure they comport with the opt-out/in provisions.

Cannabis Consumption Area, Pages 170-175

Section 82 (pages 170-175) A municipality may authorize, by ordinance, the operation of locally endorsed cannabis consumption areas by a cannabis retailer or an alternative treatment center for onsite consumption of personal/medical use cannabis.

Such an area may be indoor or outdoor, provided it meets the statutory criteria as defined through Section 82.

A local cannabis consumption area may not be allowed within 1,000 feet of a boundary with an adjoining jurisdiction that does not permit retail cannabis such as schools or churches.

Municipalities are also authorized to enact an ordinance prohibiting the consumption of edibles and non-smoking types of cannabis. 

The State Commission may only issue an endorsement after receipt of written approval of the local government.


The legislation includes the following expungement provisions:

  1. Cannabis related offenses of up to 5 pounds will be expunged, with a system in place within 9 months of the effective date of the Act.  

  2. Vacate sentences of those currently incarcerated or on probation.   

  3. Filing fee for individuals will be waived; The State is to provide funding for the expedited expungement process. 

  4. 2 tier expungement process:
    a. Expedited expungement:  apply to Superior Court for facilitate petitions for expungement.
    b. Virtual expungement: intent is to clear past offenses by prohibiting consideration of past marijuana offenses, including applications for employment, for a state professional license, etc.

Costs and Reimbursement

Section 81, Cannabis Regulatory and Expungement Aid Modernization Fund states:

“…    (2) defray costs, in an amount determined by the Legislature in the annual appropriations act or any other act, associated with the filing and review of applications for persons seeking expedited expungement relief…for being charged with, convicted of, or adjudicated delinquent for offenses associated with marijuana or hashish as set forth in that section, which occurred prior to the effective date of the “New Jersey Cannabis Regulatory and Expungement Aid Modernization Act,” …and
      (3) reimburse the expenses incurred by any county or municipality for the training costs associated with the attendance and participation of a police officer from its law enforcement unit, as those terms are defined in section 2 of P.L.1961, c.56 (C.52:17B-67), in a program provided by an approved school, also defined in that section, which trains and certifies the police officer, including a police officer with a working dog as that term is defined in section 1 of P.L.2006, c.88 (C.10:5-29.7), as a Drug Recognition Expert for detecting, identifying, and apprehending drug-impaired motor vehicle operators, and pay for costs incurred by the State Police in furnishing additional program instructors to provide Drug Recognition Expert training to police officers and working dogs.  A municipality or county seeking reimbursement shall apply to the commission, itemizing the costs, with appropriate proofs, for which reimbursement is requested and provide a copy of the certificate issued to the police officer to indicate the successful completion of the program by the police officer, and that officer’s working dog, if applicable.

Contact:  Michael F. Cerra, Assistant Executive Director,, 609-695-3481 x120.

222 West State Street, Trenton, NJ 08608 Phone: 609-695-3481 Web:

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