Contrary to reports that City Council approved cannabis legislation, the governing body tabled an ordinance to allow cannabis licenses in the city until the Planning Board has an opportunity to consider a resolution later this month.

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At its meeting on Monday night, City Council postponed a public hearing and final adoption until a special meeting on July 22 at 7 p.m. The ordinance (O-24-21) sets rules for operating five types of cannabis licenses.

City Council President Danni Newbury said the ordinance requires approval first by the Planning Board, which is scheduled to have a special meeting on July 20 at 7 p.m. The Planning Board must review the proposed ordinance  for compliance with the city’s Master Plan, then approve a resolution reflecting such, she said.

The ordinance was introduced at the June 14 council meeting and had been scheduled for a public hearing at Monday’s meeting.

In response to a question from the public at Monday’s City Council meeting, City Administrator Robert Landolfi said it’s unclear how taxes collected on cannabis sales could be allocated. The governor has appointed a commission on cannabis that has not yet “promulgated” rules and regulations that govern any uses permitted under the legislation.

The city’s ordinance includes a provision to provide for the potential to collect a host benefit, Landolfi said. It’s an undefined amount but “what we’re seeking to do is collect above and beyond what’s authorized by legislation,” he said, adding that until the state sets more specific rules and regulations, it’s premature to know how funds collected by the city would be allocated.

Towns are allowed to levy an optional Cannabis “Transfer Tax and User Tax,” which is capped at 1% of wholesale activities and 2% of cultivation, processing, and retail activities. The tax in Rahway would be fixed at a uniform rate of 2% on all sales or transfers of cannabis products from any of the cannabis establishments.

A 1% transfer tax would be collected from each sale by a cannabis wholesaler. A user tax is also established at the 2% rate and will be imposed on the value of each transfer or use of cannabis or cannabis items not otherwise subject to the transfer tax.

The proposed legislation would allow for two licenses of each class of business in Rahway, limited to the city’s light industrial or heavy industrial zones:

• Cultivator
• Manufacturer
• Wholesaler
• Distributor
• Delivery.

The only type of license that would be prohibited would be retail. A business engaging in both medical and personal cannabis would count as one toward the maximum number of licenses. On-site consumption of marijuana would be prohibited as would  marijuana-derived products, including smoking, ingesting edibles, or applying topical applications.

Towns have until Aug. 21 –  six months after Gov. Phil Murphy signed the legalization legislation – to approve ordinances allowing or prohibiting cannabis businesses. If an ordinance is not adopted, cannabis businesses will be allowed for five years. If an ordinance is approved prohibiting cannabis businesses, towns can change the ordinance at any time to allow for sales.

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