The $8 billion question: Which towns will cash in on marijuana?
By Tracey Tully
Recreational adult use of marijuana is now the law of the land in one of the most crowded corners of the country.
Since February, the drug has become legal in five neighboring Northeast states, a densely populated region that is expected to quickly become the nation’s second-largest cannabis marketplace, generating as much as $8.7 billion annually within five years.
But first, mayors and municipal leaders in three East Coast states that legalized cannabis this year — New York, New Jersey and Connecticut — are wrestling with choices freighted with political and financial implications: Should they permit cannabis companies to operate in their towns?
State officials, aware that buy-in from municipalities is essential to the success of the market, are watching closely.
Dozens of municipalities have already made clear they want no part in the growing industry, at least for now. When opting out, politicians cite the legal and practical challenges surrounding the detection of drug-impaired driving; the risk of increasing teenage access to a drug still considered by many to be a pathway to addictive narcotics; and the still-incomplete state regulations.
“Just because it’s legal doesn’t make it right,” said Kenneth L. Simmons, president of the school board in Paterson, New Jersey, who opposes a proposal to permit cannabis startups in a city where 1 in 4 people lives in poverty.
“A revenue stream for City Hall,” he added, “is not prosperity, especially when it brings another possible pitfall closer to our youth.”
About 65% of residents in Point Pleasant Beach supported a November ballot question authorizing legalization in New Jersey. Yet Point Pleasant Beach, a Jersey Shore town known for its wide beaches and lively boardwalk, has decided against permitting cannabis businesses from operating — with the exception of delivery companies, which by law must be allowed.
“They didn’t vote to have it in their backyard,” the borough’s mayor, Paul M. Kanitra, a Republican, said about the referendum.
At the same time, many large cities and rural towns throughout the region have rolled out a pot-embossed welcome mat, hoping to capitalize on legalization’s early momentum and cash.
Officials in Buffalo, New York, and Atlantic City, New Jersey, have signaled that they are eager for cannabis-related jobs and tax revenue. The council in Jersey City, New Jersey, a short train ride from Manhattan, voted recently to open its borders to all six types of cannabis licenses offered by the state. It intends to allow retailers to run smoking and consumption lounges, which are often excluded even where sales are legal.
“It’s an almost entirely new industry that provides an opportunity for new skills for people to be trained in,” said Steven M. Fulop, Democratic mayor of Jersey City. “I think it would be a waste if we did not capitalize on it.”
Many rural towns, including some in Republican strongholds, are equally supportive.
Warwick, New York, has converted the sprawling grounds of a defunct state prison into what it is calling a “cannabis cluster.” Newton, a picturesque town in New Jersey’s northernmost county, adopted an ordinance allowing retail sales every day but Sunday. Shamong, New Jersey, a farming community in the federally protected Pinelands reserve, hopes to generate enough revenue from cannabis to eliminate local taxes.
“My goal is to make Shamong the pot capital of New Jersey,” said Michael Di Croce, Shamong’s Republican deputy mayor.
Municipalities in New Jersey have until Aug. 21 to opt out. The deadline in New York is New Year’s Eve. In Connecticut, which legalized adult-use marijuana just last month, there is no cutoff for making a decision, but any cannabis business permitted to operate must be allowed to remain if a community ever changes its policy.
In New Jersey, the legalization referendum overwhelmingly approved by voters was seen more as a social justice imperative than a matter of personal liberty in a state where Black residents were more than three times as likely as white residents to be charged with marijuana possession. New York’s and Connecticut’s laws are also tied directly to economic and racial equity and making investments in minority communities ravaged by the decadeslong war on drugs.
Still, in many locales, particularly in affluent suburbs, the perceived headaches have so far outweighed the allure of extra tax revenue.
Ridgefield, Connecticut, a 25,000-person town in Fairfield County where the median household income is $164,000, quickly said it would move to bar cannabis businesses.
“The cart is way in front of the horse,” said Kurt Wheeler, mayor of Cazenovia, a quaint lakeside village in central New York where the governing board became one of the state’s first to outlaw retail sales.
“Everybody who spoke really urged the board: ‘If you have the opportunity to put the brakes on this and give the state more time to work out the public health and public safety issues, by all means do it,’” Wheeler, a Republican, said.
In New York and New Jersey, towns that vote to bar grow facilities or retail and production startups can adjust their rules later. A decision to welcome the cannabis industry, however, means communities are locked in to the policy for years.
A draft of the regulatory framework that will guide New Jersey’s adult-use market is not expected to be released until Aug. 21 — the final day for municipalities to make decisions.
The five-state Northeast region, which also includes Massachusetts and Vermont, is expected to generate an estimated $8.7 billion in cannabis-related sales by 2027, according to an analysis by the Marijuana Policy Project, a nonprofit that advocates for cannabis legalization, which used population and sales in Colorado and California as a comparative baseline.
On the West Coast, California and the neighboring states of Washington, Oregon, Nevada and Arizona, where marijuana is also legal, are likely to remain the country’s dominant market.
In Massachusetts, the city of Easthampton, which opened its first dispensary in December 2018, and is close to at least five colleges, expects to be home to five dispensaries by the end of the year, Mayor Nicole LaChapelle said.
The extra revenue has been tremendously helpful, she said, especially during the pandemic.
A small 1,000-square-foot dispensary generated $84,000 in revenue for the city of roughly 16,000 in April, May and June alone, she said.
The rollout has not been without hiccups. But the problems the city has faced, LaChapelle said, were not the same ones it anticipated.
“There was not an uptick in crime,” she said, nor increased ambulance calls. “We did not need more patrols.”
Instead, the city has been forced to repair and repave roads damaged by a heavy flow of customers.
“The people just come from everywhere,” LaChapelle said, adding that pedestrian crosswalks also had to be redesigned to make them safer.
Rob Mejia, a professor who teaches in the cannabis studies department at Stockton University near Atlantic City, New Jersey, said he expected the municipal jitters to fade over time, as has happened elsewhere.
“Week by week, month by month, the stigma is starting to disappear,” Mejia said.