NJ marijuana legalization: Legal weed forever changed Colorado, California

This story is part of the HIGH HOPES series from the USA TODAY NETWORK New Jersey, which sent journalists to Colorado & California to see how legal weed could impact the Garden State.

In a New Jersey where recreational marijuana is legal, cannabis could quickly overtake cranberries as the state’s No. 1 cash crop, the centerpiece of a new billion-dollar industry employing thousands.

From Jersey City to Atlantic City, residents and tourists — from New York, Pennsylvania and anywhere within a few hours’ drive — could flock to one of the new dispensaries, closer in appearance to a sleek Apple Store than a corner liquor store, to get their hands on the only legal weed in the Mid-Atlantic.

But along the Garden State Parkway and New Jersey Turnpike, police officers would have to confront the challenge of catching stoned drivers without a reliable breath test. And at dinner tables across New Jersey, parents would grapple with the dramatic cultural change as their children grow up in a state where marijuana dispensaries are as ubiquitous as diners and rolled joints nearly as common as pork roll.

Journalists from the USA TODAY NETWORK New Jersey visited California and Colorado, states that pioneered marijuana sales for both medical and non-medical purposes, to get a first-hand look, smell and taste at the future of legal weed in the Garden State. Watch one reporter's experience in marijuana dispensaries in the video below.

"Now that I’m out here, I don’t really want to go anywhere where they don’t have legal marijuana," said 36-year-old Ernie Falconer, a New Jersey native who moved to the Denver suburbs last year and immediately registered as a medical marijuana patient.

"It’s not such a taboo thing out here," he said. "You don’t have to feel like a criminal just because you enjoy marijuana."

HIGH HOPES: USA TODAY NETWORK journalists discuss Colorado, California legal weed experiences

In states that allow it, legal weed has boosted industries from security guards to growers while creating new challenges for regulators, police and neighborhood activists opposed to sales near them. As the 10th state to legalize marijuana for adults, New Jersey could see changes in its economy, popular culture and public safety. Changes seen in other states include:

Pot tourism. A niche tourism industry grew to meet the needs of visitors who flock to states for the chance to buy and consume marijuana without fear of arrest or embarrassment. The first state to develop a statewide program for public consumption — such as a marijuana lounge — could become the biggest pot tourism destination in the United States.

A niche tourism industry grew to meet the needs of visitors who flock to states for the chance to buy and consume marijuana without fear of arrest or embarrassment. The first state to develop a statewide program for public consumption — such as a marijuana lounge — could become the biggest pot tourism destination in the United States. A pot bureaucracy . State authorities have had to build an entirely new infrastructure of licensing, taxing and regulating marijuana businesses. That’s resulted in confusion and concern from inspectors trying to pull poorly labeled, high-potency products off the shelves and cops who must rely solely on instinct and training to determine whether a driver is under the influence.

. State authorities have had to build an entirely new infrastructure of licensing, taxing and regulating marijuana businesses. That’s resulted in confusion and concern from inspectors trying to pull poorly labeled, high-potency products off the shelves and cops who must rely solely on instinct and training to determine whether a driver is under the influence. Financial boon for investors. Savvy entrepreneurs and investors have found huge financial successes launching mobile apps and lifestyle sites for cannabis consumers and pouring millions into marijuana startups instead of selling the drug themselves.

Savvy entrepreneurs and investors have found huge financial successes launching mobile apps and lifestyle sites for cannabis consumers and pouring millions into marijuana startups instead of selling the drug themselves. Local tax questions. Municipal officials are still grappling with the question of allowing marijuana dispensaries, as they face pressure from a growing pot lobby and young voters who strongly support marijuana legalization efforts. The tax benefits may have been overrated, but it hasn't stopped some of the most conservative towns from getting into the legal weed business.

"Legal marijuana is a global phenomenon, really changing how people look at this plant,” said Sturges Karban, chief executive of the California marijuana investment firm MJIC, who has family in New Jersey.

“Does the genie ever go back into the bottle?" Karban asked. "I don’t see how you put the genie back into the bottle.”

Coming soon?

Gov. Phil Murphy has proposed legalizing marijuana in New Jersey to help address racial disparities in drug arrests and to raise money for the state. Historically, New Jersey has had little official tolerance for marijuana: Police arrest about 24,000 people a year for possession, while only this year have 20,000 people been permitted to use the drug for medical purposes.

African Americans are three times more likely to be arrested for marijuana possession than white people, even though there's no significant difference in usage between the races, according to the American Civil Liberties Union in New Jersey.

That trend has continued in states with legal weed, according to the Drug Policy Alliance. In Colorado, marijuana arrests have dropped 51 percent among white people but only 33 percent among Hispanics and 25 percent for black people.

In Washington, a black person is still twice as likely to be arrested for possession than people of other races.



While the NAACP has joined the ACLU in calling for marijuana legalization in New Jersey, the leader of the Legislative Black Caucus, state Sen. Ron Rice, D-Essex, warns of marijuana shops preying on African American communities. Rice, a former Newark police officer, instead proposes that New Jersey remove criminal penalties for possessing small amounts of marijuana without setting up a state-sanctioned marketplace.

HIGH HOPES: Community activists push back against legal weed

RELATED: Lawmakers join forces and call to decriminalize marijuana



In a statement, Murphy spokesman Dan Bryan said the Democratic governor considers a fully legal weed market "a critical step in eliminating racial disparities in our criminal justice system." His statement made no reference to tax revenue.

In 2012, Colorado became the first state to allow adults to possess and use marijuana without a medical condition, but the state — its users, regulators and business owners — still faces day-to-day struggles as the industry, which accounted for $1.5 billion in sales last year, continues to evolve, four years after the first legal joint was sold.

And more than 20 years after California first legalized medical marijuana, it's poised to become the largest legal marijuana market in the world, with a projected $5.2 billion in sales this year.

Combined, marijuana dispensaries in the two states are expected to rake in more sales than Pizza Hut, Domino's or Panera Bread.

Legal marijuana sales are scheduled to begin in Massachusetts in July, and Maine could come online later this year. If the state meets Murphy's goal of sales next January, New Jersey would be the first East Coast state south of Massachusetts to allow marijuana sales to all adults.

Marijuana shops are ubiquitous in California and Colorado, and it’s not uncommon to smell a slight odor of marijuana while out for a walk. But, despite the stereotype of lazy stoners, there's no evidence that legal weed has dragged down economic productivity in California and Colorado, which have lower unemployment rates (4.3 percent and 3 percent, respectively) than New Jersey (4.6 percent).

But legal marijuana in the Garden State will likely look somewhat different from the Western states, starting with the law itself. Voters in Colorado and California legalized the drug via ballot initiative, and the states had relatively robust medical marijuana markets — hundreds of dispensaries and hundreds of thousands of patients — which eased the transition.

Even with Murphy's expansion of the medical marijuana program that started in 2010, New Jersey has just six dispensaries serving 20,000 patients.

MORE: New Jersey medical marijuana patients could double under Murphy program



Scott Rudder, a Republican former state lawmaker who heads the New Jersey CannaBusiness Association, a coalition of marijuana-related businesses, believes New Jersey can meet Murphy’s target of legal weed sales at the beginning of next year. Murphy aides maintain that the goal remains within reach. A Monmouth University poll in April found that 59 percent of New Jersey respondents favor legal marijuana for adults.

With as little as six months from the passage of a marijuana legalization bill to the beginning of retail sales, the state could tiptoe into the market simply by letting the six existing dispensaries sell to anyone 21 or older, Rudder said.



“We can do this this year,” he said. “This is about jobs and the economy. This will benefit communities at the local level. This takes drug dealers out of the mix.”

'Different playing field'

Not everyone shares Rudder’s enthusiasm. In California and Colorado, police are pulling over more people for driving under the influence of drugs. And both states still have a black market, buoyed by hefty tax rates — more than 25 percent in California and up to 34 percent in Colorado — that are sending potential customers back to the street corner dealer.

“You get this pitch that it stops the black-market drugs, that it's a huge amount of money for cities and municipalities, it's just a cash cow,” said Debbie Brinkman, the crusading anti-marijuana mayor of Littleton, Colorado. “You get this pitch that if everybody is already doing it, why not make it legal and get paid tax dollars for it?

“What you don’t hear about is everything else that happens,” she said.

And then there’s still the elephant in the room: Marijuana remains illegal under federal law and the Trump administration has flip-flopped on whether it intends to punish states that allow the drug.

In January, U.S. Attorney General Jeff Sessions rescinded the Cole memo, an Obama-era policy that had discouraged federal prosecutors from taking action against states with legal marijuana laws. But last month, U.S. Sen. Cory Gardner, R-Colo., said President Donald Trump had committed to staying out of the way of a “states’ rights issue.”

Even in legal states, marijuana operates in kind of a gray area. Most dispensaries are still “cash only,” as many federally chartered banks and credit card companies don’t want to do business with them. Murphy has proposed a state-run bank to get around that restriction.

And without the ability to open locations across state lines, the concept of “growing” a business must take on a whole new meaning. A dispensary owner in Colorado must find new capital, a new business plan, apply for a whole new set of permits and follow a new set of regulations to set up shop in New Jersey.

HIGH HOPES: Entrepreneurs find new avenues in the gray area of legal weed

RELATED: So you wanna get in the legal weed business? Good luck.

"When you're in a federally illegal business, things that other companies would take for granted and just do in their sleep become an exercise in challenge and creativity and compliance,” said University of Denver professor Paul Seaborn, who teaches business of marijuana. “It's just a different playing field, with all kinds of challenges that most businesses would never even consider."

USA TODAY NETWORK New Jersey journalists investigated the effects of marijuana legalization on key areas and how they might affect New Jersey:

Cultural changes

In states that lifted restrictions on marijuana use, the drug not only lost much of its stigma but became the center of a thriving cannabis culture that includes gyms and yoga studios catering to users, marijuana-themed festivals and pot-laced treats for dogs and cats.

When purchasing legal weed at a marijuana dispensary in California and Colorado, customers are greeted by “budtenders” who serve as a fusion of a restaurant sommelier and a pharmacist, with insight on the tastes and physical effects of any specific strain and the way it’s prepared — smoked, vaped or eaten.

In Colorado, marijuana has become a common topic of conversation — from legislators to the business community, all the way down to the neighborhood stoner. They usually refer to it as cannabis, eschewing the racial implications of the term “marijuana," with its roots in the Spanish language.

What’s often missing is marijuana itself, at least in the form most people recognize. Many users have turned to edibles and vaping — neither of which produces a noticeable odor — as a workaround to public consumption laws, which you can learn more about in the video below. In vaping, people inhale vaporized nicotine, marijuana or fragrances through electronic cigarettes.

Instead of lighting up outdoors, people can put a marijuana-laced breath strip under their tongues at yoga studios in Los Angeles. In Colorado, tour buses travel to dispensaries and allow guests to smoke on board.

Within the last two months, the city of Denver issued its first licenses for social consumption lounges, where marijuana users can enjoy the drug just as people drink beers in a bar. California cities are looking at issuing similar licenses.

HIGH HOPES: Tour buses and lounges allow Colorado residents, visitors a place to smoke legal weed

How is marijuana legalization changing people's lives? Check out the Potcast podcast from the USA TODAY NETWORK!

“This place is super important,” said Samuel A. Torres, a Middletown native who moved to Denver four years ago. He’s a regular at iBake Denver, a private member’s lounge where — for $13 — anyone over 21 can join and smoke as much weed as they’d like.

“You’re not allowed to go anywhere and smoke — and especially if you’re a tourist, you need somewhere you can smoke and be legal about it,” Torres said. “You don’t see bad things happen in a place like this. We never have fights. Nobody has to call the cops.”

It’s difficult to say how New Jersey, with its brash Shore culture and polyglot influences, would change after marijuana loses much of its stigma along with its illegal status.

It would likely be the first mid-Atlantic state to allow the drug, which opens up an easy pot destination for the millions of people within a day’s drive of New Jersey.

RELATED: Legal weed may turn Asbury Park into the next Denver

Taxes and the black market

For decades, California has had a thriving gray and black market for marijuana that grew rapidly after the state allowed medical sales in 1996. Authorities say the state had thousands of unlicensed storefront dispensaries when legal sales began Jan. 1.

Many of those stores are still in business, able to undercut legal dispensaries that are required to collect a tax of 25 percent or more.

In North Hollywood, for example, Angie Proshak said her licensed dispensary is struggling against illegal competitors. Sixteen of the 27 marijuana dispensaries in North Hollywood are unlicensed, she said.

And in Colorado, dispensary owners and local officials alike have started to throw their full weight into the recreational market, at the expense of medical marijuana.

When Jim Parco opened up Mesa Organics in Pueblo, Colorado, in 2016, he kept it recreational-only out of concern that a medical dispensary would simply funnel product into the black market. In Colorado, an 18-year-old can buy medicinal marijuana, but only a 21-year-old can buy legal weed from a recreational dispensary.

“It doesn’t take much imagination for an 18-year-old kid to figure out what to do with two ounces of tax-free cannabis each day,” Parco said. “It’s going right into the high schools.”

HIGH HOPES: This New Jersey family moved to Colorado for medical marijuana — and they're never coming back.

California State Assemblyman Tom Lackey, a Republican who opposed legal marijuana, has introduced a bill that would lower the state marijuana tax to 11 percent and eliminate cultivation taxes. If signed into law, the bill would cost the state about $30 million per year — but deal a major blow to the black market, Lackey said.

“The state really needs to reduce its hunger for income in order to deal with the black market,” Lackey said.

In New Jersey, Murphy has proposed a 25 percent state tax rate for legal marijuana sales, in addition to state sales tax, and local communities could levy their own taxes. But his office isn't stuck on that number, aides said.

Bill Caruso, a New Jersey marijuana legalization lobbyist, said Murphy’s proposed tax rate is fair and that the Garden State won’t struggle with the black market like California because there are no known illegal dispensaries.

“We don’t have the problems with the unregulated market over the years that they’re trying to grapple with now,” Caruso said.

Rules and regulations

In New Jersey, a mom can walk into the liquor store with a child in tow and walk out with a bottle of wine, a case of beer, a handle of vodka — or all of those items at once.

The security surrounding a marijuana dispensary in Colorado and California is a world away. Visitors must present a valid driver’s license just to walk in the door and must stay in a separate vestibule until they’re called into the dispensary.

While visiting Mesa Organics in Pueblo, Colorado, a USA TODAY NETWORK New Jersey reporter watched as an employee turned down a customer with an expired driver’s license. She wouldn’t even let the customer accompany a friend to the store itself, hidden behind a locked door.

California created a Bureau of Cannabis Control last year after voters approved legal sales in 2016. The bureau has about 60 employees who deal with licensing and enforcing laws such as a ban on marketing edible products to children and ensuring that businesses have measures to protect against crime.

Only about 12 employees handle enforcement, about one officer per 58 legal weed dispensaries — and that doesn’t even account for the hundreds of illegal businesses still operating.

The bureau is hiring, said Chief Lori Ajax, who demurred when asked if state regulators were overburdened by the 13-month timeline to set up regulations and hire people to enforce them.

“I think it was an aggressive timeline but we got done what we needed to get done,” she said. “I don’t know that more time would have been beneficial to us.”

In Englewood, Colorado, a 2016 ballot initiative forced the city to permit and regulate recreational marijuana dispensaries — but didn’t give them enough revenue to make ends meet.

Now, the city loses money on regulating the dispensaries officials didn’t want in the first place.

“We don't want to be overly greedy, but we also have to understand that there are negative externalities of this business that need to be regulated,” Englewood City Manager Eric Keck said. “We need to be able to address those and there are costs that we are facing.”

HIGH HOPES: Colorado towns were promised a financial windfall. They were disappointed.



By passing marijuana legalization by legislative vote, New Jersey could be in a better position since those regulations could be included in the bill, said Rudder, the former lawmaker pushing for legal weed in New Jersey.

Law enforcement

When California voters approved legal weed in November 2016, the California Highway Patrol began training hundreds of its officers on the art and science of catching stoned drivers. Watch a video of a California Highway Patrol officer making motor vehicle stops below.

While some of the symptoms are similar to a drunken driver's impairment, there’s no reliable breath or blood test to determine marijuana intoxication. Instead, specially trained drug-recognition experts must rely on nothing but observation and instinct — except only 2 percent of all police officers in California have such certification.

HIGH HOPES: On the legal weed beat with California Highway Patrol, cannabis control inspectors

New Jersey may struggle with the same problem: In a legislative hearing, New Jersey Attorney General Gurbir Grewal acknowledged that the state might not have enough drug recognition experts to deal with the challenge of stoned drivers. The 400 such officers represent fewer than 2 percent of police in the state.

Statistics from California and Colorado suggest an increase in drugged driving:

In 2016, more than 17 percent of all DUI arrests from the Colorado State Patrol involved marijuana.

In the first quarter of 2018, the California Highway Patrol reported 886 drugged driving arrests, more than doubling the arrests during the same period last year.

Cannabis was involved in 51 fatal crashes in Colorado in 2016, compared to just 19 the previous year.

But such statistics often lack context: In California, prosecutions for driving under the influence of alcohol still outnumber those for marijuana and other drugs by a factor of nearly 14 to 1.

And those fatal cannabis-related crashes in Colorado could have also involved “alcohol or other drugs,” according to the Colorado Department of Transportation.

The New Jersey State Police did not respond to a request for comment.

Economy

While Murphy pitches legalization as primarily a social justice issue, his quest could fundamentally transform New Jersey's economy by placing it at the center of a new billion-dollar industry populated by marketing gurus and venture capitalists who speak the language of Silicon Valley and Wall Street.

At a marijuana conference in Philadelphia in early May, New Jersey legalization advocates said the drug could be a boon for companies from lighting and greenhouse manufacturers to app developers and attorneys.

HIGH HOPES: Investors try to get rich off legal weed

Projections vary widely on the potential size of the U.S. marijuana industry, although all are in the tens of billions of dollars. And there are no reliable estimates as to how large of a share New Jersey could claim, especially with New York and Pennsylvania potentially getting into the legal marijuana business.

To meet Murphy's revenue goal of $300 million a year, New Jersey would need $1.2 billion in annual sales — a number that economists with marijuana experience say is realistic.

"This is the hot new industry," said Troy Mass, vice president of business development at Sky Island Consulting, a marijuana consultancy in Los Angeles. "This is where everyone wants to be. The sky is the limit."

Mike Davis; @byMikeDavis: 732-643-4223; mdavis@gannettnj.com

James Nash; @jmnash: 973-459-8601; nashj@northjersey.com