New Jersey Marijuana Business

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What is the Demand for Marijuana in New Jersey?

The Substance Abuse and Mental Health Services Administration released a National Survey on Drug Use and Health report showing the demand for marijuana in New Jersey between 2018 and 2019. Based on the report, an estimate of 78,000 New Jersey residents aged 12 - 17 used marijuana, while an estimate of 955,000 New Jerseyans aged 18 and older used marijuana. First-time users of marijuana in New Jersey included an estimate of 33,000 residents aged between 12 and 17 and an estimate of 56,000 aged 18 and older. The report reveals that most of the users of marijuana in New Jersey were between the ages of 18 and 25 as they constituted a larger part of the marijuana users. The survey indicates a moderately high demand for marijuana in New Jersey, particularly among persons aged 18 and older.

As of April 2023, there are over 107,000 patients, 5,000 caregivers, and 1,500 doctors registered in the New Jersey medical marijuana program. The state reports cannabis sales and tax revenues every quarter. In the 2022 cannabis sales published report, New Jersey $55.8 million worth cannabis in Q1 that year. Legal recreational marijuana sales commenced in the state on April 21, 2022. Therefore, the second quarter total included recreational marijuana sales for the first time. In Q2 2022, New Jersey sold $139 million worth of cannabis with recreational marijuana accounting for $79.7 million of this total. Q3 and Q4 sales totals were $177.7 million and $182.4 million respectively. New Jersey generated $4.4 million, $7.4 million, and $8.2 million in tax revenue on recreational cannabis sales in Q2, Q3, and Q4 2022 respectively.

How is Marijuana Taxed in New Jersey?

Following the establishment of the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act, the use of marijuana by adults aged 21 and older became legal in New Jersey. Governor Phil Murphy signed the reform bill into law. Medical marijuana in New Jersey is taxed in accordance with the state’s regular sales and use rate of 6.625%. However, this tax rate is set to phase out over three years, wherein the tax will be reduced to 4% in July 2020, 2% in July 2021, and finally eliminated in July 2022.

There is an allowance of a 2% maximum municipal retail tax. The New Jersey State League of Municipalities (NJLM) provides that a municipality may impose a transfer tax on the sale of marijuana or marijuana units by a cannabis enterprise located within the municipality. The tax may be imposed on:

  • Receipts from retail sales of cannabis units by a cannabis retailer to retail consumers

  • Receipts from the sale of cannabis by a cannabis cultivator to another cannabis cultivator

  • Receipts from the sale of cannabis units from one cannabis enterprise to another

A municipality is authorized to set its own tax rate, but the rates must not exceed:

  • 2% of the receipts from each sale by a cannabis cultivator;

  • 2% of the receipts from each sale by a cannabis manufacturer;

  • 1% of the receipts from each sale by a cannabis wholesaler; and

  • 2% of the receipts from each sale by a cannabis retailer.

Furthermore, the New Jersey Cannabis Regulatory Commission may enforce a weight-based excise tax at rates based on the average retail price of marijuana. These rates may include:

  • $10 per ounce if the average retail price per ounce is more than $350

  • $30 per ounce if the average retail price per ounce ranges from $250 to $350

  • $40 per ounce if the average retail price per ounce ranges from $200 to $250

  • $60 per ounce if the average retail price per ounce is less than $200

The regular sales tax is charged on all final consumption of marijuana in New Jersey. This, however, does not apply to purchases made by businesses that will use it in the course of production. 70% of the marijuana sales tax revenue in New Jersey is assigned to be invested in impact zones. These zones majorly comprise Black and Latino cities and neighborhoods affected by the initial enforcement of marijuana laws. The remaining 30% will cover administrative costs that accrue from the regulation of marijuana.

What is the Agency Taxing Marijuana Businesses in New Jersey?

The New Jersey Department of the Treasury is the state agency that generates and gathers revenues, among other related functions relating to budgeting and financing. The Taxation Division of the state’s Department of the Treasury is responsible for collecting taxes in New Jersey. This also includes the taxation of marijuana businesses in the state. The Division administers 41 taxes and fees. The Taxation Division ensures that businesses and residents in New Jersey conform to tax laws and statutes.

The Taxation Division of New Jersey’s Department of the Treasury is divided into seven branches to ensure efficiency in the administration, enforcement, and collection of the different tax types in New Jersey. These branches include:

  • Audit Activity - This activity is composed of several branches that conduct audits to verify that taxpayers file returns accurately and pay the right amount of tax.

  • Collection and Enforcement Branch - This branch is in charge of the collection of deficient and delinquent taxes from individuals and businesses. It includes other sub-branches like bankruptcy, field investigations, bulk sales, casual sales, clearance/license verification, judgments, and regional Information centers.

  • Counsel Services - It guides the Division and the public concerning tax laws. The counsel services have four branches including:

    • The Office of Taxpayer Advocate

    • The Office of Legislative Analysis, Grants and Disclosure

    • Regulatory Services

    • Conference and Appeals

  • Office of Criminal Investigation (OCI) - It performs law enforcement functions for the Division.

  • Property Administration Branch - This branch is divided into the Policy & Planning; and Valuation & Mapping sections. These sections help administer local property tax laws for municipal and county officials.

  • Inheritance and Estate Tax Branch - It administers all phases of the New Jersey inheritance and estate.

  • Taxpayer Services Activity - Offers information, assistance, and services to taxpayers to help them meet their New Jersey tax responsibilities.

The contact details of the Taxation Division of New Jersey’s Department of the Treasury is as follows:

Department of the Treasury

125 West State Street

Trenton, NJ 08625

Phone: (609) 292-6748

The mail address is:

Department of the Treasury

Division of Taxation

PO Box 281

Trenton, NJ 08695-0281

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New Jersey Marijuana Business