Legalized pot in N.J. a $300 million tax jackpot?

New Jersey would gain at least $300 million a year in taxes if it followed the lead of four other states and legalized marijuana for recreational use, according to a report released Tuesday by New Jersey Policy Perspective and New Jersey United for Marijuana Reform.

The revenue projection is based on imposing an eventual 25 percent sales tax on consumers, who would have to be at least 21 years old.

The organizations represent a coalition of advocacy groups working for legalization in New Jersey. They analyzed available data on the number of people who purchase the drug illegally in New Jersey, and examined the experiences of states that recently approved legalization.

"The lessons from around the country are loud and clear: Marijuana legalization makes fiscal sense and it makes practical sense," said Policy Perspective policy analyst Brandon McKoy, who coauthored the report with Ari Rosmarin, public policy director of the American Civil Liberties Union of New Jersey.

The coalition said legalization also would stimulate business, create jobs, and eliminate the cost of enforcing marijuana-possession laws that it says are unfair and unnecessary. More than 24,000 individuals are arrested in New Jersey for marijuana possession each year, with African Americans being penalized three times as often as Caucasians despite similar usage rates, the group said.

The tax proposed in the report would start at 5 percent the first year, then rise to 15 percent the next year and finally be set at 25 percent, which is comparable to Colorado's 27.9 percent tax. The report projects about 343,100 New Jersey residents and about 100,000 Pennsylvania and New York residents would purchase marijuana at a legal marketplace in New Jersey.

"Higher out-of-state participation is much more likely to be realized if New Jersey implements a legalized system for adults before its neighbors," the 14-page report said. Besides Colorado, the other states that allow recreational marijuana are Oregon, Washington, and Alaska. The District of Columbia also has legalized it, but only for personal use, not for sale.

Two years ago, State Sen. Nicholas Scutari (D., Union) introduced the state's first bill to legalize marijuana. But it was not brought to the floor for a vote and expired in December. An identical bill in the Assembly was introduced this year.

Scutari said Tuesday that he plans to visit Colorado next month to meet with officials and industry representatives to discuss their program, and will introduce a new bill in the Senate this summer. "We're hearing the downsides are nonexistent. . . . Someone said one problem is they didn't budget this much money coming in," he said.

Scutari said that he believes the New Jersey report contains "very conservative" projections, and that his staff had estimated legalization would generate more than $500 million in tax and other revenues a year. "But that will take time. We have to get a whole industry started," he said.

Still, Scutari said he would like to expedite its launch. "We would like to be the first on the East Coast. That's why we would like to get out in front of it. . . . We need the money," he said.

The report said 365,900 New Jerseyans spend more than $869 million on black-market purchases of marijuana each year, based on the annual National Survey on Drug Use and Health. If marijuana were legalized, state residents would spend about $1.2 billion each year, based on a price of $350 per ounce, which is comparable to the estimated price of $343 per ounce in the illegal market, the report said.

Gov. Christie has repeatedly said he would veto any legalization bill. He has said that he believes marijuana is a gateway drug that could put children and others at risk. His representative did not respond to an email Tuesday asking for comment on the report.

Coalition members say they will continue to lobby for passage, since Christie's term will end after next year. They cite a 2015 Rutgers-Eagleton poll that found 58 percent of New Jerseyans support legalization.

New Jersey allows medical marijuana to be sold only to patients with certain ailments, and they must obtain physician approval.

"Facing yet another budget shortfall, New Jersey is again confronted with the untenable choice of either further draconian cuts or massive tax increases in order to balance the state budget. . . . It's time for New Jersey to get off the sidelines," said New Jersey United for Marijuana steering committee member Bill Caruso, a former executive director of the Assembly.

The report says the $300 million New Jersey was projected to get in taxes is a conservative estimate. Taking into consideration other direct revenues, the state could reap $305.4 million, the report said. Among other things, that amount could pay for as many as 12,000 inpatient drug-treatment beds, or job training for more than 45,000 unemployed or underemployed residents.

"New Jersey can't afford to wait," said Rosmarin, the report's coauthor. "With just one vote, the Legislature can raise hundreds of millions of dollars annually, help end a civil rights injustice. . . . It's time for common sense, and that means ending Prohibition again."

jhefler@phillynews.com

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