What weed paid for: What are NJ towns doing with marijuana taxes?

LAWRENCE — It seemed too good to be true.

Lawrence Township Manager Kevin Nerwinski didn't believe the numbers he was seeing. Verano Holdings wanted approval to open up their Zen Leaf medical marijuana dispensary in the town to recreational customers, selling legal weed to anyone over 21 years old. The company expected millions in revenue per month and, with a 2% transfer tax on every sale, a huge windfall for the township.

In the first year or two, Verano told Nerwinski that the township could see as much as $1 million in tax revenue.

"The numbers seemed eye-popping," Nerwinski said. "And then, on day 1, there were lines around the building. And it continued for weeks and weeks and weeks."

As the New Jersey cannabis industry enters its second year of recreational marijuana sales, municipalities are beginning to reap the tax benefits promised to officials when they signed up to become first in line. While the revenues are not budget saviors for any and likely will decrease with time and competition, town officials say it’s driving real impact.

More:What we've learned, one year after NJ legal weed sales began

More than $4.6 million was collected in cannabis tax revenue in 10 of the 12 municipalities where adult use sales began in April 2022, according to a USA TODAY NETWORK analysis of municipal budgets and interviews with municipal officials. The impact in those municipalities is varied, often depending on the size of the municipality: In small towns, cannabis tax revenue can pay for new firefighters. In bigger cities, it's simply a way of keeping costs down.

Complete tax figures were not available in three municipalities — Deptford, Egg Harbor and Paterson, where cannabis tax revenue wasn’t listed as a budget line item and municipal officials did not return multiple requests for clarification and comment.

"It's about trying to maintain a stable tax base, particularly when the cost of everything is going up," said Mike Cerra, executive director of the New Jersey League of Municipalities. "A lot of towns want to reinvest any excess revenue into their community, in terms of upgrades and infrastructure, creating more sufficient parking, making their downtowns more walkable."

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