The NJ Cannabis Regulatory Commission (NJCRC) pushed raising the Social Equity Excise Fee (SEEF) to another meeting at a special meeting since many were against them doing so.
It was removed from their original October meeting of NJCRC.
Many NJ cannabis consumers and business advocates were against it.
Expensive and mediocre legal cannabis has been a problem for 11 years and counting. Since 2021, the NJCRC has said competition would “eventually” lower the price.
Explaining the Social Equity Excise Fee
During the meeting, Executive Director Christopher Riggs explained they are allowed to impose the tax, and it’s based on the price of an ounce of cannabis and is supposed to be adjusted annually.
“That average retail price shakes out to be $330.68,” he noted.
Riggs said when the price of an ounce of legal NJ cannabis is below $350 and above $250, the SEEF is to be set at $30 for usable cannabis and $8 for unusable cannabis sold for manufacturing.
“I move to … set the social excise equity fee at $5 per ounce of usable cannabis and $3 for un-usable cannabis sold for manufacturing,” Vice Chair Sam Delgado said.
Commissioner Krista Nash seconded it.
“I would like to waive the regulation… and set the Social Equity Excise Fee at $10 an ounce of usable cannabis,” Commissioner Maria Del Cid-Kosso said.
“Seeing as there is no second, the motion does not carry,” NJCRC Chair Dianna Houenou said about Del Cid-Kosso’s efforts.
She then said the proposal for $5 an ounce of useable and $3 for un-usable cannabis SEEF was pending.
Pushing the Issue of a Fee Increase
Notably, passionate social equity and social justice advocate Charles Barker is still a Commissioner despite the announcement of his replacement.
“I move to amend the current motion and, move to waive the November 1st requirement,” Barker said. “This will afford the Commission more time to gather more information and speak to more stakeholders and organizations that represent the businesses and the people that will be directly impacted.”
“Social equity is a primary goal if we’re going to be successful in New Jersey,” he explained. “This decision stands to impact a lot of businesses. I’m concerned for our small businesses.”
“This decision can be devastating,” Barker argued.
“There are many ways to realize Social Equity outside of S E E F. Our law conditioned 70 percent of all tax revenue to go to Impact Zones for social equity investment,” he said.
Barker said the legislature can also send more money to Impact Zones.
“The motion is to amend the underlying motion,” Houenou said. “A waiver of regulation.”
Del Cid-Kosso seconded it.
The motion amendment passed 3-2, with Barker, Del Cid-Kosso, and Houenou voting yes and Delgado and Nash voting no.
Houenou then explained the motion itself to push the decision had to be voted on.
It was so complicated the Commissioners themselves got confused.
“We didn’t vote on a waiver of the fee?” Nash asked
“Correct,” Houenou said.
The motion to push the decision passed 3-2 on the same lines as the first vote.
Arguing for Social Justice
During the public comment period, Ami Kachalia of the American Civil Liberties Union (ACLU) of NJ explained that part of the reason to support cannabis legalization was to help Black and Latinx people.
“New Jersey spent hundreds of millions of dollars… on these criminalization laws,” she noted. “This has always been one of the most important pillars of the work to ensure community reinvestment.
“It was always clear when the SEEF would change,” Kachalia argued.
“My hope is that when the decision is made, we will not be leaving millions of dollars on the table that could go back into Black and Latinx communities that have borne the brunt of the Drug War,” she added.
Many Against SEEF Increase
“You have built here a model for the nation. That’s the view of other states,” noted cannabis advocate Bill Caruso said.
“But you can’t kill this golden goose right now. The steep tax at the 30-dollar rate would decimate the racial and social equity you built,” he argued.
Caruso said the conversion to underground legacy to legal operators would be hurt.
(Heady NJ is holding a forum event on the underground legacy to legal pathway on January 11, 2025 in Newark!)
He was not happy with some cannabis operators who wanted to stop the SEEF increase.
“Where were you when the Commission was under assault?” Caruso asked.
“If you want to raise money for the SEEF, tell them to tax hemp the same way they’re taxing cannabis!” he exclaimed.
Caruso commended Barker for taking the lead.
“Raise the social excise fee on cannabis revenue,” Austin Edwards of Salvation and Social Justice said.
He noted there were thousands of marijuana arrests every year in Jersey.
“We don’t think even $10 is enough,” Edwards said. “$60 if possible. This is necessary since investments are so desperately needed.
“Create a public dashboard for residents to track the funding of money set aside for comm investment,” he added.
Patient Advocate Against SEF Increase for Small Businesses
“Some of the larger corporate cannabis companies can absolutely pay the
$30 SEEF fee,” cannabis patient advocate Samuel Reichbart argued. “Companies like Curaleaf that have done patients wrong for many, many, many years now. They produce cannabis at $100 a pound and turn and sell it inside their dispensaries for anywhere from 6 to $8,000.”
He said they then wholesale legal cannabis for $4,000 a pound.
“There is no reason… they cannot afford… the SEEF fee,” Reichbart said. “We do still need to protect the small businesses that have worked so hard to come online. They cannot afford that.”
“Curaleaf and GTI (Rise) and MPX (BE) and Kind Tree (TerrAscend) and every single one of these companies that has put out garbage, that puts their weed in radiation machines, that makes sure mold gets to the market, that pays extra to inflate their numbers, that lab shops, that harms patients,” he exclaimed. “Every single one of those companies should have to pay every single dollar that you guys are allowed to charge them by law.”
“If you don’t, you are just allowing them to do our state dirty and allowing them to continue to hurt people,” Reichbart argued.
Underground Legacy to Legal Operator Against Increase
Underground legacy operator Daniel Kessel of Budhub explained he just got out of prison and is trying to go legitimate. He also accused towns of corruption.
“What would happen if a town with dispensaries currently open, the ordinance was not done properly?” he asked.
Kessel said that the South Toms River cannabis process has been strange and favored companies before the final laws were established. One company has already opened.
“There is a criminal investigation going on into the South Toms River cannabis program,” he noted.
Kessel was against the steep increase.
“It’s going to absolutely cripple manufacturers, wholesalers, retailers. Prices are going to skyrocket. I’m all for social justice,” he said.
“Alcohol has hurt our communities way worse than cannabis,” Kessel argued.
“Corruption, it’s happening in all local towns,” he noted.
Towns have a lot of power in New Jersey. And the NJCRC has no power to bend them.
Immediately after the meeting, the NJ CannaBusiness Association (NJCBA) sent out a statement saying how happy they were with the NJCRC’s decision.
“By extending the timeline to set the Social Equity Excise Fee for 2025, we’re ensuring that our decision reflects an intentional and thoughtful commitment to community reinvestment and sustainable growth for New Jersey’s cannabis industry,” Houenou explained in a press release.
According to the NJCRC’s release, the date of when the board is expected to vote on the 2025 SEEF rate has yet to be determined.
