Attention New Yorkers: Legal weed could soon be just a PATH ride away.
In next month’s election, New Jersey residents are being asked if they want to approve recreational cannabis. A recent poll by law firm Brach Eichler showed that 65% of likely voters support the proposal.
“The isolation of quarantining and stress of the pandemic have changed some minds on the recreational use of cannabis,” said John Fanburg, co-chair of the firm’s cannabis-law practice.
If the measure passes, the New Jersey Legislature would need to adopt retail regulations, growth limits and so on. Jessica Rabe, co-founder of Wall Street firm DataTrek Research, which tracks the cannabis industry, said that because medical marijuana is already legal in New Jersey it should take only about a year to set up recreational distribution.
That could push New York to finally legalize it, because the last thing the cash-strapped city and state need is residents making the quick trip across the Hudson in order to spend their money in Hoboken or Jersey City.
City Comptroller Scott Stringer forecast two years ago that legalizing recreational sales could generate $1.3 billion in new revenue for the Big Apple. Many New Yorkers now buy their weed at the closest legal dispensary, which is in Great Barrington, Mass., a two- to three-hour trip by car.
“New York and other nearby states will see that they are missing out on tax revenue from sales” if New Jersey moves first, Rabe said.
Gov. Andrew Cuomo has called for legalization for a long time. In January he vowed that marijuana would be legalized this year, saying it could bring in $300 million in tax revenue and billions more in economic activity. But he was unable to corral enough lawmakers, due in part to the coronavirus infecting some state legislators. There are also disagreements over how to allocate tax revenue, how to regulate distribution and how to coordinate with other states.
Similar disagreements have persisted in New Jersey and elsewhere. New Jersey Gov. Phil Murphy supported legalization during his successful campaign in 2017, but he ran into opposition in the Legislature, including from fellow Democrats. The state decided last fall to put the matter before the electorate.
“It’s a complicated issue,” Cuomo said in May, “and it has to be done in a comprehensive way.”
But the state’s $14.5 billion deficit is renewing momentum for the stalled legalization campaign. In a report submitted to the Cuomo administration last month, the state Association of Counties recommended cannabis legalization as one of 80 measures New York should take to raise revenue and close the budget gap.
“Counties should be allowed to apply their local sales tax rate on these transactions,” the group said. “In addition, the cannabis cultivation tax should be shared with the county in which the product is grown.”
In a nod to the issue’s tricky politics, a spokesman for the county-officials group said “there is no strong concession on the ‘yes or no’ to legalization.”
If New Jersey sparks another legalization wave, Wall Street likely will be thrilled—and not just because it could mean dispensaries opening in or near Hoboken. Cannabis stocks have performed terribly, with an exchange-traded fund that tracks the sector—ticker “MJ”—losing 75% of its value in the past two years. Investors have given up on federal regulators taking the lead on legalization.
More states are voting on the matter, though. In addition to New Jersey, legalization is on the ballot in Arizona, Montana and South Dakota.
“It would be smart for Joe Biden to embrace legal marijuana in an effort to rally more voters to the polls,” Rabe said.