New Jersey voters will decide on Election Day whether to make recreational marijuana legal in the Garden State. Lawmakers are taking the issue directly to voters after failing to pass it in the state legislature.
“The public sentiment is strongly in favor,” New Jersey Governor Phil Murphy told Yahoo Finance. “I hope that’s what happens Tuesday.”
A recent poll finds that two-thirds of New Jersey voters are in favor of the referendum. Medical marijuana has been legal in the state since 2010.
If approved, New Jersey would become the biggest state on the East Coast to legalize recreational marijuana, and it would join 11 states that have already fully legalized cannabis, including Illinois, Massachusetts and Michigan.
Similar referendums are on Nov. 3 ballots in Arizona, Montana and South Dakota. Mississippi voters will decide whether to allow medical marijuana use.
“When I became governor, we had the widest white, non-white gap of persons incarcerated, believe it or not, of any American state,” said Murphy. “The biggest reason was low-end drug offenses. So, I get there first and foremost through social justice.”
Fully legalizing marijuana would give a big boost to New Jersey’s dwindling coffers, at a time when states are facing their biggest cash crisis since the Great Depression because of the coronavirus pandemic. New Jersey is expecting a more than $5 billion revenue decline for the 2021 budget year and plans to borrow billions to cover budget shortfalls.
“Assuming that it does pass, we’ll build an industry,” said Murphy. “It’ll be a revenue generator. I think at first it will be modest, but it ultimately will grow into the several hundred million dollars in the state budget, and it will create jobs and economic opportunity. So along with social justice, that’s a pretty good combination, I think.”
New Jersey’s Office of Legislative Services estimates legalized marijuana would generate $1.9 billion of sales, generating more than $125 million in sales-tax revenue. The state plans to support small business growth in the cannabis industry by offering micro-licenses to entrepreneurs.
“Obviously the tax benefits for these states are going to be critical,” said Noah Hamman, founder and CEO of AdvisorShares Investments. “I would tell investors to be careful. You see companies like Aurora (ACB) or Canopy Growth (CGC) as the poster child stocks of the cannabis space, but they have struggled so much. They’re Canadian cannabis companies, but they haven’t done well at all. So you want to look at the U.S. operators, the multi-state operators.”
Massachusetts-based Curaleaf (CURLF) is the top holding in Hamman’s AdvisorShares Pure US Cannabis ETF (MSOS.) He also likes Pennsylvania-based Cresco Labs (CRLBF), which is also included in his cannabis ETF.
If approved, sales in New Jersey could get rolling at lightning speed. Some lawmakers promise to allow the state’s existing medical marijuana dispensaries to begin selling recreational pot within a month of the election.
Alexis Christoforous is a host and reporter for Yahoo Finance. Follow her on Twitter @AlexisTVNews.
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