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Legalization gaining speed in U.S. northeast

Legislation would allow for the creation of ‘consumption lounges’

U.S. expert predicts other regional states will move on cannabis legislation

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New Jersey is on track to make recreational marijuana legal in the Garden State as soon as next month in a move experts believe could lead to a domino effect of legalization efforts gaining both speed and traction across the American northeast.

Members of the state’s Senate and Assembly budget committees approved legislation Monday that would end cannabis prohibition for adults. The New Jersey Marijuana Legalization Act now proceeds to full floor votes in both chambers of the state legislature, which are expected to take place before the end of this year, before Governor Phil Murphy, who campaigned on a pro-legalization platform, can sign it into law.

“There is still some debate to be had in terms of the provisions but I’m optimistic,” said Kate Bell, general counsel for the Marijuana Policy Project on whether the bill will land on the governor’s desk in December. “They had the public hearing today, but the reality is they’ve been hammering out the details behind the scenes for a year.”

In its current state, the proposed law would allow New Jersey residents aged 21 and older to possess up to one ounce of dried cannabis and establish a 12-per-cent tax rate, with the option for municipalities that host cannabis retail outlets to impose an additional tax of up to 2 per cent. That combined tax rate would still be among the lowest in the 10 U.S. jurisdictions that have legalized recreational cannabis use so far, with only the Michigan tax rate coming in lower at 10 per cent.

The New Jersey legalization measure would also allow for the creation of “consumption lounges” that would be similar in principle to alcohol-serving bars. While other states such as Alaska and Nevada technically allow for such lounges to exist, establishing the rules governing those establishments has proven too onerous to be practically applied.

“This is very much a cutting edge and important issue,” Ms. Bell said. “Not only is it important for tourists [to have a place to consume cannabis] but also it is a social justice issue since folks who live in public housing, there is a zero tolerance policy, they could lose their housing because federal law would apply.”

Even if the bill sails through the New Jersey legislature and is immediately signed into law, Ms. Bell is expecting a substantial delay before a fully regulated market can function.

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“They have to write regulations and then they have to go through the licensing process [and] unfortunately, based on past experience, states have a very hard time meeting those deadlines,” she said, estimating New Jersey’s market might begin operating by early 2020 under the most optimistic scenario.

Massachusetts, for example, did not issue licenses for the state’s first two recreational cannabis retail locations until earlier this month, despite initially targeting the first licenses to come by January, 2018. In New Jersey, disagreements between Gov. Murphy and State Senate President Stephen Sweeney over whether to create a new Cannabis Regulatory Commission to oversee the young industry could slow the process even further. Nevertheless, there is “tremendous” interest from the industry, Ms. Bell said - and the latest data from Arcview Market Research and BDS Analytics helps explain why. Medical cannabis alone is expected to generate US$284-million in annual sales in New Jersey by 2022, the sixth edition of the group’s annual marijuana market report says, representing a more than fivefold increase from 2017 levels.

Yet no matter how quickly – or not – New Jersey moves toward full cannabis legalization, Ms. Bell argues the process is putting further pressure on neighbouring New York state to harmonize its marijuana rules with New Jersey since both states have millions of residents that live in one state and work in the other. Adam Orens, founding partner of the Denver-based Marijuana Policy Group, argues the contagion effect will be far broader.

“Now that Massachusetts is open, the rest of the states around there like New York in particular and Connecticut as well are going to get FOMO, or should I saw FOMR or ‘fear of missing revenue’ and will move quickly to legalize cannabis,” Mr. Orens said. “This is much broader than just New Jersey, there is lots going on in the northeast and all it really takes is one big state for the rest of the dominoes to fall.”

Meanwhile, in Asia, cannabis restrictions were relaxed in two major economies last week:

In Thailand, the National Legislative Assembly unanimously passed legislation that would allow cannabis to be consumed for medical reasons and studied for research purposes. The process could move slowly from here, however, with a parliamentary committee expected to spend the next two months debating proposed rules and guidelines for the new industry. Regulations for doctors looking to prescribe cannabis are also being drafted by the country’s Government Pharmaceutical Organization, which told a local news outlet to expect “something tangible” by May 2019.

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India, meanwhile, is also making it easier to access the controversial plant. The state-owned Central Council for Research in Ayurvedic Sciences, which runs studies on the form of ancient traditional medicine that was invented in India, announced results from the country’s first-ever clinical study on the use of cannabis as a cancer treatment. The Council’s director general told the Press Trust of India that the study’s success would make it easier for similar research to be approved in the near future.

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