As 2022 budget plans continue to roll out, California is the latest to earmark cannabis tax revenue to strengthen cannabis regulations.
Governor Gavin Newsom released his 2022-23 budget plan Monday. It allocates $13.6 million from the Cannabis Tax Fund to the Department of Cannabis Control to continue to address key objectives, from licensing to the unregulated market.
This includes $6.1 million for a multi-year consumer education and awareness campaign, as “one of the key elements of the cannabis framework is consumer safety and awareness.”
“As the cannabis market continues to grow and illegal cannabis activity persists, it is important that the public have access to information on how to identify legal and licensed operators and products,” the plan states. budgetary. “Furthermore, it is also essential that consumers understand which products are safe, the benefits of buying from the legal market, and the potential threats to safety and public health from buying from the illegal market.”
A total of $5.5 million has been allocated towards the creation of a unified licensing system to “continue to simplify and streamline participation in the legal marketplace and collect, analyze and share licensing-related data to support the administration of cannabis requirements”.
And the remaining $2 million in funding is also being allocated to a data warehouse to store state-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 policy development related to the regulatory framework of the state and to support external decision-making by stakeholders such as licensees and local governments,” the governor’s budget plan noted.
Proposition 64, the legalization measure passed by voters in 2016, stated that the priorities of the Cannabis Tax Fund were first to regulate the legal market and then, as the budget plan called for, “research and activities related to the legalization of cannabis and the past effects of its criminalization”. After that, the remaining funds go to youth education, prevention, treatment, environmental protection and public safety.
In this budget, an estimated $594.9 million will be spent on these uses, which is $34.2 million less than the last budget. The breakdown: 60% ($356.9 million) will be allocated to education, prevention and treatment, 20% ($119 million) will go to “cleaning, sanitation and environmental impacts created by the illegal cultivation of cannabis” and 20%% ($119 million) is allocated to activities related to public safety.
As has been the case for years, the biggest problem that still plagues the state’s legal industry is the unshakeable, unregulated and unlicensed state market. Today, the majority of localities grant no licenses, 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 help localities transition provisional to annual licensees. And, the budget plan notes that Newsom’s administration “intends to further develop a grant program this spring that will help local governments, at a minimum, open legal retail access to consumers.
Meanwhile, the California cannabis industry has been pushing to lower taxes, largely to help them compete in the unregulated market.
In December, more than two dozen members of the cannabis industry wrote a letter to Newsom calling for tax relief and warning that the state’s legal industry is “collapsing”.
In this regard, the budget plan noted that “the administration supports cannabis tax reform and plans to work with the legislature to make changes to California’s cannabis tax policy to help stabilize the market ; better support small licensed operators in California; and strengthen compliance with state law.