[12-18-2023 by Ord. No. 2023-20]
This chapter shall be known as the "Taxation of Cannabis Sales."
[12-18-2023 by Ord. No. 2023-20]
A. 
Legislation. On February 22, 2021, Governor Murphy signed into law P.L. 2021, c. 16, known as the "New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act" (the "Act"),[1] which legalizes the recreational use of cannabis by adults 21 years of age or older and establishes a comprehensive regulatory and licensing scheme for commercial recreational (adult-use) cannabis operations, use and possession.
[1]
Editor's Note: See N.J.S.A. 24:6I-31 et seq.
B. 
The Act establishes six marketplace classes of licensed businesses, including:
(1) 
Class 1 cannabis cultivator license for facilities involved in growing and cultivating cannabis;
(2) 
Class 2 cannabis manufacturer license for facilities involved in the manufacturing, preparation, and packaging of cannabis items;
(3) 
Class 3 cannabis wholesaler license for facilities involved in obtaining and selling cannabis items for later resale by other licensees;
(4) 
Class 4 cannabis distributor license for businesses involved in transporting cannabis plants in bulk from one licensed cultivator to another licensed cultivator, or cannabis items in bulk from any type of licensed cannabis business to another;
(5) 
Class 5 cannabis retailer license for locations at which cannabis items and related supplies are sold to consumers; and
(6) 
Class 6 cannabis delivery license for businesses providing courier services for consumer purchases that are fulfilled by a licensed cannabis retailer in order to make deliveries of the purchased items to a consumer, and which service would include the ability of a consumer to make a purchase directly through the cannabis delivery service which would be presented by the delivery service for fulfillment by a retailer and then delivered to a consumer.
C. 
A cannabis business is defined as any business that holds one or more State of New Jersey issued license for Class 1 through Class 6 cannabis business and a vertically integrated cannabis business is defined as any cannabis business that holds more than one cannabis license.
D. 
Section 40a(1) of the Act permits a municipality to adopt an ordinance imposing a transfer tax on the sale of cannabis or cannabis items by a cannabis establishment that is located in the municipality on receipts from the sale of cannabis by a cannabis cultivator to another cannabis cultivator; receipts from the sale of cannabis items from one cannabis establishment to another cannabis establishment; receipts from the retail sales of cannabis items by a cannabis retailer to retail consumers who are 21 years of age or older; or any combination thereof, and to set its own rate or rates, but in no case exceeding 2% of the receipts from each sale by a cannabis cultivator; 2% of the receipts from each sale by a cannabis manufacturer; 1% of the receipts from each sale by a cannabis wholesaler; and 2% of the receipts from each sale by a cannabis retailer.
E. 
Section 40a(2) of the Act requires a municipality enacting a transfer tax to also enact a user tax.
[12-18-2023 by Ord. No. 2023-20]
A. 
As used in this chapter, the following terms shall have the meanings indicated:
CANNABIS
Shall mean the same as that term is defined in Section 3 of P.L. 2021, c. 16 (N.J.S.A. 24:6I-33).
CANNABIS CULTIVATOR
Shall mean the same as that term is defined in Section 3 of P.L. 2021, c. 16 (N.J.S.A. 24:6I-33).
CANNABIS ESTABLISHMENT
Shall mean the same as that term is defined in Section 3 of P.L. 2021, c. 16 (N.J.S.A. 24:6I-33).
CANNABIS ITEMS
Shall mean the same as that term is defined in Section 3 of P.L. 2021, c. 16 (N.J.S.A. 24:6I-33).
CANNABIS MANUFACTURER
Shall mean the same as that term is defined in Section 3 of P.L. 2021, c. 16 (N.J.S.A. 24:6I-33).
CANNABIS RETAILER
Shall mean the same as that term is defined in Section 3 of P.L. 2021, c. 16 (N.J.S.A. 24:6I-33).
CANNABIS WHOLESALER
Shall mean the same as that term is defined in Section 3 of P.L. 2021, c. 16 (N.J.S.A. 24:6I-33).
CONSUMER
Shall mean the same as that term is defined in Section 3 of P.L. 2021, c. 16 (N.J.S.A. 24:6I-33).
PREMISES
Shall mean the same as that term is defined in Section 3 of P.L. 2021, c. 16 (N.J.S.A. 24:6I-33).
TAXPAYER BUSINESS
Shall mean for the purposes of this chapter any cannabis business defined in this subsection.
B. 
All other terms as defined in the "New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act,"[1] also referenced herein as the "Act" or "P.L. 2021, c. 16," are hereby incorporated herein by reference and shall have the meanings set forth in the Act, as may be amended or superseded.
[1]
Editor's Note: See N.J.S.A. 24:6I-31 et seq.
[12-18-2023 by Ord. No. 2023-20]
A. 
Transfer tax.
(1) 
There is hereby imposed a transfer tax in the amount of 2% on receipts from the sale of cannabis as follows:
(a) 
From the sale of cannabis by a cannabis cultivator to another cannabis establishment.
(b) 
From the sale of cannabis items from one cannabis manufacturer to another cannabis establishment.
(c) 
From the sale of cannabis items from a cannabis retailer to the consumer, if retail cannabis sales become permitted in Hightstown Borough.
(2) 
There is hereby imposed a transfer tax in the amount of 1% on receipts of the sale of cannabis as follows:
(a) 
From the sale of cannabis items from one cannabis wholesaler to another cannabis establishment.
B. 
Collection of transfer tax. Such tax shall be collected or paid, and remitted to the municipality by the cannabis establishment from the cannabis establishment purchasing or receiving the cannabis or cannabis item, or from the consumer at the point of sale, on behalf of the municipality by the cannabis retailer selling the cannabis item to that consumer. The transfer tax shall be stated, charged, and shown separately on any sales slip, invoice, receipt, or other statement or memorandum of the price paid or payable, or equivalent value of the transfer, for the cannabis or cannabis item. No cannabis establishment required to collect a transfer tax imposed hereunder shall advertise or hold out to any person or to the public in general, in any manner, directly or indirectly, that the transfer tax or user tax will not be separately charged and stated to another cannabis establishment or the consumer, or that the transfer tax will be refunded to the cannabis establishment or the consumer.
C. 
User tax. There shall also be imposed a user tax, at the equivalent transfer tax rates, on any concurrent license holder, as permitted by Section 33 of P.L. 2021, c. 16 (N.J.S.A. 24:6I-46), operating more than one cannabis establishment. The user tax shall be imposed on the value of each transfer or use of cannabis or cannabis items not otherwise subject to the transfer tax imposed pursuant to Subsections A and B of this section, from the license holder's establishment that is located in the municipality to any of the other license holder's establishments, whether located in the municipality or another municipality. The value of each transfer or use of cannabis or cannabis items for user tax computation shall equal the statewide average retail price of an ounce of usable cannabis for consumer purchase, as determined by the Cannabis Regulatory Commission, less 10% or the third-party dispensary wholesale price, whichever is less.
D. 
Relationship to other taxes. A transfer tax or user tax imposed pursuant to this section shall be in addition to any other tax imposed by law. Any transaction for which the transfer tax or user tax is imposed, or could be imposed, pursuant to this section, other than those which generate receipts from the retail sales by cannabis retailers, shall be exempt from the tax imposed under the "Sales and Use Tax Act," P.L. 1966, c. 30 (N.J.S.A. 54:32B-1 et seq.). The transfer tax or user tax shall be paid by the cannabis establishment purchasing or receiving any cannabis or cannabis item from any cannabis cultivator or cannabis manufacturer or cannabis wholesaler licensed by the municipality, and shall be collected and remitted to the municipality by the cannabis establishment licensed by the municipality. The transfer tax or user tax shall be stated, charged, and shown separately on any sales slip, invoice, receipt, or other statement or memorandum of the price paid or payable, or equivalent value of the transfer, for the cannabis or cannabis item.
E. 
Tax liability. Every cannabis establishment required to collect a transfer tax or user tax imposed pursuant to this chapter shall be personally liable for the transfer tax or user tax imposed, collected, or required to be collected under this section. Any cannabis establishment shall have the same right with respect to collecting the transfer tax or user tax from another cannabis establishment or the consumer as if the transfer tax or user tax was a part of the sale and payable at the same time, or with respect to nonpayment of the transfer tax or user tax by the cannabis establishment or consumer, as if the transfer tax or user tax was a part of the purchase price of the cannabis or cannabis item, or equivalent value of the transfer of the cannabis or cannabis item, and payable at the same time; provided, however, that the chief financial officer of the Borough of Hightstown which imposes the transfer tax or user tax shall be joined as a party in any action or proceeding brought to collect the transfer tax or user tax. No cannabis establishment required to collect a transfer tax or user tax imposed by pursuant to this chapter shall advertise or hold out to any person or to the public in general, in any manner, directly or indirectly, that the transfer tax or user tax will not be separately charged and stated to another cannabis establishment or the consumer, or that the transfer tax or user tax will be refunded to the cannabis establishment or the consumer.
[12-18-2023 by Ord. No. 2023-20]
A. 
Unless otherwise determined by the Borough Council, the chief financial officer of Hightstown is charged with the administration and enforcement of the provisions of this chapter, and is empowered to prescribe, adopt, promulgate and enforce rules and regulations relating to any matter pertaining to the administration and enforcement of this chapter, including provisions for the reexamination and corrections of declarations and statements, and of payments alleged or found to be incorrect, or as to which an overpayment is claimed or found to have occurred, and to prescribe forms necessary for the administration of this chapter. The Borough Council may determine at any time, in its sole discretion, to retain an outside third-party financial consultant (the "outside consultant") to exercise all of the duties and responsibilities of the chief financial officer as set forth above, with the exception of the power of enforcement, levying of fines and penalties and entering into agreements with the State of New Jersey. In the event that the Borough Council retains such an outside consultant, the fee schedule for the outside consultant shall be presented, for informational purposes only, to the cannabis business before such audit and other work is undertaken. The cannabis business shall be responsible for reimbursement to the Borough of the fees incurred by the Borough to the outside consultant for services rendered in its examination of the business's accounts for the determination of tax to be paid. A copy of the invoice shall be sent to the cannabis business by the municipality after the municipality is billed for the outside consultant's work. The cannabis business shall reimburse the municipality for the outside consultant's fees and expenses within 60 days thereafter. Failure to timely reimburse the municipality shall invoke § 4-13-5 of the Borough Code. Should a cannabis business fail or refuse to provide adequate information to the chief financial officer or the outside consultant to determine the amount of tax due, the chief financial officer or the outside consultant may use information provided from other sources (i.e., the NJ Cannabis Regulatory Commission or NJ Department of Treasury) to determine the amount of tax liability, and the licensee shall be subject to the penalties set forth in § 4-13-5 of the Borough Code.
B. 
It shall be the duty of the chief financial officer or the outside consultant, as applicable, to collect and receive the taxes, fines, and penalties imposed by this chapter. It shall also be the duty of the chief financial officer or the outside consultant, as applicable, to keep a record showing the date of such receipt. The chief financial officer is authorized to enter into agreements with the State of New Jersey to obtain information to facilitate administration of the taxes. The chief financial officer is authorized to issue a ruling upon written request of a taxpayer or upon his or her own volition.
C. 
The chief financial officer or the outside consultant, as applicable, is hereby authorized to examine the books, papers and records of any taxpayer to verify the accuracy of any declaration or financial statement, or if no declaration or financial statement was filed, to ascertain the tax due. Every taxpayer is hereby directed and required to give to the chief financial officer, or to the outside consultant, as applicable, the means, facilities and opportunity for such examinations and investigations, as are hereby authorized or otherwise permitted by law.
D. 
In the event that the transfer tax or user tax imposed pursuant to this chapter is not paid when due by a cannabis establishment, the unpaid balance, and any interest accruing thereon, shall be a lien on the parcel of real property comprising the cannabis establishment's premises in the same manner as all other unpaid municipal taxes, fees, or other charges. The lien shall be superior and paramount to the interest in the parcel of any owner, lessee, tenant, mortgagee, or other person, except the lien of municipal taxes, and shall be on a parity with and deemed equal to the municipal lien on the parcel for unpaid property taxes due and owing in the same year.
E. 
The chief financial officer or outside consultant, as applicable, shall file in the office of its tax collector a statement showing the amount and due date of the unpaid balance and identifying the lot and block number of the parcel of real property that comprises the delinquent cannabis establishment's premises. The lien shall be enforced as a municipal lien in the same manner as all other municipal liens are enforced.
F. 
Returns and records filed by a licensee, and the records and files of the chief financial officer or the outside consultant, as applicable, respecting the administration of the transfer and user tax, shall be considered confidential and privileged and neither the chief financial officer nor any employee or outside consultant engaged in the administration thereof or charged with the custody of any such records or files, nor any former officer or employee, nor any person who may have secured information therefrom shall divulge, disclose, use for their own personal advantage, or examine for any reason other than a reason necessitated by the performance of official duties any information obtained from the said returns, records or files or from any examination or inspection of the premises or property of any person, or to an officer of a public entity for a reason authorized by N.J.S.A. 54:50-9. Neither the chief financial officer nor any employee or outside consultant engaged in such administration or charged with the custody of any such returns, records or files shall be required to produce any of them for the inspection of any person or for use in any action or proceeding except when the records or files or the facts shown thereby are directly involved in an action or proceeding to collect or challenge the assessment of transfer or user taxes hereunder, or where the determination of the action or proceeding will affect the validity or amount of the claim of the Borough hereunder, or in any lawful proceeding for the investigation and prosecution of any violation of this Chapter 31 or of the criminal provisions of the State Uniform Tax Procedure Law[1] or of any state tax law, or where production is required pursuant to the New Jersey Open Public Records Act (N.J.S.A. 47:1A-1 et seq.) or the Common Law, or the New Jersey Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act[2] (P.L. 2021, c. 16) or other applicable law.
[1]
Editor's Note: See N.J.S.A. 54:48-1 et seq.
[2]
Editor's Note: See N.J.S.A. 24:6I-31 et seq.
[12-18-2023 by Ord. No. 2023-20]
A. 
Requirement to keep records. Taxpayers liable for the transfer and/or user tax are required to keep such records as will enable the filing of true and accurate financial statements of the tax, and such records shall be preserved for a period of not less than three years from the filing date or due date, whichever is later, in order to enable the chief financial officer or any agent designated by him to verify the correctness of the declarations or financial statements filed. If records are not available in the Borough of Hightstown to support the financial statements which were filed or which should have been filed, the taxpayer will be required to make them available to the chief financial officer either by producing them at a location in the municipality or by paying for the expenses incurred by the chief financial officer or his agent in traveling to the place where the records are regularly kept.
B. 
Tax payments and financial statements. All cannabis establishments operating in the Borough of Hightstown shall be required to file a transfer and/or user tax statement with the chief financial officer to report their sales during each calendar quarter and the amount of tax in accordance with the provisions of this chapter. Financial statements shall be filed and payments of tax imposed for the preceding calendar quarter shall be made on or before the last day of April, July, October, and January, respectively. A taxpayer who has overpaid the transfer tax, or who believes it is not liable for the tax, may file a written request on an amended financial statement with the chief financial officer for a refund or a credit of the tax.