The Jersey City Council passed an ordinance diverting cannabis tax revenue to the general operating budget to address the city’s significant deficit.
Jersey City Cannabis Tax Issues
At Large Councilperson Rolando Lavarro explained that he introduced the cannabis transfer tax spending ordinance.
“A lot of people are in this room because of taxes and the potential um tax increase that’s looming here in Jersey City,” he noted.
“Several months ago, and I want to thank the Corporation Counsel, when the subject of cannabis revenue and taxes was on the agenda …I asked to see if these monies that the City receives …. cannabis tax revenue… whether it could be diverted and directed to the general operating budget,” Lavarro explained.
“This ordinance, being introduced tonight, does something about our tax situation,” he argued. “It doesn’t solve it. Not by a long shot. It frees over $1 million in cannabis tax revenue and directs it to our general operating budget. Dollars that will help close our deficit without raising um … taxes on our Jersey City residents.”
“We are in a budget crisis, and we owe it to the people of Jersey City to think creatively, to think out of the box and to think differently and turn over every stone before we ever ask residents to pay more,” Lavarro declared to applause. “…This ordinance turns over one of those stones.”
“…I hope you will pass this. It’s only a little over a $1 million, but every dollar makes a difference,” he said. “I tell everybody here as well as the public at large, I intend to keep turning over every stone until we exhaust every single option that is available to us…”
The Jersey City Council unanimously passed the ordinance 9-0 on first reading without further comment. It still needs to be passed on 2nd reading at their next meeting in July to become law.
According to the ordinance, initially, the money was supposed to go to the Board of Education and the Affordable Housing Trust Fund. There was also supposed to be a “Cannabis fund” governed by a Cannabis Fund Committee that would fund social equity programs.
According to the ordinance, the tax is imposed on:
- “receipts from the sale of cannabis by a cannabis cultivator to another cannabis cultivator;
- receipts from the sale of cannabis items from one cannabis establishment to another cannabis establishment;
- receipts from the retail sale of cannabis items by a cannabis retail to retail consumers who are twenty-one (21) years of age or older.”
They wanted to impose the following rates:
- “Two percent of the receipts from each sale by a cannabis cultivator
- Two percent of the receipts from each sale by a cannabis manufacturer
- One percent of the receipts from each sale by a cannabis wholesaler.
- Two percent of the receipts from each sale by a cannabis retailer.”
Under former Mayor Steve Fulop, the city’s summer youth program received $500,000 last year from cannabis tax revenue.
Heady NJ hears many of the dispensaries in the city are not meeting their revenue projections due to intense competition from smoke shops and each other.
The new Mayor of Jersey City, James Solomon, blames Fulop for leaving a $254 milion deficit from last year’s budget. Solomon has blamed it on the tricks Fulop used to not raise property taxes during his unsuccessful run for Governor in the Democratic primary last year.
Solomon initially proposed raising property taxes by 20 percent. But the unpopular ordinance was withdrawn before a vote could be taken.
