Governor Phil Murphy introduced a budget proposal for Fiscal Year 2026 that would increase the Social Equity Excise Fee (SEEF) tax paid on cannabis and hemp as a townhall on how the money would be spent was held by the NJ Cannabis Regulatory Commission (NJ-CRC).
Murphy’s Administration released their lengthy Fiscal Year 2026 budget proposal. It says they want the SEEF raised from $2.50 to $15 an ounce on cannabis and $30 an ounce on intoxicating hemp.
It was not mentioned in his initial budget address to the Legislature.
“The FY2026 budget also assumes … an increase in the Social Equity Excise Fee (SEEF) on cannabis sold by a Class 1 license holder from $2.50 per ounce to $15 per ounce and implementation of a new $30 per ounce SEEF on intoxicating hemp products. Both of which are expected to generate an additional $70 million in revenue,” it says.
“This year, cannabis sales are expected to produce $90 million in tax and fee
revenues, most of which is allocated to support State programs to mitigate
the harms of past cannabis criminalization, especially for communities of color,” the budget reads. “The Governor proposes using over $200 million in available and projected revenues to support a variety of important investments.”
“These include support for youth mental health and underage drug prevention services. Programs to assist incarcerated persons as they reenter their communities and programs that improve access to education; support for cannabis entrepreneurs. Violence prevention and intervention programs and aid to cities disproportionately affected by the War on Drugs,” the budget proposal says.
The budget tracks the generation and spending of cannabis revenue.
The SEEF Wholesale Cannabis Tax Issues
The NJ-CRC raised the SEEF last year from $1 to $2.50 after there was an initial chance they could raise it to $30 an ounce.
As a wholesale tax, it is not paid directly by consumers. However, unless the loss is absorbed by competitive pricing, it is likely imposed on consumers.
The leading cannabis industry advocates likely do not want another increase on top of last year’s debate.
A lot of the momentum and advocates behind New Jersey cannabis legalization were fighting to advance social justice. Raising tax revenue through adult-use cannabis sales and sending it was especially for minority communities that were most hit by the War on Drugs in the inner cities.
So, addressing this was a top legalization goal for many notable organizations like the ACLU of NJ, the NJ NAACP, the Latino Action Network (on whose board I served full disclosure), Salvation and Social Justice, and others.
Many communities want the money. There are many things that money could be spent on to address the harms of federal marijuana prohibition and the War on Drugs.
The NJ-CRC said that while some of it has been spent $6 million, it was sitting in the fund last August at the last meeting this February.
Some money from cannabis tax revenue has already gone to anti-violence programs in two rounds announced by the NJ Attorney General last fall and recently.
NJ-CRC Town Hall on Spending SEEF Cannabis Tax Revenue Money
NJ-CRC Commissioner Krista Nash led a town hall on how to spend the SEEF money this week. It was their last in a series of three.
While the Commission’s monthly meetings are usually hybrid in-person and live streamed from YouTube, this was a Zoom meeting.
Nash detailed how money was spent. That included $25.5 million for violence intervention, $5 million went to the NJ Economic Development Authority NJ-EDA) for the Cannabis Equity grant program.
“It’s so important and helpful to small businesses,” she explained.
The NJ-EDA did not release the list of their Social Equity grant winners to the public last year. Nor did it announce another round of grant money to be won which is badly needed.
Nash also said the cannabis tax revenue went to the children’s defense fund, summer programs, and programs to help those released from jail.
She noted the SEEF tax is not imposed on medical cannabis.
Nash explained the State collected an especially large amount of money last year.
Many social justice-minded cannabis advocates like NORML Organizer and Heady NJ Guest Writer Chris Goldstein and American Civil Liberties Union (ACLU) NJ advocate Ami Kachalia spoke in favor of funding programs.
She wanted them to establish a permanent advisory committee on how to spend the money. Kachalia also continued to advocate for the SEEF to be $30 an ounce on cannabis to fully fund social justice programs.
Notably, the fiery social equity advocate Commissioner Charles Barker did not co-host.
Barker’s replacement Amelia Mapp passed a recent a NJ Senate Judiciary Committee vote.
