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Industry warns huge excise-fee spike would raise prices, strain cultivators
Summary
The New Jersey Cannabis Trade Association and operators urged caution over a possible jump in the social equity excise fee (CIF/SEIF) from about $1.24 per ounce to as high as $30, saying such an increase could raise wholesale prices, reverse recent price declines and shock the supply chain.
Industry representatives told the Assembly Oversight, Reform and Federal Relations Committee that how the social equity excise fee (also called the CIF or SEIF) is charged matters for the viability of cultivators and the state market.
Todd Johnson, executive director of the New Jersey Cannabis Trade Association, said the Cannabis Regulatory Commission has discretion under the CREAM Act to increase the SEIF from roughly $1.24 per ounce to a maximum of $30 per ounce in 2025. "An adjustment of this size would represent an increase of over 2,500%," Johnson said, warning that a sudden spike would force cultivators to raise wholesale prices and cascade higher costs through manufacturers and retailers.
Why it matters: Johnson said the SEIF is intended to fund social equity programs but the current mechanism singles out adult-use cultivators, who face highly capital-intensive costs (estimates to build a cultivation facility ranged in testimony from about $5 million to $50 million). He recommended charging the fee as a small percentage at the point of sale instead, which he said would spread the burden and simplify recordkeeping.
Dual supply-chain burden. Johnson also described the operational burden on medical operators forced to maintain separate systems and fees for medical and adult-use product flows; he cited a drop in registered medicinal patients from about 129,000 in 2022 to 72,000 as of a CRC count in September, and said duplicative licensing and conversion fees up to $1 million can disadvantage medical operators.
Advertising and product-safety. Johnson urged loosening advertising restrictions that ban television, radio, social media and billboard ads (while stressing protections to avoid marketing to children), and thanked the committee for recent hemp-related bills (S3235 and A4461) that removed some unregulated products from shelves.
Next steps. Committee members acknowledged the potential trade-offs between funding social equity programs and protecting nascent cultivators from destabilizing cost shocks; the association offered to discuss alternate fee mechanisms with the legislature and regulator.
