On July 1, New Jersey is slated to reduce the sales tax on medical marijuana from 6.625% to 4%. This move is the first in a series of measures that will see state sales taxes removed entirely within a space of three years. On July 1 next year, the tax will reduce to 2% and the following year (July 1, 2022) will see the reduction to a 0% state sales tax.
However, the sales tax reforms which roll out tomorrow don’t mean that buyers of medical marijuana will not pay any taxes on their purchases. Municipalities within New Jersey are still allowed to impose a 2% sales tax within their jurisdictions, but so far, no town has invoked this provision to levy the tax.
The plan to phase out sales taxes on medical marijuana were part of the Jake Honig Compassionate Use Act enacted into law last year. The bill was named after Jake Honig, a 7-year old kid from Howell who had an inoperable tumor in the brain. Only medical marijuana gave him any relief until he passed in 2018.
Activists raised an uproar about the sales taxes imposed by the state on medical marijuana. This outcry was prompted by the fact that prescription medications are exempted from state sales tax. The activists therefore wanted medical marijuana to be regarded in the same way since it is a prescription medicine in New Jersey.
While the bill was being debated in the state legislature, several lawmakers called the sales tax “criminal” since working class and poor families would suffer an added burden while acquiring the medicine they need.
Currently, more than 77,000 people are registered on the state’s medical marijuana program. However, supply chain problems and the resulting prohibitive prices (medical marijuana can cost approximately $500 an ounce) have plagued the progress of the sector.
As the tax cuts kick in, an ounce of medical marijuana will drop to about $469.15. This will bring some relief to patients, and as the supply issues are sorted, prices could drop even further.
At the moment, only nine clinics are open to sell medical pot to patients across the state. Other locations that were pre-approved haven’t opened their doors to customers due to ongoing legal battles.
In November, New Jersey voters are slated to vote on a ballot measure that could see recreational marijuana legalized. If the bill passes, dispensaries will be allowed to sell recreational marijuana to adults who are 21 or older.
The reduction of the state sales tax on medical marijuana is likely to be welcomed by the entire industry, including Green Growth Brands Inc. (CSE: GGB) (OTCQB: GGBXF) since it makes products more affordable for patients.
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