The New Jersey sales tax on medicinal cannabis sales was eliminated, effective July 1, 2022, reducing the ultimate costs for patients enrolled in the New Jersey Medicinal Cannabis Program (NJMCP). Meanwhile, the sales tax on retail purchases of recreational cannabis will remain at 6.625%. This article discusses the current state of taxation on both medicinal and recreational cannabis, along with the additional municipal nuances related to recreational cannabis.

Taxation on Medicinal Cannabis

The Jake Honig Compassionate Use Medical Cannabis Act of 2019 provided guidelines to the New Jersey Cannabis Regulatory Commission (CRC) delineating that while medicinal cannabis would initially be taxed at 6.625%, it would be reduced to 4% on sales made between July 1, 2020, and June 30, 2021, then additionally reduced to 2% on sales between July 1, 2021, and June 30, 2022, and now finally eliminated. The elimination of the sales tax on cannabis sales only applies to patients who have registered with the NJMCP. Registration under the NJMCP requires the patient to show that they:

  1. Have a bona fide relationship with a physician who is a part of the program, as defined by the CRC;
  2. Are a New Jersey resident; and
  3. A registered physician has diagnosed the patient with a medical condition that qualifies for medicinal cannabis as a remedy.

This elimination of the sales tax on medicinal marijuana is one of the many ways in which New Jersey and the CRC have prioritized medicinal cannabis patients. Furthermore, since the opening of the recreational market, three cannabis purveyors have been fined for not meeting the standards required by the CRC towards their medicinal cannabis patient customers. New Jersey fined these cannabis retailers $10,000 per infraction, which resulted in a combined total of $360,000 in fines for all three retailers for their sales to recreational cannabis customers during hours of operation strictly reserved for medicinal cannabis patients. With the increase in cannabis sales, operators must stay keenly aware of the state's requirements to prioritize medicinal cannabis access or they may face more severe penalties.