The Jersey City Council has voted to advance an ordinance that would redirect more than $1 million in cannabis tax revenue to the city’s general operating budget as officials look for ways to address a sizable budget shortfall.
The ordinance, introduced by At-Large Councilmember Rolando Lavarro, was approved unanimously on first reading by a 9 to 0 vote. It will still need approval on second reading at a council meeting in July before becoming law.
Lavarro said the proposal is intended to help reduce the city’s deficit without immediately turning to residents for additional tax revenue.
“This ordinance, being introduced tonight, does something about our tax situation,” Lavarro said during the meeting. “It doesn’t solve it. Not by a long shot. It frees over $1 million in cannabis tax revenue and directs it to our general operating budget.”
He said the money could help close part of the deficit “without raising taxes on our Jersey City residents,” adding that officials should “turn over every stone” before asking residents to pay more.
Jersey City’s cannabis transfer tax applies to several types of marijuana-related transactions, including sales between cultivators, sales of cannabis items between licensed businesses, and retail sales to consumers who are at least 21 years old.
Under the city’s tax structure, cultivators and manufacturers are taxed at 2% of receipts, wholesalers are taxed at 1%, and retailers are taxed at 2%.
The revenue was originally designated for specific purposes, including the Board of Education and the Affordable Housing Trust Fund. The city also planned to create a Cannabis Fund overseen by a Cannabis Fund Committee, which would support social equity programs.
Last year, $500,000 in cannabis tax revenue was directed to the city’s summer youth program under former Mayor Steve Fulop.
The proposal comes as Jersey City officials work through a major budget gap. Mayor James Solomon has said the city is facing a $254 million deficit tied to the previous budget, while also criticizing decisions made under Fulop’s administration. Solomon previously proposed a 20% property tax increase, but the plan was withdrawn before a vote.
The ordinance will return to the council for a final vote next month.
