S4726

An Act concerning the cannabis Social Equity Excise Fee, and amending P.L.2021, c.16.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 41 of P.L.2021, c.16 (C.24:6I-50) is amended to read as follows:

41. Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Fund.

a. Except for amounts credited to the Property Tax Reform Account in the Property Tax Relief Fund pursuant to paragraph 7 of Section I of Article VIII of the New Jersey Constitution, all fees and penalties collected by the commission[,]; all tax revenues on retail sales of cannabis items[,]; all tax revenues collected pursuant to the provisions of the “Jake Honig Compassionate Use Medical Cannabis Act,” P.L.2009, c.307 (C.24:6I-1 et al.); [and] all revenues, if any, collected for the Social Equity Excise Fee pursuant to section 39 of P.L.2021, c.16 (C.54:47F-1); and all tax revenues on the retail sale of intoxicating hemp beverages by any plenary retail distribution license holder or Class 5 Cannabis Retailer licensee, as well as any fees associated with the approval provided to any plenary wholesale license holder to sell intoxicating hemp beverages, as defined pursuant to section 3 of P.L.2021, c.16 (C.24:6I-33), shall be deposited in a special nonlapsing fund, which shall be known as the “Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Fund,” with 15 percent of the monies deposited being placed into an account within the fund to be known as the “Underage Deterrence and Prevention Account.”

b. Except for any monies derived from the Social Equity Excise Fee, which shall be appropriated annually in accordance with subsection [d.] e. of this section, and the monies placed into the “Underage Deterrence and Prevention Account” within the fund for the commission to fund programs and services in accordance with subsection e. of this section, monies in the fund shall be appropriated annually as follows:

(1) at least 70 percent of all tax revenues on retail sales of cannabis items shall be appropriated for investments, including through grants, loans, reimbursements of expenses, and other financial assistance, in municipalities defined as an “impact zone” pursuant to section 3 of P.L.2021, c.16 (C.24:6I-33), as well as provide direct financial assistance to qualifying persons residing therein as recommended by the commission; and

(2) the remainder of the monies in the fund shall be appropriated by the Legislature to include the following:

(a) to oversee the development, regulation, and enforcement of activities associated with the personal use of cannabis pursuant to P.L.2021, c.16 (C.24:6I-31 et al.), and assist with assuming responsibility from the Department of Health for the further development and expansion, regulation, and enforcement of activities associated with the medical use of cannabis pursuant to the “Jake Honig Compassionate Use Medical Cannabis Act,” P.L.2009, c.307 (C.24:6I-1 et al.) and P.L.2015, c.158 (C.18A:40-12.22 et al.);

(b) to reimburse the expenses incurred by any county or municipality for the training costs associated with the attendance and participation of a law enforcement officer from its law enforcement unit in a police training course by an approved school, as those terms are defined in section 2 of P.L.1961, c.56 (C.52:17B-67), which trains and certifies the law enforcement officer, including a law enforcement officer with a working dog, as that term is defined in section 1 of P.L.2006, c.88 (C.10:5-29.7), as a Drug Recognition Expert for detecting, identifying, and apprehending drug-impaired motor vehicle operators; and to pay for the same training costs incurred by the Division of State Police in the Department of Law and Public Safety for the training of a State police officer or trooper, including an officer or trooper with a working dog, as a Drug Recognition Expert, as well as the Division of State Police costs in furnishing additional program instructors to provide Drug Recognition Expert training to police officers, troopers, and working dogs. A municipality or county seeking reimbursement shall apply to the commission, itemizing the costs, with appropriate proofs, for which reimbursement is requested and provide a copy of the certificate issued to the police officer to indicate the successful completion of the program by the police officer, and that officer’s working dog, if applicable; and

(c) for further investments, including through grants, loans, reimbursements of expenses, and other financial assistance, in municipalities defined as an “impact zone” pursuant to section 3 of P.L.2021, c.16 (C.24:6I-33), as well as provide direct financial assistance to qualifying persons residing therein as recommended by the commission.

The monies appropriated pursuant to paragraph (1) of this subsection shall be offset by any revenue constitutionally dedicated to municipalities defined as an “impact zone” pursuant to section 3 of P.L.2021, c.16 (C.24:6I-33).

c. After the appropriation of those monies in the fund in accordance with subsections b. and e. of this section, any remaining monies shall be deposited in the State’s General Fund.

d. [(1) (a) Not less than 60 days prior to the first day of each State fiscal year, the commission shall make recommendations to the Governor and Legislature for social equity appropriations based upon the amount of any revenues collected during the current fiscal year for the Social Equity Excise Fee pursuant to section 39 of P.L.2021, c.16 (C.54:47F-1), or, if the commission has not imposed or adjusted the Social Equity Excise Fee in the current fiscal year pursuant to that section, then appropriations from the General Fund in an amount equal to the revenues that would have been collected had the commission imposed or adjusted the Social Equity Excise Fee. The recommendations to the Governor and the Legislature shall consist of social equity appropriations that invest, through grants, loans, reimbursements of expenses, and other financial assistance, in private for-profit and non-profit organizations, and public entities, including any municipality defined as an “impact zone” pursuant to section 3 of P.L.2021, c.16 (C.24:6I-33) as well as provide direct financial assistance to qualifying persons as determined by the commission, in order to create, expand, or promote educational and economic opportunities and activities, and the health and well-being of both communities and individuals.

(b) Not less than 30 days prior to submitting its recommendations to the Governor and Legislature pursuant to subparagraph (a) of this paragraph, the commission shall hold at least three regional public hearings throughout the State, with at least one hearing in the northern, central, and southern regions of the State, to solicit the public input on the social equity investments to be made as described in this section.

(2) The commission’s recommendations to the Governor and Legislature may include, but are not limited to, recommending investments in the following categories of social equity programs:

(a) educational support, including literacy programs, extended learning time programs that endeavor to close the achievement gap and provide services for enrolled students after the traditional school day, GED application and preparedness assistance, tutoring programs, vocational programming, and financial literacy;

(b) economic development, including the encouragement and support of community activities so as to stimulate economic activity or increase or preserve residential amenities, and business marketing, and job skills and readiness training, specific employment training, and apprenticeships;

(c) social support services, including food assistance, mental health services, substance use disorders treatment and recovery, youth recreation and mentoring services, life skills support services, and reentry and other rehabilitative services for adults and juveniles being released from incarceration; and

(d) legal aid for civil and criminal cases, regardless of a party’s citizenship or immigration status.

(3) The commission may also, subject to the annual appropriations act, recommend that it retain a portion of the Social Equity Excise Fee to administer startup grants, low-interest loans, application fee assistance, and job training programs through the commission’s Office of Minority, Disabled Veterans and Women Cannabis Business Development established by section 32 of P.L.2019, c.153 (24:6I-25).

(4) After receiving the recommendations, as set forth in paragraphs (1) through (3) of this subsection and prior to the first day of each fiscal year, the Legislature shall provide to the commission a statement which lists the investments to be made by appropriations, including the investment recipients, investment amounts, and how the investment is intended to support and advance social equity as described in this subsection.] (Deleted by amendment, P.L. , c. ) (pending before the Legislature as this bill)

e. The monies deposited in the “Underage Deterrence and Prevention Account” within the fund, and the revenues collected for the Social Equity Excise Fee pursuant to section 39 of P.L.2021, c.16 (C.54:47F-1), shall be appropriated annually to the commission, and shall be used by the commission, based on the acceptance of applications submitted on a form and through an approval or denial process promulgated by the commission, to [fund] provide grants, low-interest loans, application fee assistance, reimbursements of expenses, and other financial assistance to qualified individuals, private for-profit and non-profit organizations, and county and municipal programs and services that provide:

(1) [offer] social services, educational, recreational, and employment opportunities and local economic development designed to encourage, improve, and support youthful community activities to divert and prevent persons under 18 years of age from activities associated with the consumption of cannabis items, marijuana, or hashish;

(2) educational support, including literacy programs, extended learning time programs that endeavor to close the achievement gap and provide services for enrolled students after the traditional school day, GED application and preparedness assistance, tutoring programs, vocational programming, and financial literacy;

(3) economic development, including the encouragement and support of community activities so as to stimulate economic activity or increase or preserve residential amenities, and business marketing, and job skills and readiness training, specific employment training, and apprenticeships;

(4) social support services, including food assistance, mental health services, substance use disorders treatment and recovery, youth recreation and mentoring services, life skills support services, and reentry and other rehabilitative services for adults and juveniles being released from incarceration;

(5) legal aid for low-income persons in civil and criminal cases, including but not limited to assistance in obtaining expungements, regardless of a party’s citizenship or immigration status; and

(6) programs, services, and resources in furtherance of the policies and goals of the commission’s Office of Minority, Disabled Veterans and Women Cannabis Business Development pursuant to section 32 of P.L.2019, c.153 (24:6I-25).

f. (1) Annually, within 60 days following the receipt of appropriations pursuant to subsection e. of this section, the commission shall hold at least three regional public hearings throughout the State, with at least one hearing in the northern region, at least one hearing in the central region, and at least one hearing in the southern regions of the State, to inform the public concerning the availability of funding and to solicit public input on the social equity investments to be made as described in subsection e. of this section.

(2) The commission shall post to its Internet website, and disseminate to the public through other appropriate means, regularly updated information concerning the availability of funding pursuant to subsection e. of this section, including but not limited to, information concerning the amount and types of funding available, the application process and deadlines, the application acceptance criteria, and a list of funding recipients with the type of funding and amounts awarded. The commission shall not charge any application fee for funding pursuant to subsection e. of this section.

(3) No later than January 31 of each year, the commission shall report annually to the Governor, and to the Legislature pursuant to section 2 of P.L.1991, c.164 (C.52:14-19.1), the list funding recipients through December 31 of the prior year pursuant to subsection e. of this section, with the type of funding and amounts awarded, together with a statement for each recipient describing how the funding is intended to support and advance social equity or underage deterrence as described in subsection e. of this section, as well as an accounting of the unexpended balance remaining as of December 31, if any.

(cf: P.L.2025, c.215, s.5)

2. This act shall take effect on the first day of January next following enactment, except that the Cannabis Regulatory Commission may take such anticipatory action as may be necessary for the timely implementation of this act.

STATEMENT

This bill transfers responsibility for disbursing Social Equity Excise Fee (SEEF) revenues from the Legislature to the Cannabis Regulatory Commission (CRC).

Under current law, the CRC may impose the SEEF on cultivators, which is calculated based on the retail market price of cannabis in this State, and which may be adjusted annually. SEEF revenues are collected by the Division of Taxation in the Department of the Treasury and deposited into the “Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Fund.” SEEF monies are dedicated to annual appropriations by the Legislature for investing in social equity programs in order to create, expand, or promote educational and economic opportunities and activities, and the health and well-being of both communities and individuals.

Under current law, the CRC holds public hearings annually in order to make recommendations to the Governor and the Legislature concerning the appropriation of SEEF funds in the annual State budget. These recommendations can include grants, loans, reimbursements of expenses, and other financial assistance to private and public entities, as well as qualifying individuals, to fund such investments as educational, literacy, and GED programs; economic development, job skills, and apprenticeship programs; social support services including food assistance, mental health and substance abuse treatment, and reentry services; and legal aid services. Following receipt of the CRC’s recommendations, the Legislature provides the CRC with a list of the SEEF investments funded in the State budget.

For 2026, the SEEF rate is $2.50 per ounce. According to the CRC’s 2026 SEEF report, the CRC has estimated that the SEEF will generate $12.4 million in Fiscal Year 2026, and $14.1 million in Fiscal Year 2027. According to the 2026 report, as of March 2026, $11.924 million in SEEF funds have been disbursed by the Legislature in Fiscal Year 2026 appropriations, with $3.667 million remaining unallocated. In Fiscal Year 2026, the $11.924 million appropriation from SEEF funds appears to have been allocated through the annual appropriations act, P.L.2025, c.74, entirely to the Department of Corrections to support Purchase of Community Services grants as determined by the Commissioner of Corrections. It should be noted that, according to the CRC’s 2025 SEEF report, the Legislature did not make any SEEF appropriations in Fiscal Years 2023, 2024, and 2025. Thus, according to the 2025 report, at the beginning of 2025, there was $5.129 million in SEEF funds accumulated from prior years.

Under the bill, the CRC will become directly responsible for disbursing SEEF funds, through a public competitive application process. The bill provides for the CRC to receive annual appropriations of SEEF funds from the State budget. The CRC will be required to award SEEF grants, loans, and other financial assistance to the same types of social equity investments set forth under current law. The CRC will also be required to provide an annual report to the Governor and the Legislature with a list of funding recipients, type of funding (grants, loans, or other assistance), and amounts awarded, together with a statement for each recipient describing how the funding is intended to support and advance social equity.