The $8 Billion Question: Which Towns Will Cash In on Marijuana?

Recreational adult use of marijuana is now the law of the land in one of the most crowded corners of the country.

Since February, the drug has become legal in five neighboring Northeast states. Densely populated region poised to become the second-largest cannabis market in the country. Further, generating as much as $8.7 billion annually within five years.

But first, mayors and municipal leaders in three East Coast states that legalized cannabis this year — New York, New Jersey and Connecticut — are wrestling with choices freighted with political and financial implications: Should they permit cannabis companies to operate in their towns?

State officials, aware that buy-in from municipalities is essential to the success of the market, are watching closely.

Dozens of municipalities have already made clear they want no part in the growing industry, at least for now. When opting out, politicians cite the legal and practical challenges surrounding the detection of drug-impaired driving; the risk of increasing teenage access to a drug still considered by many to be a pathway to addictive narcotics; and the still-incomplete state regulations.

Representatives View

“Just because it’s legal doesn’t make it right,” said Kenneth L. Simmons, the president of the school board in Paterson, N.J. Who opposes a proposal to permit cannabis start-ups in a city where one in four people lives in poverty.

“A revenue stream for City Hall,” he added, “is not prosperity, especially when it brings another possible pitfall closer to our youth.”

About 65 percent of residents in Point Pleasant Beach supported a November ballot question authorizing legalization in New Jersey. Yet Point Pleasant Beach, a Jersey Shore town known for its wide beaches and lively boardwalk, has decided against permitting cannabis businesses from operating. With the exception of delivery companies, which have to be allowed by law.

“They didn’t vote to have it in their backyard,” the borough’s mayor, Paul M. Kanitra, a Republican, said about the referendum.

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At the same time, many large cities and rural towns throughout the region have rolled out a pot-embossed welcome mat. Hoping to capitalize on legalization’s early momentum and cash.

Officials in Buffalo, N.Y., and Atlantic City, N.J., have signaled that they are eager for cannabis-related jobs and tax revenue. The council in Jersey City, N.J., a short train ride from Manhattan. Recently voted to open its borders to all six types of cannabis licenses offered by the state. As such, smoking and consumption lounges will be permitted, which are often excluded even in areas where sales are legal.

“It’s an almost entirely new industry that provides an opportunity for new skills for people to be trained in,” said Steven M. Fulop, the Democratic mayor of Jersey City. “I think it would be a waste if we did not capitalize on it.”

Many rural towns, including some in Republican strongholds, are equally supportive.

Warick New York

Warwick, N.Y., has converted the sprawling grounds of a defunct state prison into what it is calling a “cannabis cluster.” Newton, a picturesque town in New Jersey’s northernmost county, adopted an ordinance allowing retail sales every day but Sunday. Shamong, N.J., a farming community in the federally protected Pinelands reserve, hopes to generate enough revenue from cannabis to eliminate local taxes.

“My goal is to make Shamong the pot capital of New Jersey,” said Michael Di Croce, Shamong’s Republican deputy mayor.

Municipalities in New Jersey have until Aug. 21 to opt out. The deadline in New York is New Year’s Eve. In Connecticut, which legalized adult-use marijuana just last month, there is no cutoff for making a decision, but any cannabis business permitted to operate must be allowed to remain if a community ever changes its policy.

Marijuana Laws

Because marijuana remains illegal at the federal level, all cannabis products sold within a state must be produced and consumed there.

All three states are still writing regulations that will guide the adult-use markets. Though only a handful of towns in Connecticut and New York have made final decisions. In New Jersey, about one in four municipalities has introduced or adopted ordinances barring cannabis-related businesses. According to a tally maintained by the state’s League of Municipalities, and next month’s approaching deadline has intensified the debate.

Similar wrangling has played out in just about every state that has legalized marijuana.

In Colorado, which began its first-in-the-nation experiment with adult-use recreational sales in 2014, a majority of municipalities still bar retail sales.

But that has not seemed to stymie the statewide market, which has more than tripled over the last seven years, reaching $2.2 billion in medical and recreational sales last year.

Permitting towns in Colorado to opt-out was key to winning political and public support for the pioneering venture. Stated by Sam Kamin, a professor at the University of Denver’s law school who has studied legalization and served on cannabis task forces in Colorado and California.

But because most of the state’s populous cities and mountain resort towns allow cannabis sales, about six in 10 residents live in a community where recreational or medical marijuana purchases are legal, according to Colorado’s cannabis regulatory agency.

“Most people in most of the population centers have pretty ready access,” Professor Kamin said.

New Jersey Laws

In New Jersey, the legalization referendum overwhelmingly approved by voters was seen more as a social justice imperative than a matter of personal liberty in a state where Black residents were more than three times as likely as white residents to be charged with marijuana possession. Both New York and Connecticut have laws that directly relate to racial equity and investments in minorities ravaged by the decades-long drug war.

Still, in many locales, particularly in affluent suburbs, the perceived headaches have so far outweighed the allure of extra tax revenue.

Ridgefield, Conn., a 25,000-person town in Fairfield County where the median household income is $164,000, quickly said it would move to bar cannabis businesses.

“The cart is way in front of the horse,” said Kurt Wheeler, the mayor of Cazenovia, a quaint lakeside village in central New York where the governing board became one of the state’s first to outlaw retail sales.

“Everybody who spoke really urged the board: ‘If you have the opportunity to put the brakes on this and give the state more time to work out the public health and public safety issues, by all means do it,’” Mr. Wheeler, a Republican, said.

In New York and New Jersey, towns that vote to bar grow facilities or retail and production start-ups can adjust their rules later. The problem with welcoming the cannabis industry is that it locks-in communities for a long time.

New Jersey’s regulatory framework for adult-use markets is not expected to be released until Aug. 21. — the final day for municipalities to make decisions.

Five State Northeast Region

Massachusetts and Vermont also make up the Northeast five-state region, which will generate $8.7 billion in cannabis-related sales by 2027. According to an analysis by the Marijuana Policy Project, a nonprofit that advocates for cannabis legalization. Which used population and sales in Colorado and California as a comparative baseline.

On the West Coast, California and the neighboring states of Washington, Oregon, Nevada, and Arizona. Where marijuana is also legal, is likely to remain the country’s dominant market.

In Massachusetts, the city of Easthampton, which opened its first dispensary in December 2018. Further, it’s close to at least five colleges and expected to be home to five dispensaries by the end of the year, the mayor, Nicole LaChapelle, said.

The extra revenue has been tremendously helpful, she said, especially during the pandemic.

A small 1,000-square-foot dispensary generated $84,000 in revenue for the city of roughly 16,000 in April, May, and June alone, she said.

The rollout has not been without hiccups. Despite the difficulties the city has faced, LaChapelle says the results weren’t what it expected.

“There was not an uptick in crime,” she said, nor increased ambulance calls. “We did not need more patrols.”

“The people just come from everywhere,” stated Lachapelle.

Rob Mejia, a professor who teaches in the cannabis studies department at Stockton University near Atlantic City, N.J. Stated he expected the municipal jitters to fade over time, as has happened elsewhere.

Mr. Easley Statements

“Week by week, month by month, the stigma is starting to disappear,” Professor Mejia said.

Some towns that have moved to ban cannabis businesses have faced pushback on social media and with citizen-led petitions. In New York and Connecticut, citizens can force a binding referendum to require their towns to permit cannabis businesses.

In New Jersey, residents hoping to apply for one of an unlimited number of so-called micro-licenses must live in the community where they plan to operate a cannabis business. Or in an adjacent town, creating built-in pressure on local leaders.

Dominique Easley, a former N.F.L. defensive tackle, lives in Shamong and operates a party supply store nearby.

Mr. Easley said he used cannabis to wean himself off an opioid addiction he developed after tearing his anterior cruciate ligament several times while playing football, and later began growing marijuana at his property in California.

He and his family plan to apply for several types of cannabis licenses in New Jersey, including a micro-license.

“It’s a wonderful thing, especially for this area,” said Mr. Easley, who is originally from Staten Island but is raising his three sons in Shamong. “Just to bring in more people, more revenue. Just to open up people’s eyes.”