Cannabis advocates in New Jersey are currently debating whether the Cannabis Regulatory Commission should raise a fee aimed at funding social equity initiatives and supporting communities disproportionately affected by the war on drugs. With the commission set to meet soon, the decision could have significant implications for the state’s cannabis market.

The fee, known as the social equity excise fee, is collected from cannabis cultivators and based on the amount of cannabis they produce. It was introduced to redirect some revenue from legal cannabis sales to programs designed to support impacted communities. As it stands, the fee is currently set at $1.24 per ounce, generating approximately $2.6 million in the 2024 fiscal year.

Progressive activists argue that now is the perfect time to increase the fee to $30 per ounce, aligning with other states that have higher cannabis tax rates. Marleina Ubel, senior policy analyst at New Jersey Policy Perspective, believes the fee should be raised to better serve its purpose. “This fund is critical for community support services,” Ubel said. “If we’re serious about creating real change, we need to invest more. The fee remains far too low for the scale of what needs to be done.”

Arguments for Raising the Fee

According to Ubel, increasing the fee could provide funding for after-school programs, expungement services, and legal aid for those affected by past cannabis-related offenses. New Jersey’s legalization law allows the Cannabis Regulatory Commission to adjust the fee annually, with a cap as the market grows. Since its introduction at $1.10 per ounce in 2022, the fee peaked at $1.52 in 2023 before being lowered.

Activists like Ami Kachalia of the American Civil Liberties Union of New Jersey are urging the commission to raise the fee to its maximum. “Millions of dollars could be redirected back to Black and Latinx communities that have borne the brunt of prohibition. Failing to do so risks falling short on New Jersey’s commitment to equity and justice,” Kachalia said.

Concerns About Market Impact

However, not everyone agrees that raising the fee is the right move. Todd Johnson, president of the New Jersey Cannabis Trade Association, warned that a dramatic fee increase could harm the market. “Cultivators will have no choice but to raise their prices, and that cost will trickle down to consumers,” Johnson explained. He predicted a 15% increase in cannabis product prices, which could drive consumers back to the unregulated market.

At dispensaries, the price for an eighth of an ounce of cannabis currently ranges from $40 to $60, depending on quality. A higher fee could push these prices up even more, creating affordability issues for consumers.

Longtime cannabis advocate Leo Bridgewater also voiced opposition to the proposed increase. “For small businesses, especially those owned by people of color, access to capital is still a major hurdle,” Bridgewater said. “Raising the fee without addressing those underlying issues is shortsighted and could ultimately hurt those the law is meant to help.”

Balancing Equity and Market Stability

While concerns about rising prices are valid, proponents of the fee increase argue that the potential for transformative community investment outweighs the risks. Ubel suggested that consumers may be willing to pay a slightly higher price if they know their money is being used for a good cause. “If I’m told my purchase is helping fund critical programs in my community, I’d happily pay the extra cost,” she said.

Meanwhile, Bridgewater pointed out that encouraging more municipalities to allow cannabis businesses could increase revenue without raising fees. Currently, fewer than one-third of New Jersey towns permit the cultivation or sale of recreational cannabis, limiting the market’s growth.

As the Cannabis Regulatory Commission prepares to decide on the future of the social equity fee, the debate highlights the complex balance between supporting social equity initiatives and ensuring a healthy, sustainable cannabis industry in New Jersey.