Bill Summary – FastDemocracy

LEGISLATIVE FISCAL ESTIMATE
                              [Third Reprint]
                               ASSEMBLY, No. 4461
                             STATE OF NEW JERSEY
                               221st LEGISLATURE
                                             DATED: JULY 3, 2024
                                                  SUMMARY
    Synopsis:                   Regulates production and sale of certain intoxicating hemp products.
    Type of Impact:             Annual State revenue and expenditure increases. Potential local
                                revenue increase.
    Agencies Affected:          Department of Law and Public Safety; Cannabis Regulatory
                                Commission; Department of Agriculture; Municipalities.
                                       Office of Legislative Services Estimate
    Fiscal Impact                                                                Annual
    State Expenditure Increase                                            Indeterminate
    State Revenue Increase                                                Indeterminate
    Potential Local Revenue Increase                                      Indeterminate
    The Office of Legislative Services (OLS) concludes that the bill will result in an indeterminate
     annual increase in State revenues and expenditures.
    The OLS does not have sufficient data on the demand for or future sales of intoxicating hemp
     beverages and other products to project the tax revenues generated from these in a regulated
     marketplace under the authority of the Cannabis Regulatory Commission.
    The OLS also estimates indeterminate State revenue increases from civil penalties levied
     on an owner or operator of a business who sells an intoxicating hemp product in violation
     of the bill. The OLS cannot project the number or frequency of such violations. Also, the
     State’s ability to collect fines and fees has historically been limited.
    The OLS finds the bill will result in State expenditure increases for the Cannabis Regulatory
     Commission and the Department of Law and Public Safety to develop and implement a public
     education program for businesses across the State on the bill. Additionally, establishing
     and maintaining a regulatory framework for intoxicating hemp products and the bill’s
      Office of Legislative Services                                    Legislative Budget and Finance Office
           State House Annex                                                    Phone (609) 847-3105
              P.O. Box 068                                                       Fax (609) 777-2442
      Trenton, New Jersey 08625                                                  www.njleg.state.nj.us
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   enforcement provisions will lead to respective workload increases for the commission and
   the department.
                                   BILL DESCRIPTION
   The bill synchronizes the definitions of hemp, hemp products, and definitions involving
total tetrahydrocannabinol (THC) concentration in order to regulate the sale of intoxicating
hemp products, particularly intoxicating hemp beverages, as a form of cannabis item. By
means of updating definitions, and adding a definition of intoxicating hemp products, the bill
clarifies the role of each agency. The Cannabis Regulatory Commission would be responsible
for regulating the sale of all legally produced intoxicating cannabis items, whether hemp or
cannabis; the Department of Agriculture would continue to regulate the cultivation and
processing of hemp as an agricultural commodity; and the Attorney General would maintain
the jurisdiction over illegally produced marijuana and THC, including any businesses or
individuals who fail to sell cannabis items through a licensed retailer.
   The bill requires that any sale of an intoxicating hemp beverage by a holder of a plenary retail
distribution liquor license or plenary wholesale license is subject to: (1) the sales tax imposed on
cannabis; and (2) the optional local cannabis transfer and user tax imposed on cannabis by a
municipality.
   A person who sells or distributes an intoxicating hemp product or hemp item not derived from
naturally occurring biologically active chemical constituents, would be subject to civil penalties
of not less than: $100 for the first violation; $1,000 for the second violation; and $10,000 for the
third and each subsequent violation.
    The commission, in consultation with the Department of Law and Public Safety, would be
required to develop and implement a public education program to educate businesses across
the State on the bill’s provisions.
                                    FISCAL ANALYSIS
EXECUTIVE BRANCH
   None received.
OFFICE OF LEGISLATIVE SERVICES
    The OLS concludes that the bill will result in an indeterminate annual increase in State
revenues and expenditures.
    The OLS does not have sufficient data on the demand for or future sales of intoxicating hemp
beverages and other products to project the tax revenues generated from these in a regulated
marketplace under the authority of the Cannabis Regulatory Commission.
    The bill requires that any sale of an intoxicating hemp beverage by a holder of a plenary retail
distribution liquor license or plenary wholesale license is subject to: (1) the sales tax imposed on
cannabis; and (2) the optional local cannabis transfer and user tax imposed on cannabis by a
municipality. The OLS finds there is not enough data to estimate the revenues, to the State and
municipalities that opt in, from the sale of such beverages or quantify the demand or future trends
in sales of intoxicating hemp beverages.
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    The OLS also estimates indeterminate State revenue increases from civil penalties levied
on an owner or operator of a business who sells an intoxicating hemp product in violation of
the bill. The penalties ranges from at least $100 for a first violation to at least $10,000 for
third and subsequent violations. The OLS cannot project the number or frequency of such
violations. Also, the State’s ability to collect fines and fees has historically been limited.
    The OLS finds the bill will result in State expenditure increases for the Cannabis Regulatory
Commission and the Department of Law and Public Safety to develop and implement a public
education program for businesses across the State on the bill.
   Additionally, establishing and maintaining a regulatory framework for intoxicating hemp
products and the bill’s enforcement provisions will lead to respective workload increases for
the Cannabis Regulatory Commission and the Department of Law and Public Safety. The
commission, which currently regulates adult-use and medical cannabis, will also regulate
intoxicating hemp products under the bill. The OLS finds that this would broaden the
commission’s responsibilities and presumably increase its workload. The OLS also finds that
enforcement relating to intoxicating hemp products may result in workload increases for the
Attorney General’s Office.
  Section:     Judiciary
  Analyst:     Michael Davila
               Associate Counsel
  Approved:    Thomas Koenig
               Legislative Budget and Finance Officer
This legislative fiscal estimate has been produced by the Office of Legislative Services due to the
failure of the Executive Branch to respond to our request for a fiscal note.
This fiscal estimate has been prepared pursuant to P.L.1980, c.67 (C.52:13B-6 et seq.).
Statutes affected: 
Introduced: 4:28-8, 24:6I-33, 24:21-5