A recreational cannabis tax could be in Jersey City’s future, according to a newly introduced ordinance, but how the revenues will be spent is up for debate.
The city council voted unanimously to introduce an ordinance establishing a cannabis tax which would place a 2 percent sales tax on cannabis manufacturers, cultivators and retailers and a 1 percent sales tax on wholesalers.
The ordinance states, “one hundred percent of the revenues collected from the tax imposed … shall be dedicated to the Jersey City Public Schools,” and the city will be required to deposit the revenues from the Recreational Cannabis Transfer and User Tax “into an appropriate fund for the Jersey City Public Schools on a quarterly basis.”
The ordinance, sponsored by council members James Solomon and Rolando Lavarro, stipulates that if an establishment does not pay the tax, the unpaid balance and any accrued interest will be placed as a lien on the property.
The council will now consider other ways to spend the funds before the ordinance is back on second reading during the July 14 council meeting.
“I think we would be remiss if we didn’t try to add some sort of social equity package to these taxes,” said Councilwoman Denise Ridley.
Council President Joyce Watterman said she would like to see some of the funds go to the district and some back to the communities that have been most affected by the country’s war on drugs.
“There are people in the Black and Brown community whose lives have been affected in so many ways,” Watterman said. “Some of their lives are ruined, so we have to set up something to help them, too.”
She said she would like to ensure that a committee and reports on the funding are created.
Academics, not administration
Councilman Daniel Rivera said he wanted to ensure that money earmarked for the school district goes directly to the classroom and not toward the district’s administration.
Since 2018, the Jersey City Public School District has seen deep cuts to it’s state funding.
In 2018, the state approved the School Funding Reform Act of 2008 changing the way state aid to school districts is calculated and distributed.
Under the updated funding formula, the state Department of Education now allocates more money to districts that were considered underfunded by the previous formula, while gradually reducing aid to districts like Jersey City that were identified as being overfunded.
According to Superintendent of the Jersey City Public School District Franklin Walker, this year the district lost about $152 million in state aid, and over the next three years the district is projected to lose another $250 million.
To help address the loss of funding, the Jersey City Board of Education adopted a $814.1 million budget representing a roughly $77.5 million increase from last year’s budget.
The tax levy would be set at about $278 million, including $85 million from the Levy Bank Cap.
This means that the owner of a home with an average assessed property value of about $461,925 would pay an estimated $993 in school taxes for the year.
This year, the school board and city council have held two combined public meetings in an attempt to devise a way to help further fund the school district and address the state aid cuts.
During those meetings, a local cannabis tax has been floated as a source of revenue for the district. Last November New Jersey voters made recreational cannabis legal, and Gov. Phil Murphy signed a bill into law allowing municipalities to levy a 2 percent tax on all retail cannabis sales.
In January, the council adopted an ordinance allocating a 2 percent tax on medical cannabis sales to the Affordable Housing Trust Fund.