The Next USA State To Legalize Pot Is A $1 Billion Market
Posted on November 20, 2017 | By Henry | Leave a response
Green is as good as gold in New Jersey.
The state is set to legalize recreational pot early next year.
And by “early” I mean before the snow melts.
The effort first got on track in June when State Senator Nicholas Scutari introduced a bill to legalize recreational marijuana in the Garden State.
Of course, at the time, Chris Christie was governor.
Christie wasn’t just a big, fat road block. He was a rabid anti-pot attack dog.
He called supporters of marijuana legalization “crazy liberals” who want to “poison our kids.”
Mind you, this is a man who ate so many donuts people started calling him “Christie Kreme.” (I guess so long as you can afford lap band surgery that’s okay.)
But more importantly, this is a man who increased spending every single year he was in office and refused to raise any taxes to pay for it.
As a result, credit-rating agencies downgraded New Jersey’s credit rating 10 times during his term — the most for any governor in U.S. history
The state’s operating deficit is on track to reach $3.6 billion by 2023. And Christie’s tax cuts, alone, have contributed about a third of that — a total $1.1 billion by 2021.
Moody’s now says New Jersey’s debt problem is so big that even tax hikes will be insufficient to cover it.
“While future tax increases are possible, the projected $3.6 billion gap is equivalent to 34% of sales taxes and 22% of gross income taxes, making it unlikely a sufficient tax increase would be politically feasible,” Baye Larsen, the credit agency’s vice president, said in a statement.
Hence, the recreational weed proposal. The legislation envisions a 5% sales tax the first year, followed by 15% the second year, and 25% in the third.
Analysts believe New Jersey could grow into a $1 billion market, generating $1.2 billion in annual cannabis sales by 2021.
That would greatly help the state’s budget predicament. Colorado topped $1 billion in marijuana sales last year, collecting $200 million in taxes. It also saved the $145 million it previously spent each year combating the drug.
That’s a $345 million swing for a state that’s still facing a $260 million budget deficit in 2017.
And with Chris Christie on his way out the door, New Jersey is poised follow suit.
Last week, Democrat Phil Murphy was elected as New Jersey’s next governor. On the campaign trail, Murphy pledged to legalize marijuana in his first 100 days in office.
Fellow Democrats, who control both arms of New Jersey’s legislature, as well as the governorship, aren’t looking to make waves.
“This is something Murphy supports and I support it and I don’t think anyone is going to go out of their way to embarrass the governor,” New Jersey Senate President Stephen Sweeney told the Washington Examiner. “It’s a priority and it’s something we’re going to need to do.”
Sweeney says legalization will become law before April. New Jersey will be the ninth state to fully legalize the drug — joining Washington, Colorado, California, Nevada, Alaska, Oregon, Maine, Massachusetts, and the District of Columbia.
However, stores won’t be open until 2019. As a result, the expected $300 million in annual tax revenue isn’t likely until 2020 at the earliest.
The delay between the passing of legislation and store openings is due to the state’s total lack of preparation. As I said, the previous administration was decidedly anti-pot. So New Jersey is building from the ground up.
Literally. From the planting of the cannabis seeds to the growth of the plants to the processing into buds or other products like oils and edibles, the transportation of product from the farm to the store, and then retail sale to the consumer — it’s going to take time to develop the infrastructure.
Furthermore, New Jersey counties, towns, and cities will have to decide whether or not to participate.
The New Jersey bill would eventually give municipalities that allow pot sales 3% of the tax revenue generated in those towns. But not every municipality is swayed by the potential for added tax revenue.
Recreational marijuana has been legal in Colorado since 2014. Yet, roughly two-thirds (176 of 272) of the state’s municipalities still don’t allow marijuana sales.
Still, you could easily see how a city like Atlantic City would welcome the added revenue jolt. The city’s economy has been cratering for years, with a budget battered by bankrupt casinos.
It was these very casinos that saved the city from collapse in 1976, when New Jersey citizens voted to give it the sole authority to operate casinos.
Four decades later, legal weed could be the new savior.
“The thing they need is to generate real dollars — something Atlantic City can’t do on its own, and generate more tourists,” says State Assemblyman Reed Gusciora. “Right now, there are too many tourists who decide to go to Delaware, the Poconos and New York.”
Still, it’s unlikely Atlantic City will get a monopoly.
Other pragmatic politicians, like Maplewood Mayor Victor DeLuca, also support legalization.
“If it’s legalized and it’s a business, I think we should consider it,” he said. “People are going to use it, we might as well legalize it, regulate it and tax it.”
Indeed, this is the conclusion states around the country have come to time and time again.
The green wave rolls on.
And if you want to get in on it you should check out Jimmy Mengel’s latest report for the Marijuana Manifesto.
He’s found a marijuana streaming company that’s poised to blow up for a big-time gain.