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The state of New Jersey earned $3.31 million in sales tax revenue from the $54.3 million medical cannabis industry in 2018, according to the Department of Treasury.
This is not a figure you could pluck from the Murphy administration’s $38.6 billion proposed budget. Nor was it included in the Health Department recent biennial report which touted the rapid growth of the medical marijuana program during the governor’s tenure.
The truth is, taxing cannabis — medicine for the 45,300 registered patients in the program — is unpopular. Patient advocates have complained about it since day one.
State lawmakers have chimed in. In November, Sen. Robert Singer, R-Ocean, called the tax “disgraceful” during a hearing on the medical marijuana bill last year.
Earlier this month, Assemblyman John DiMaio, R-Somerset, echoed that sentiment during the Assembly Budget Committee hearing on the Health Department.
“It’s the only medicine that is taxed,” DiMaio said. “Does the administration support the elimination of the sales tax?”
Yes, Health Commissioner Shereef Elnahal replied. Ending the sales tax would allow more people to be able to afford participating in the program, according to the department’s recent report.
But the pending legislation that expands the nine-year-old medical marijuana law only calls for phasing-out the sales tax over five years.
Gov. Phil Murphy’s budget also counts on $2.45 million in other cannabis revenues, including $2.2 million from registration fees from a projected 85,000 to 105,000 patients. The Health Department will also collect $240,000 in annual permits fees from the 12 alternative treatment centers, according to a budget analysis by the Office of Legislative Services and the Murphy administration’s response.
With growing revenues, the Murphy folks plan to hire more people, including a regulatory officer, an administrative analyst trainee, an executive assistant, and two investigator trainees this year.
Next year, the administration wants to add at least three field monitors, which collectively should cost $250,000.
State Sen. Joseph Vitale, D-Middlesex, one of the bill’s prime sponsors, said he considered ending the sales tax immediately.
“Then I saw what the revenue numbers looked like,” Vitale told NJ Cannabis Insider.
“I agree medical marijuana should be treated on par with other pharmaceuticals, but that being said, the immediate elimination (of the sales tax) would create another budget hole. That’s not responsible.”
Vitale’s bill expanding the medicinal marijuana program phases out the sales tax over five years once the law legalizing marijuana for adults 21 and over passes. And that bill is stalled as Senate President Stephen Sweeney, D-Gloucester, is working to secure the 21 votes needed to pass the legislation in the 40-member house.
This story first appeared in NJ Cannabis Insider.
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