As 2022 budget plans continue to roll out, California is the latest to put cannabis tax revenue toward strengthening cannabis regulations.
Gov. Gavin Newsom released his 2022-23 budget plan on Monday. It allocates $13.6 million from the Cannabis Tax Fund to the Department of Cannabis Control to continue tackling major goals, from licensing to the unregulated market.
This includes $6.1 million toward a multi-year consumer education and awareness campaign, because a “key tenant of the cannabis framework is consumer safety and awareness.”
“As the cannabis market continues to expand, and as illegal cannabis activity remains persistent, it is important that the public have access to information on how to identify licensed, legal operators and products,” the budget plan noted. “Further, it is also critical that consumers understand what products are safe, the benefits of purchasing from the legal market, and the potential public safety and health threats of purchasing from the illegal market.”
A total of $5.5 million has been allocated toward the creation of a unified licensing system to “continue simplifying and streamlining participation in the legal market and collect, analyze, and share licensing-related data to support the administration of cannabis requirements.”
And the remaining $2 million in funding is also allocated for a data warehouse to store the state’s regulated cannabis data.
“This investment will enable the Department to analyze and share licensing and compliance data with state partners and public stakeholders, help inform the development of policies related to the state’s regulatory framework, and support external decision making by stakeholders such as licensees and local governments,” the governor’s budget plan noted.
Proposition 64, the legalization measure that voters passed in 2016, stated that Cannabis Tax Fund priorities first go toward regulating the legal market, and then, as the budget plan put it, “research and activities related to the legalization of cannabis and the past effects of its criminalization.”. After that, remaining funds go to youth education, prevention, treatment, environmental protection, and public safety.
In this budget, an estimated $594.9 million will be put to these uses, which is $34.2 million less than the last budget. The breakdown: 60% ($356.9 million) will be allocated toward education, prevention, and treatment, 20% ($119 million) will go to “clean-up, remediation, and enforcement of environmental impacts created by illegal cannabis cultivation,” and 20% ($119 million) is allocated for public safety-related activities.
As has been the case for years, the top issue still weighing down the state’s legal industry is the state’s unwavering unregulated, unlicensed market. Today, the majority of localities aren’t licensing at all, and more than three-quarters of the state’s licensees are in the provisional state. Just last week, the Department of Cannabis Control awarded $100 million in grants to assist localities as they transition licensees from provisional to annual. And, the budget plan notes that Newsom’s administration “intends to further develop a grant program this spring that will aid local governments in, at a minimum, opening up legal retail access to consumers.
In the meantime, California’s cannabis industry has been pushing for lower taxes, in large part to help them compete with the unregulated market.
In December, more than two dozen cannabis industry members drafted a letter to Newsom calling for relief on taxes, and warning that the state’s legal industry “is collapsing.”
On this subject, the budget plan noted that “the Administration supports cannabis tax reform and plans to work with the Legislature to make modifications to California’s cannabis tax policy to help stabilize the market; better support California’s small licensed operators; and strengthen compliance with state law.”
