Jersey City earned $240K from cannabis sales. Now how will the city spend it?

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Jersey City has collected a lot of green —in both weed and currency.

In the year since the first dispensary opened its doors, the city’s 10 cannabis businesses have generated $12.2 million in revenue. More importantly to the city, they’ve generated $239,578 in city taxes, a figure that surprised the city council president.

The question now for city officials is how to spend it, whether it’s schools, mental health or second chance programs and marijuana use education, and when the money will be spent.

“It is extremely important that the schools benefit from this, that the money get to these nonprofits out here doing work in the community,” said Councilman Frank Gilmore. “I can’t imagine an instance where it would be justifiable not going where it’s supposed to go.”

Jersey City initially lagged statewide, but now holds of the distinction of having more dispensaries than anyone else in the state.

The city applied a 2% city sales tax to recreational sales, which dispensary owners say isn’t burdensome and in fact, favorable compared to other states that have higher cannabis taxes.

“Many states have applied excise taxes of 10% to 30% on cannabis, so it makes it much harder for (those) businesses to compete against the illicit market,” said Jonathan Bednarsh, co-owner of RIPT Dispensary.

New Jersey has limited the local tax to 2%, and there also is the standard 6.625% sales tax, along with a $1.24-per-ounce social equity fee on cannabis sales.

“The consumer is getting a really fair tax scheme here in New Jersey, which is good,” Bednarsh continued.

RIPT, located in the shadow of the Pulaski Skyway, recorded a total of $2 million in recreational sales since last September and paid $40,671 in taxes, according to data provided by the city. The city’s most financially successful dispensary is downtown FLWR, whose $5.2 million in sales has generated $99,968 in taxes.

The recreational tax revenue will go to either the city’s public schools or social equity programs. A yet-to-be-formed committee will make those decisions. A city spokeswoman did not comment on when the committee would be created.

Council President Joyce Watterman suggested putting the money into areas affected by the war on drugs, such as Bergen-Lafayette, or into mental health programs.

“When you look at the history of drugs, they find that for a lot of people on drugs, it’s mostly a mental health issue,” she said. “If we can figure out some type of education and training, I think we can help the public.”

Gilmore says tax revenue should go toward programs geared to marijuana-usage education or others that provide second-chance offenders clothes and job opportunities, noting that the legalization of cannabis was meant to help people affected by the criminalization of marijuana.

Dispensary owners have their own ideas for utilizing the tax money, such as capital improvements at the public schools, technology or air conditioning, workforce training, the arts or violence intervention programs.

“Who can learn in a 90-degree environment and who can teach in that kind of environment?” said Cannabis Place CEO Osbert Orduna.

“It’s very difficult for both the teachers and the students, but by setting our youth in the city up for success and having a educational environment that’s conducive to learning, the opportunities are exponential for the kids and the staff to be able to work and learn in.”

Orduna said the city could generate more tax revenue by cracking down on the illegal, unlicensed dispensaries, saying sales, and tax dollars, would be redirected to licensed dispensaries.

While the city’s cannabis scene is flourishing, the city is still under a moratorium on new cannabis applications. It was implemented last year so that the city council could create new cannabis regulations, but it’s been extended multiple times because of disagreements on the legislation.

“Part of the problem is some of the council can’t agree on … how many do they desire in each ward,” Watterman said. “The longer they wait, more businesses are opening up. So are they grandfathering or not? They keep going back and forth with that.”

The dispensary cap per ward has been a sticking point for multiple council members. Previously proposed legislation included capping the amount of dispensaries citywide to either 48 or 55 and limiting the amount per each of the city’s six wards to eight.

There are currently 26 cannabis applications with state approval and another 11 with city approval. Watterman is hoping to have the new regulations passed by the end of the fall.

Gilmore says the city “botched” its plan by not putting a cap on the amount of dispensaries. He’s open to capping the amount citywide to 12.

Councilman James Solomon said while the city is “close to saturating the market,” he wants to keep the moratorium in place and let the cannabis industry “go forward and see which ones succeed and which ones don’t.”