New Jersey must do more to bring racial justice and equity to cannabis legalization

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New Jersey enacted cannabis legalization in 2021, promising to create a recreational cannabis market grounded in social equity and racial justice. After decades of criminalizing cannabis and disproportionately arresting people from Black and Brown communities, the state promised to make amends.

Eighteen months later, the state has made big profits: $4.6 million in tax revenue during the first 10 weeks of cannabis sales. But on its promises of social equity and racial justice? It’s a mixed record, at best. While the state has succeeded at drastically curbing arrests, it has much more to do to open the legal cannabis business to the communities it promised to benefit.

First, the good news. When it comes to reducing the number of people arrested for cannabis, the state has been succeeding. One of the hallmarks of New Jersey’s cannabis law is its strict restrictions on arrests for the personal possession of cannabis as well as small-time dealing. The law prohibits police from arresting people for possessing cannabis for personal use and requires that police officers issue warnings to low-level dealers following their first offense.

As a result, the state has seen a dramatic drop in the number of people arrested for both cannabis possession and selling small amounts of cannabis. A recent report by POLITICO New Jersey found that arrests for selling less than an ounce dropped from about 1,000 a year to about 23 a year. Similarly, while there were about 19,000 arrests a year for possession of less than 50 grams of cannabis, today it is legal to possess an ounce or less and there were only 217 arrests a year for possessing more than six ounces. New Jersey still needs to release information on the demographics of people arrested for cannabis to determine if racial disparities in arrests persist, but on the volume of arrests alone, this is promising.

But there’s also bad news: when it comes to ensuring equity in the growing cannabis market in New Jersey, the gap is wide between promises made and promises delivered. A key policy goal touted by the state has been its commitment to creating a cannabis industry that benefits communities that have historically faced the disproportionate brunt of the war on drugs — mainly low income Black and Latino communities. During prohibition, Black people in New Jersey were 3.5 times more likely to be arrested for marijuana possession than white people, despite Black and white people using marijuana at similar rates. These racial disparities in arrests were not because of differences in consumption rates. Rather, they were driven by policing and broader criminal justice practices. The Cannabis Regulatory Commission, which oversees cannabis licenses in the state, has repeatedly stated that creating equity is one of its key goals, including by prioritizing “social equity businesses.”

Yet so far these well-meaning promises have not translated into equity on the ground. Business applicants from local communities that have been harmed by decades of a failed war on marijuana now must compete with multi-state businesses that have significant access to resources and to capital. As a consequence, it has been incredibly difficult for people who are living in the state with arrest records that resulted from the war on drugs to now be able to profit from the scaling back of that unjust war. According to NJ Advance Media, all 19 recreational cannabis dispensaries in New Jersey are owned by eight multi-state operators.

In general, it is very expensive to start a cannabis business, but in New Jersey it is particularly challenging for two reasons: First, real estate prices are high in the state, and second, three out of every four municipalities in New Jersey, including Princeton, have opted out of allowing cannabis businesses in their towns. This in turn has only made the competition for real estate worse. Add the fact that the federal government continues to classify cannabis as a Schedule I drug, and therefore financial institutions will not provide capital to start-up businesses, only the wealthy can enter into the cannabis market in New Jersey.

New Jersey still has time to create equity in its cannabis industry. Of the 102 conditional licenses awarded by the Cannabis Regulatory Commission in May and June, a third have owners who have past marijuana convictions, 37 were self-identified majority Black-owned, and 13 were self-identified as majority Latino-owned.

But these conditional licenses are meaningless if the license owners can’t marshal the resources to actually open a business. On the state level, policymakers must make it easier for people who are living with a marijuana record or who come from communities that have faced the brunt of the war on marijuana to have access to capital to start local cannabis businesses. Governor Murphy recently signed a bill sponsored by Senate President Nicholas Scutari that allows grants and low-interest loans to small business cannabis applicants who were previously prohibited from receiving economic incentives because of the federal cannabis prohibition, but more is needed.

For starters, New Jersey should follow in the footsteps of New York and appropriate $200 million for a social equity cannabis fund that can provide start-up capital to applicants who come from communities historically targeted by the war on marijuana, and should also create a technical assistance program and institute fee waivers to help applicants from such communities, as recommended recently by the ACLU of New Jersey. Another idea is to ask multi-state operators who own cannabis businesses in New Jersey to contribute some of their profits to a fund that would help provide capital for local businesses.

But the onus also falls on municipalities, who control local zoning laws and can create incentives for cannabis businesses that are owned and operated by people who are living with a cannabis arrest record. I sat on the Cannabis Task Force established by the municipality of Princeton, and we recommended that Princeton create such incentives to address the impact of the war on drugs on Princeton. Like the state, Princeton had persistent and even extreme racial disparities in cannabis arrests. From 1995 to 2019, there were racial disparities in arrests every year except for one, and from 2000–2013, Princeton had the second highest racial disparity in Mercer County. Even though the volume of arrests was never high, in several years more than 50 percent of all cannabis possession arrests in Princeton were of Black people. But unfortunately, after facing pressure from some residents, the town disbanded the Task Force and never acted on any of its recommendations.

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New Jersey must do better when it comes to supporting local residents who are living with a cannabis arrest record and who want to open a cannabis business. It cannot wait for the federal government to legalize or de-schedule cannabis. It’s time for New Jersey to make amends and ensure that those who profit under cannabis legalization are those who suffered the most under cannabis prohibition.

Udi Ofer is the John L. Weinberg Visiting Professor and Lecturer in the School of Public and International Affairs (SPIA) at Princeton, and the founder of SPIA’s Policy Advocacy Clinic. Prior to joining Princeton, he worked as a civil rights lawyer at the ACLU for 20 years, serving as its Deputy National Political Director and the founding Director of the Justice Division, which leads the ACLU’s criminal justice reform advocacy. He can be reached at uofer@princeton.edu.