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Municipal control, uneven revenue: mayors and the League of Municipalities urge local discretion on cannabis
Summary
Municipal officials and the League of Municipalities told a legislative committee that local control has let towns tailor cannabis rules to community needs but produced wide differences in fees and revenues; officials flagged auditing, application costs, and enforcement of unlicensed sellers as persistent problems.
Municipal leaders and the New Jersey League of Municipalities told the Assembly Oversight, Reform and Federal Relations Committee on Thursday that local control over cannabis licensing has allowed different towns to choose approaches that fit their communities, but has produced wide variation in fees, enforcement costs and revenue.
Frank Marshall, associate general counsel for the League of Municipalities, said many towns initially banned cannabis establishments and later adopted “thoughtful ordinances” to permit them. He said municipalities rely on two local charges—a transfer tax capped around 2% and a user tax—and that some vertically integrated operators are taking aggressive positions to avoid paying municipal transfer taxes. “That’s where this user tax comes in,” Marshall said, urging clear enforcement and audit authority for municipalities.
Why it matters: local control has helped towns address neighborhood concerns, officials said, but it also leaves municipal finance officers grappling with a new revenue stream and the technical challenge of verifying sales and transfers, particularly when cultivators and manufacturers operate within the same corporate chain.
Municipal costs and fees. Committee members asked for typical municipal application fees. Marshall said fees vary with the type of license and depth of review, commonly ranging from about $500 to $5,000 depending on whether the municipality must fund engineering reviews, odor-control assessments or multiple public hearings. He warned that low fees can leave taxpayers covering the costs of repeated hearings and staff review.
Revenue snapshots. The committee heard that statewide cannabis receipts are large but unevenly distributed locally: Marshall and other witnesses said the combined medicinal and recreational market in the first full year produced just over $800 million in sales, and that municipalities that opted in have collected widely differing amounts—examples cited by witnesses included municipal receipts in the low six figures and others collecting about $2 million.
Enforcement and unlicensed sellers. Speakers cautioned that illegal sales and unlicensed convenience-store products are straining local enforcement. Marshall said complaints about unlicensed products appear at gas stations and other outlets, and that enforcement duties fall to police or code inspectors, diverting resources from other public-safety tasks.
Next steps. The chairman said the committee would compile the roughly 30 points raised—including municipal taxes, auditing capacity, uniform local licensing and application fees—and return to potential legislative or administrative options to standardize processes and help municipalities recover review costs. Witnesses agreed to submit written materials for the record.
The hearing adjourned with the committee asking staff to quantify the issues raised before drafting any next-step legislation or guidance.
