Cannabis Highlights From Governor Newsom’s State Budget Proposal

Governor Gavin Newsom unveiled a $222.2 billion budget proposal for 2020-21 on Friday – the second annual spending plan he has presented as governor and the largest in state history.

Newsom began a lengthy press conference by blasting what he calls a sort of “California Derangement Syndrome” that suggests the state’s best days are behind it. California has seen unprecedented growth, record surpluses, and low unemployment. These are records the state can be proud of.

The 2020 budget proposal represents a 2.3% increase over last year and reflects $153 billion in general fund spending. The reserve account would hit $18 billion by 2021. The governor’s proposal also calls for some big changes in the cannabis space.

First, the governor wants to create a new Department of Cannabis Control. It would take the cannabis-related responsibilities of the Bureau of Cannabis Control, the Department of Food and Agriculture, and the Department of Public Health and combine them under one agency.

Second, the governor wants to see changes to the tax system. These changes would “move the responsibility for the cultivation excise tax from the final distributor to the first, and for the retail excise tax from the distributor to the retailer.” The goal is simplification. As Marijuana Moment notes, “doing so would allow businesses to avoid a requirement to ‘estimate product mark-up and set wholesale tax rates’ and therefore simplify both the industry’s tax burden as well as the collection process.” 

Newsom said the state is projecting $550 million in cannabis revenue. $332 million of that will go toward social programs and education.

Newsom waved off assertions that California’s cannabis industry is in dire trouble, despite a warning from an independent panel of experts. It takes time to perfect a relatively new legal industry he said, but the state is moving in the right direction.

Read the full budget proposal here.  


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