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New Jersey approves legal weed for adults in historic marijuana vote

New Jersey approved a constitutional amendment legalizing marijuana for adult use on Tuesday by a ratio of about 2 to 1.

With the historic vote, New Jersey became the first state in the Mid-Atlantic region to adopt legal cannabis, creating a potential $2 billion market and making it likely that criminal arrests for marijuana will be curtailed. The decision represents a potential bonanza for state taxpayers and will put pressure on Pennsylvania and New York to follow suit, experts say.

“New Jersey voters have mandated an end to cannabis prohibition, and they have voiced their support for building an equitable, just market in place of unfair and outdated drug laws,” said Axel Owen, campaign manager for NJ CAN 2020, which led the public relations effort to legalize the substance.

So will legal weed go on sale to everyone over 21 anytime soon?

“Definitively, no,” said Jeff Brown, assistant commissioner for the Office of Medicinal Marijuana at the New Jersey Department of Health. “How soon will be determined by what the legislation looks like. That has yet to be written by the Legislature.”

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The amendment allows for a state tax rate of 6.25% on sales. Everything else would be in play.

The regulations to govern the new legal industry may take several months — or even years — to work out, depending on what political roadblocks spring up in Trenton.

New Jersey was one of four states this year with referendums to legalize cannabis on the ballot; the others were Arizona, Montana, and South Dakota, where the votes still hadn’t been counted last night. Until Election Day, 34 states, including Pennsylvania and New Jersey, had enacted laws to allow medical marijuana. And 11 of those states had made cannabis available to all adults.

Appearing in Willingboro on Tuesday, Gov. Phil Murphy underscored his enthusiasm for recreational marijuana.

“I got to supporting it first and foremost due to social justice,” Murphy said, following an appearance with U.S. Rep. Andy Kim (D., N.J.) “We inherited when I became governor the largest white, nonwhite gap of persons incarcerated in America and the biggest contributor to that was low-end drug offenses.”

“We’ll work with the Legislature to that get up and running,” Murphy said. “And we’ll address one of the biggest social injustices in our state, and at the same time, by the way, secondarily, but importantly, will create jobs and economic activity.”

The New Jersey constitutional amendment will take effect on Jan. 1.

The scope of the law will depend on what model the Legislature adopts.

Lawmakers could decide to “flip the switch” and allow current medical marijuana retailers to sell to a broader adult market. The Legislature could revisit a previously stalled legalization bill, and rush it through. Both options would keep all cannabis sales under a tightly regulated regime and in a small number of hands, similar to the program underway in Illinois.

Marijuana advocates have no enthusiasm for those plans.

“The existing Big Marijuana cartel has shown an inability to handle the very limited patient population” under medical marijuana, said Chris Goldstein, a regional spokesperson for NORML, the National Association for the Reform of Marijuana Laws. “They’ve been unable to maintain supply, they’ve proven they can’t get in gear to make home deliveries, and their prices are too high.”

New Jersey during the last two years has added only six medical licensees. Oklahoma, during the same period, added 2,200 medical dispensaries.

“I’d prefer a free and open market similar to Oklahoma’s,” said Scott Rudder, a lobbyist and president of the New Jersey Cannabis Association. “We could do it in the same way we have with pharmacies and liquor stores. You meet certain criteria, pay a fee, and you get the OK.”

With the vote, New Jersey becomes the most populous state on the East Coast to legalize recreational weed.

Currently in both New Jersey and Pennsylvania, the deck is stacked to favor big corporations or investors with deep pockets. Obtaining a permit, zoning, and a storefront for a new cannabis retailer can cost up to $1 million. Rudder would prefer to see a fee closer to $2,500.

“We want to make sure that we don’t skip over Main Street and go straight to Wall Street,” said Rudder, a former Republican assemblyman.

Whatever the state adopts, advocates said the Legislature will first have to swiftly adopt a bill to end criminal arrests for marijuana even before the broader sales regulations are worked out.

“We must ensure we stop arresting people for marijuana possession,” said Bill Caruso, who heads the cannabis practice at Archer Law. “Hopefully it happens this month, but it needs to happen before the end of the year.”

New Jersey will allow Pennsylvanians to buy weed in the Garden State, but federal and Pennsylvania state law will ban Keystoners from transporting it back home. Analysts nonetheless expect Pennsylvanians and New Yorkers to make substantial purchases in New Jersey.

Approaching the election, polls showed the legalization measure had overwhelming support.

The handful of opponents included Kevin Sabet, founder of Smart Approaches to Marijuana and a former White House adviser on drug policy to President Barack Obama.

Supporters of legalization raised about $2.1 million. That money came primarily from the ACLU of New Jersey, which advocated for the amendment as a way to improve social justice and end the documented racial disparities among pot-related arrests.

More than $800,000 was donated by a foundation funded by Scotts Miracle-Gro, which makes hydroponic equipment and fertilizers often used to grow marijuana.

The total spent was tiny compared with the average of $8.3 million spent to legalize cannabis in other states, said the Election Law Enforcement Commission.

Acreage Holdings, a multistate marijuana grower and retailer, was the only Big Marijuana firm to contribute to the cause, and with a relative paltry sum of $20,000. Acreage operates dispensaries under the name the Botanist.

“The money put in by corporations will pay dividends,” Sabet said. “But the people of New Jersey will be shortchanged through increased mental health costs, student school problems, and impaired driving. I’m particularly worried about the last. Those jug handles are already tough to navigate. Now there’s going to many people trying to drive on them while they’re stoned.”

Staff writer Amy S. Rosenberg contributed to this article.

The regulations to govern the new legal industry may take several months — or even several years — to work out.

COVID-19 is costing drug cartels millions of dollars

The coronavirus pandemic has crippled cities and crushed businesses from coast to coast.

It’s also costing drug traffickers millions, multiple law enforcement officials told NBC News, because their methods of moving money have been compromised.

Since the start of the crisis, federal drug agents in major U.S. hubs have seized substantially more illicit cash than usual amid statewide lockdowns that have disrupted the way cartels do business, the officials said.

“Their activities are a lot more apparent than they were three months ago,” said Bill Bodner, special agent in charge of the Drug Enforcement Administration’s Los Angeles field office.

Bodner said California’s stay-at-home order has made it more difficult for traffickers to launder money and move around the city unseen.

“When there’s less hay in the haystack, it’s easier to find the needle,” he added. “It’s caused the drug cartels and money launderers to take more risks, and that’s where we can capitalize.”

From March 1 to May 8, seizures of cash in the greater Los Angeles area have more than doubled from $4.5 million last year to $10 million during the same period this year. Bodner said that includes four separate seizures of more than $1 million in Long Beach, Cerritos, Anaheim and Wildomar.

DEA agents operating on the East Coast have seen similar success.

The New York City field division’s cash seizures are up 180 percent since last year, said special agent in charge Ray Donovan, with the bulk of them coming in the last couple of months.

“It’s really around April, where we started saying, ‘Hey, we’re having a lot more success in this area,’” Donovan said.

When moving product along the West Coast, Mexican cartels use manufacturing businesses as de facto banks that help to launder the drug proceeds and funnel the money back across the southern border

Mexico’s coronavirus death toll feared much higher than reported

But in New York, the cartels typically rely on “international Asian criminal organizations” to clean their cash, Donovan said. These cartel associates will buy American goods with drug money and ship them back to China. In return, the criminal gangs that receive the products will then send money back to the cartels in Mexico — often through bank wires, which are more difficult to track from China.

But the city’s lockdown has deprived the traffickers of using the first link in their sophisticated operation.

“With all the stores and shops closed down here, they don’t have that as one of the means to quickly launder money,” Donovan said.

As a result, the cartel’s cash has been piling up, Donovan said, resulting in larger seizures.

Pre-pandemic busts would often net cash hauls in the neighborhood of $100,000. Now, with the cartel’s laundering methods disrupted, New York DEA agents have been recovering piles of cash exceeding $1 million, Donovan said.

“More money is being stockpiled here,” he added. “So when we come across them, instead of seizing $100,000, we seize $1 million or several million dollars.”

The recent busts haven’t been confined to stacks of cash. Along the northern border, federal officers have confiscated large quantities of drugs over the past few months.

From March 21 to May 16, border patrol officers working out of the Detroit field office have seized 2,856 pounds of marijuana, 87 pounds of cocaine, 12 pounds of fentanyl and 12 guns.

“We are definitely seeing an uptick,” said Kris Grogan, spokesman for U.S. Customs and Border Protection in Detroit.

DEA agents in Michigan and Ohio have hauled in $6 million in drug money since March 16, officials said. That amount is not unusually high, but there’s been a marked increase in the amount of cash seized at airports.

“Hundreds of thousands of dollars,” said Keith Martin, special agent in charge of the DEA’s Detroit field office. “Which is not normal.”

Unlike New York and Los Angeles, the drug money made in Michigan and Ohio is moved the old-fashioned way — by driving it across the southern border.

Martin said it’s too early to draw a firm conclusion on what’s fueling the spike in cash seizures at airports, but a drop in car traffic because of statewide lockdowns is likely a contributing factor.

“They don’t want to be that one vehicle out in the road that gets pulled over,” Martin said. “When there’s not a lot of border traffic, you’re singled out easier than if there were a thousand cars.”

While COVID-19 is already reshaping parts of the global economy, the impact on the drug cartels’ overall business remains yet to be determined, the officials said.

The coronavirus is also affecting drug prices. The price of methamphetamine has skyrocketed in California, according to Bodner, rising from about $1,000 a pound in November to upward of $2,000 a pound. He said that’s due in part to the economic disruptions and difficulties in importing chemicals from China and India, as well as the closure of the southern border to nonessential travel.

In New York, the price of marijuana is up 55 percent, according to Donovan, in part because of the increased risk of getting it into the country. Cocaine is up 12 percent, and heroin 7 percent, he said.

The virus has also changed the way law enforcement operates. One example: fewer DEA agents in the office, and more out in the streets.

“We’re practicing social distancing,” said Martin, the Detroit agent. “But the pandemic has not kept us from doing our job.”

Federal agents are also out in the streets en masse in Los Angeles and New York.

“I asked all my agents to stay in the street and just work in the street,” Donovan said. “We are there for our community, and ultimately, we’re doing a pretty damn good job.”

Andrew Blankstein is an investigative reporter for NBC News. He covers the Western United States, specializing in crime, courts and homeland security.

Tom Winter is a New York-based correspondent covering crime, courts, terrorism and financial fraud on the East Coast for the NBC News Investigative Unit.

Rich Schapiro is a reporter for the NBC News Investigative Unit.

The coronavirus crisis has made it more difficult for drug cartels to hide their operations, leading federal authorities to seize more illicit cash than usual. ]]>