Will New Jersey's Cannabis Referendum Reignite the Legalization Debate?

The Garden State is about to get a lot greener, and it could set off a wave of cannabis legalization across the Eastern Seaboard.

New Jersey's upcoming cannabis referendum is causing a stir around the world and drawing the attention of the global cannabis industry, who believe that the state's decision could produce a powerful knock-on effect that may supercharge the legalization movement.

The state's voting population is already firmly in favour of the idea, with the yes vote currently enjoying an almost three-to-one lead—according to a recently commission poll from law firm Brach Eichler LLC—over citizens who would prefer to see cannabis remain illegal.

We found that support for the amendment to legalize steadily decreased as age increased. Among 18-29 year old respondents, 88% said they supported it. Among 30-49 year-olds, 76% supported. 60% of 50-64 year-olds and 52% of those 65 and older did. There was also stronger support among those who identify as Democrats (76%) than Republicans (52%). William J. Hughes Centre Research Associate, Alyssa Maurice

This was seen as a highly positive sign, as the results of the survey echo several previous polls conducted by the organization and were also found to be statistically consistent with a study from Fairleigh Dickinson University.

Additionally, 51% of voters have also thrown their weight behind a push to expunge all previous criminal convictions for offenders charged with cannabis-related offences. 

"After election day it is imperative that our legislature move to create the most efficient, safe and regulated marketplace to capture the tri-state cannabis business," Brach Eichler Executive Committee Member Charles Gormally said.

"The Brach Eichler Cannabis Poll, which has consistently reported overwhelming support for legalizing cannabis, today again confirms that New Jersey voters support this long overdue change by a significant margin."

"It is clear that home rule is a topic that needs to be more fully addressed. Cannabis businesses are going to need an immediate understanding of local politics and community issues before embarking on plans for certain parts of New Jersey."

However, New Jersey legalization activists are still hard at work promoting voter awareness, as there is still concern that many of the state's citizens may be unaware that recreational cannabis is even on the ballot.

"Margins in actual election results for ballot questions are typically less than found in the polls," explained a researcher from the Stockton University Polling Institute.

"The reason may be that the number of voters who actually cast votes at the end of the ballot, where public questions are placed, are generally fewer than at the top of the ballot."

Bulk and Swagger

If you're still wondering what all the fuss is about, it can be helpful to look at the issue from a perspective of scale.

In November 2016, voters in Massachusetts approved Question 4—the initiative to legalize the recreational marijuana for adults aged 21 years and older—and since then the state's adult-used cannabis industry has only continued to grow.

I wish we could have gotten it done through a legislative process. We just couldn't find the last few votes, so it's on the referendum. I'm strongly supporting it—first and foremost for social justice reasons. Legalization would right those wrongs while also spurring massive economic development opportunities, job creation, and new tax revenue. Now, we have the opportunity to get this done and finally legalize adult-use marijuana. New Jersey Governor, Phil Murphy

Furthermore, earlier this year the market research firm BDS Analytics predicted that the marijuana market in Massachusetts would swell to more than $1.35 billion by 2024, despite the potential impact of the COVID-19 pandemic.

This may seem shocking until you consider the fact that the state of Massachusetts—which saw roughly $24 million in cannabis sales between November 20, 2018 and January 20, 2019 alone—has a population of almost 7 million.

"Massachusetts is the largest eastern state to fully legalize cannabis, both for medicinal and recreational use," BDS Analytics CEO Roy Bingham said.

"The successful roll-out of the legal cannabis program across one of the founding states represents a major shift in New England politics and is likely to accelerate the legalization initiatives in other major markets, including New York, as regulators and politicians grow more comfortable with the cannabis industry and face extreme budget pressure caused in part by the financial impact of COVID-19 mitigation measures."

This number becomes even more impressive when you consider the fact that New Zealand—which is currently awaiting the results of its own cannabis referendum—has a total population of less than 5 million.

Meanwhile, New Jersey's population is nearly 9 million strong, which has led many pundits to suggest that the state's cannabis industry could be worth close to $2 billion within four years' time.

Naturally, this has prompted many US cannabis companies to follow the outcome of the referendum with bated breath, as the introduction of legal adult-use in New Jersey would generate a sizeable new market to target.

However, the implications stretch far further than America's Mosquito State.  

Pennsylvania Pushes for Pot

While this may be exciting enough, the US cannabis industry's interest in the referendum has been heightened further by the knowledge that four of New Jersey's neighbouring states— Connecticut, Pennsylvania, Rhode Island and New York—have also been considering the possibility of legalizing recreational adult-use.

In fact, the Democratic Governor of Pennsylvania, Tom Wolf, has been calling on state lawmakers to legalize a recreational cannabis program since August 2020, although he has faced significant pushback from the Legislature's Republican leadership.

I think it's time for the General Assembly to sit down and craft a bill that actually recognizes that Pennsylvania is ready for this, and also takes advantage of what we've learned from other states in terms of what to do and what not to do. Pennsylvania Governor, Tom Wolf

Governor Wolf argued that a recreational cannabis program would help to revitalise Pennsylvania's job market and stem the budgetary shortfalls caused by the state's pandemic-stricken economy

Wolf has also stated that he wants 50% of the tax revenue generated by recreational cannabis sales to be set aside for disadvantaged small businesses, granting further momentum to the legalization movement.

Unfortunately, this idea was quickly shot down by the Republican Senate Majority Leader, Jake Corman, despite the potential fiscal boost it would generate.

"Like with any issue, a bill would need to work its way through the Senate Committee process to be vetted," Corman said.  

"Our caucus has no plans or interest in legalizing recreational marijuana."

Additionally, many analysts have predicted that Pennsylvania's medicinal cannabis industry may also begin to suffer if the state's regulatory landscape fails to keep pace with New Jersey.

In an interview with MJBizDaily, an attorney working for the Hoban Law Group, Bridget Hill-Zayat, explained that this could even lead to a scenario where medicinal marijuana retailers in Pennsylvania begin losing patients to their New Jersey counterparts.

"A lot of medical marijuana customers will go over to New Jersey, and that's a significant amount of revenue Pennsylvania is going to lose."

"It's going to motivate the surrounding states for sure," Bridget Hill-Zayat said.

Is New York Next?

Bringing recreational cannabis to the big apple has long been a pet project of the Democratic Governor of New York, Andrew Cuomo, who has included it in his two most recent budget proposals.

Regrettably, negotiations between the Governor and the state's Legislature fell through each time, as neither side could reach an agreement on how the tax revenue generated from cannabis sales would be allocated.

New Jersey will legalize. I've always referred to New Jersey as "the big domino." Once it passes in New Jersey, the other states (i.e. New York, Pennsylvania, etc.) will not have a choice but to legalize. Mississippi is also looking good. Regionally, Mississippi is equally significant like New Jersey. It'll be the first ballot initiative for the Deep South. It's significant for the states down there to follow suit. CannaAdvisors Co-Founder, Jay Czarkowski

Although this may seem disappointing, Governor Cuomo remains confident that the measure will be introduced "soon, because now we need the money".

"I've tried to get it done the last couple years," Cuomo said.

"There are a lot of reasons to get it done, but one of the benefits is it also brings in revenue, and all states—but especially this state—we need revenue and we're going to be searching the cupboards for revenue."

"And I think that is going to put marijuana over the top."

Additionally, public support for Cuomo's plan is enjoying a nearly two to one margin over those who object, with 61% of New Yorkers saying they're in favour of enacting the reform, while only 30% stand opposed.

The same survey—which was conducted by Spectrum News and Ipsos—found that approximately 60% of New Yorkers support the idea of legalizing cannabis at the federal level, although 10% remained undecided.

Earlier this month a top advisor for Governor Cuomo also confirmed that cannabis legalization will be reintroduced to the budget "in January".

"We're working on this. We think we can get it done by April 1," he said. 

According to cannabis entrepreneur and CannaAdvisors Co-Founder, Jay Czarkowski, the New Jersey referendum represents an inflection point for the East Coast states. He believes that—in a broader sense—the outcome will be symbolic of "where we are at in this country".

"Even back in 2016, there was no talk of cannabis in the House of Representatives or the Senate. Someone would float a bill and it would get crushed. Just the fact there are serious pieces of legislation that are being voted on in Congressional committees, that's significant. Progress is being made and the ball is moving forward," said Czarkowski in an interview with Forbes.

"Everywhere I've seen it has always been very positive for the local economies. It's not just benefiting those who grow and sell it, it's benefiting local real estate, tradesmen, carpenters who have to build these businesses, the attorneys, accountants, the many jobs that are created."

"If you look at the populations of New Jersey, New York and Pennsylvania, the combined population is more than California. This underscores the massive economic opportunity once these three states—New Jersey, New York and Pennsylvania—pass."

East Coast Goes Green

If recreational adult-use in New Jersey is legalized, the state's Legislature Office has stated that it currently expects to see up to $1.9 billion in cannabis sales, which would mean close to $126 million in tax revenue.

This could prove particularly timely for the state as well, as the New Jersey government recently announced a plan to issue up to $4.5 billion in debt during the current fiscal year, as a direct result of the tax shortfalls caused by the pandemic-weakened economy.

The situation is so dire, that the state's bond rating is in danger of being dropped down to the triple-B level—which represents the lowest bracket of investment grades—prompting Democratic Senator Nicholas Scutari to announce that he intends to table the recreational cannabis legislation within a week of the referendum.  

"It will be an economic engine for New Jersey when it gets going," Scutari said.

"The greater impact on society is going to be the job opportunities, people getting employed and paying their employment tax, people not getting arrested. It'll be a whole new industry just like we have liquor stores, and we have breweries and we have beverage warehousing."

However, some experts have cautioned against overtaxing the drug, such as New Jersey CannaBusiness Association President Scott Rudder, who warned that legal cannabis retailers will need to maintain competitive prices if the state wants to draw customers away from black market vendors.

"People are selling it on the street at a much lower rate," Rudder said.

"We want to make sure that we're getting to the point where our prices are much more attractive to people who want to go to a legal market, who want to buy something that they know they can trust."

Luckily, New Jersey's population stands to significantly benefit from the introduction of recreational cannabis, regardless of which legalization framework is implemented.

And, if New York, Pennsylvania, Connecticut, and Rhode Island all follow in New Jersey's footsteps, then their combined population would total roughly 45.9 million. This would make them collectively larger than California—which is currently the largest legal cannabis market in the world—as it only has a population of 39.5 million.

In fact, if the dominoes fall the right way then the US may soon see a new king of cannabis rise in the East Coast, as New Jersey becomes the Pathway of the Revolution once more.

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Hugo Gray
Hugo Gray

Hugo Gray is a Melbourne-based journalist with a body of work that covers a diverse range of topics, including immigration law, sex technology, and now the rapidly expanding cannabis industry.

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