N.J. lawmakers strike deal to set up legal marijuana marketplace. What’s next?

The constitutional amendment authorizing recreational marijuana in New Jersey takes effect on New Year’s Day, but the Garden State’s Democratic-led Legislature has been at an impasse over measures decriminalizing marijuana.

Late Friday, Gov. Phil Murphy and legislators said they did reach an agreement on setting up the new recreational marketplace, but did not disclose details.

Lawmakers and lobbyists expressed cautious confidence that the measures will move forward, but the logjam comes even though the top two legislative leaders and the governor largely agree on how to move forward more than a year after the trio announced their support for legalization.

Legislators penciled in Dec. 17 for the final voting sessions of the year.

Here’s a closer look at what the sticking points are and what’s going on:

» READ MORE: N.J. attorney general tells prosecutors to stop pressing charges for small amounts of marijuana

Voters overwhelmingly said yes to a constitutional amendment that legalizes a recreational marijuana market for people 21 and older. But the amendment doesn’t specify what that market would look like, beyond tasking the Cannabis Regulatory Commission with overseeing it.

The amendment also does not address laws on the books that outlaw marijuana offenses, like possession and distribution. Neither does any state law address a cannabis marketplace. The Legislature has always known it would need to step in.

There are two key bills.

One rewrites the state’s laws on marijuana possession. Currently, marijuana possession and distribution of an ounce to 5 pounds of marijuana is punishable by as many as five years in jail. The measure would make it lawful to possess up to 6 ounces of marijuana.

The other bill, which is the one Murphy said there’s a deal on, sets up the marketplace, placing the Cannabis Regulatory Commission in charge of it. The legislation also addresses tax rates, which were a key sticking point early on.

The bills set up a sliding scale of a per-ounce tax rate on cultivators. If an ounce of cannabis costs $350 or more, the tax is just $10 per ounce. But if the price per ounce falls to below $200, then the tax climbs to $60 an ounce, with two additional steps between those two levels.

The state’s sales tax of 6.625% also applies.

» READ MORE: U.S. House votes to decriminalize marijuana at the federal level

Both measures are pending in the Legislature. The state Senate passed the legislation decriminalizing marijuana, but it was tripped up by a last-minute amendment.

The issue had to do with psilocybin mushrooms. The drugs known as psychedelic or magic mushrooms were added to the Senate’s version of the bill shortly before it passed, with a bipartisan majority. The measure, introduced by State Sen. Nick Scuatari (D., Linden), downgraded possession from a third-degree crime to a disorderly persons offense.

That language gave Assembly lawmakers pause.

The bill setting up the adult-use marketplace snagged on whether to limit the number of licenses the state authorizes for businesses that want to get into the marijuana trade. Currently, 12 cultivators have state permits allowing them to grow marijuana. That number must rise to meet foreseen demand.

The Assembly — where at least one member has an ownership stake in a current marijuana grow -- favors limiting cultivator licenses to 37. The Senate is opposed to any such limits, arguing they could stunt supply and consequently fail to put the marijuana black market out of business.

The Senate is also proposing that the proceeds from the per-ounce tax be entirely used in towns and cities whose residents were disproportionately affected by marijuana-related arrests, while the Assembly is not.

» READ MORE: Bill to decriminalize marijuana in N.J. passes in committee — and is amended to include hallucinogenic mushrooms

Lawmakers say they’re working behind the scenes on the measures. Their last chance to vote on them before the amendment goes into effect comes just before the winter holiday break.

Anticipating the legislation, state Attorney General Gurbir Grewal directed prosecutors to use their discretion and not pursue a number of marijuana possession charges until Jan. 25.

“Fairness demands that we suspend prosecution of marijuana possession-related cases while we await direction from the Legislature,” Grewal said in a statement.

Inquirer staff writer Sam Wood contributed to this report.