Budget Matters, Incentives, and Cannabis Will Be This Summer’s Hot Topics in Trenton

The Summer is here and the halls of the Legislature are quiet, but three topics that controlled much of the debate in Trenton this year are expected to drag into the Fall: the state budget, economic incentives, and cannabis.

Fiscal Year 2020

Governor Murphy signed the Fiscal Year 2020 budget on June 30, avoiding a government shutdown, but not ending the debate on taxes and spending. After the Legislature sent the Governor a budget that did not include a millionaire’s tax, corporate responsibility fee, and tax on opioid manufacturers, the Governor line-item vetoed several appropriations and signed an Executive Order authorizing the State Treasury to place in reserve approximately $235 million in state appropriations. In 2016,Governor Christie took similar action when his Administration froze approximately $100 million in spending as the state health benefit plan design committees considered cost reductions. Prior to the July 4th holiday, the Murphy Administration announced the full list of spending items placed in reserve. The funds will only be released after the Treasurer certifies that certain revenue objectives are met, meaning this issue will linger for several months.

Economic Incentives

Also on June 30, the State’s two main economic incentive programs, the Grow NJ Assistance Program (GROWNJ) and the Economic and Redevelopment Growth Grant (ERGG) Program, expired and new applications are no longer being accepted. However, the Legislature recently put on Governor Murphy’s desk a bill providing for a short-term extension of the two programs until January 1, 2020. The Governor publicly stated he will veto the bill, setting up a potential veto override vote in both houses. The Legislature and Governor also remain far apart in terms of enacting new programs to replace the now-expired incentives.

Cannabis

The effort to make New Jersey the eleventh state to legalize marijuana for recreational purposes may have stalled, but the Governor and Legislature worked out an agreement to expand New Jersey’s medical marijuana program. The Department of Health previously announced a request for applications (RFA) that would have licensed nearly 100 cultivators, manufacturers, and dispensaries. Due to concerns the RFA was too broad, the Legislature and Governor negotiated a legislative proposal which the Governor enacted on July 2, 2019. The new law, among other provisions, caps the number of alternative treatment centers for the first 18 months after the act takes effect, creates a Cannabis Regulatory Commission to administer the medical marijuana program, and relaxes the program rules for doctors, patients, and caregivers. The Department revoked the previously issued RFA, and issued a new RFA that only calls for 24 new licenses, which is within the scope of the new law. Applications are now due on August 21 for those seeking to become a dispensary and August 22 for applicants seeking cultivation and vertically integrated permits. It will take several months for the Department to review the applications and award the licenses.

In sum, while the State has turned the page on its last fiscal year, the issues carried forward into the new fiscal year look very much the same.

Michael D. DeLoreto, an Associate in the Gibbons Government & Regulatory Affairs Department, and Jason J. Redd, a Director in the Gibbons Government & Regulatory Affairs Department, Authored this post.
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