Pot legalization hits an unlikely snag: ‘magic’ mushrooms

Winning a constitutional right for adults to smoke pot in New Jersey was, apparently, the easy part.

The ballot question drew overwhelming support on Election Day, despite a muted pandemic-era campaign that had minimal financial backing from the national cannabis industry.

But creating a legislative pathway to reach proponents’ goals — establishing New Jersey as the dominant East Coast marijuana market, right next to New York, while ending the disproportionate rates of arrest in minority communities — is proving to be far more complicated.

Many of the pitfalls were anticipated. A battle over psychedelic mushrooms was not.

Last week, the state Senate amended a decriminalization bill to include psilocybin, the hallucinogenic compound in so-called magic mushrooms, or “shrooms,” snarling the time-sensitive negotiations over a separate legalization bill. That bill creates a framework for the constitutional amendment legalizing marijuana, which takes effect Jan. 1.

The mushroom amendment was tacked on just as social justice advocates were spotlighting what they saw as an overarching flaw in the legalization bill: a lack of guaranteed benefit to Black and Latino communities that have suffered most from criminal enforcement of marijuana laws.

“We really do want to see the dollars reach the communities most harmed by the war on drugs,” said Sarah Fajardo, policy director of the American Civil Liberties Union of New Jersey.

The legalization bill was pulled back for an overhaul. Lawmakers outlined the scope of the proposed amendments, but the updated bill had not been published by midday Thursday, even though hearings were underway and it was scheduled for a final vote in the Legislature on Monday.

Once the bill is signed into law, existing medical marijuana dispensaries would be permitted to sell excess cannabis to adults. But supply is limited, and it is expected to take at least 18 months for new shops catering specifically to the adult-use market to open.

For many who had been fighting for years to legalize marijuana, the mushroom amendment was seen as a headline-grabbing smoke screen. The timing deflected attention from a more substantive debate over how many marijuana licenses to issue, and to whom, as well as how high to set the tax rate — and who would control the purse strings.

New Jersey’s last-minute mushroom amendment was added to a Senate bill designed primarily to end criminal penalties for possession of up to 6 ounces of marijuana. It calls for downgrading felony possession of an ounce of psilocybin mushrooms to a disorderly persons offense, punishable by up to six months in jail.

By Monday, the Assembly, which had passed its own decriminalization bill in June, had shelved the legislation, unable to reach a consensus on mushrooms.

State Sen. Nicholas P. Scutari, a Democrat, said he added the psilocybin amendment to eliminate the three- to five-year prison sentences and the lifelong scar of a felony record that people convicted of possessing even small amounts of the hallucinogens face.

“It’s another failed war on drugs,” said Scutari, a co-sponsor of the decriminalization bill who, with Senate President Stephen M. Sweeney, is also crafting the bill to legalize marijuana.

Some scientists have studied the potential of psychedelics to treat psychiatric problems. Last year, Johns Hopkins Medicine established the Center for Psychedelic and Consciousness Research to study compounds like LSD and psilocybin to treat mental health problems, including chronic depression.

The amended legislation passed the Democrat-led Senate with only four dissenting votes.

Sen. Nia H. Gill, a Democrat from Montclair who voted against the bill, said there was no public or private discussion about the merits of adding mushrooms to a bill centered on reforming the disparate enforcement of the state’s marijuana laws. In New Jersey, Black residents are more than three times as likely as white residents to be charged with marijuana possession, despite similar usage rates, according to a study by the ACLU.

“Why was it introduced at the last minute? And why are we not able to have a full robust discussion?” Gill said. “It creates a narrative of the public not having faith in the integrity of the process.”

It was at least the second recent hiccup in the state’s effort to lay the ground rules for recreational marijuana sales. The first involved taxes.

The governor and legislative leaders had hoped to absorb the extra tax revenue into the state’s general fund, in part to plug gaps in a budget decimated by the pandemic.

But critics immediately argued that a portion of the tax revenue should be designated for programs that benefit communities most harmed by decades of uneven drug enforcement.

Leo Bridgewater, an African American Army veteran from Trenton, New Jersey, who has been pressing for years for marijuana legalization as a means of criminal justice reform, called it “restitution.”

“I need to be made whole,” Bridgewater said in an interview.

The solution was to impose extra layers of taxes — in addition to what had been stipulated in the ballot question that voters approved.

Patrick Duff, who testified Thursday at an Assembly hearing that he operated medical marijuana dispensaries, said the added fees would push the cost of marijuana so high that the illicit market would continue to thrive. The extra fees should have been disclosed to voters, he said.

“If that was known, I would never have voted for the law,” Duff testified.

The proposal calls for adding a cannabis cultivation fee to an already established 6.625% sales tax, lifting the effective tax rate for pot to 7%. A five-person Cannabis Regulatory Commission, led by Dianna Houenou, would also be permitted to adjust the fee by an additional $10 to $60 an ounce as supply increases and the price of marijuana declines.

Some or all of the extra taxes would be set aside to fund unspecified initiatives within “impact zones” most harmed by marijuana enforcement, like prison transition efforts, startup grants for minority-owned cannabis companies and after-school programs. An unlimited number of cannabis licenses for micro-businesses run by New Jersey residents were also added as part of the negotiations.

Steven Hawkins, executive director of the Marijuana Policy Project, a national organization focused on legalizing cannabis, said the potential range of taxes would either make New Jersey the state with the lowest marijuana taxes — or the highest. At 15%, South Dakota’s tax rate is the lowest of any of the 11 states where recreational sales are already legal, while Washington state is the highest with a 37% base tax.

R. Todd Edwards, the political action chairman of the New Jersey conference of the NAACP, said the challenge was ensuring that the price of legal marijuana remained low enough to prevent the illicit market from thriving.

“I don’t want to overtax it so much that we make the black market relevant,” Edwards said.

But the true variable determining pricing is supply, said Brandon McKoy, the chief executive of New Jersey Policy Perspective, a nonprofit think tank.

A current draft of the adult-use marijuana bill stipulates that 37 cultivation licenses may be issued at first; this includes licenses already held by medical marijuana outfits and others that are in the pipeline, but tied up in a lawsuit.

All this points to what some legalization proponents say is an underlying flaw in the process: New Jersey lawmakers have done a poor job replicating programs that worked in states where marijuana was legalized years ago.

“We’re not living in the United States of New Jersey,” Jessica F. Gonzalez, a cannabis lawyer who also advises two national marijuana advocacy organizations, said in an interview. “We need to capitalize on their success and learn from their mistakes. I’m not seeing a lot of learning.”