Good news for cannabis in Governor Newsom’s budget

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Good news for cannabis in Governor Newsom’s budget

Good Afternoon,

Yesterday, Governor Gavin Newsom signed legislation implementing the 2022-23 state budget, including a trailer bill focused on measures that will bring tax relief to the cannabis industry, support equity businesses, strengthen enforcement tools against illegal cannabis operators, and protect youth, environmental, and public safety programs funded by cannabis tax revenue. 

The cannabis tax reform trailer bill will:

  • Indefinitely suspend the cannabis cultivation tax effective July 1, 2022 
  • Move cannabis excise-tax collection and remittance to retail in 2023, establishing one point of collection and remittance and greatly simplifying tax requirements for the entire cannabis supply chain  
  • Retain the current 15-percent excise tax rate until at least 2025, and thereafter increase the tax rate (no higher than 19 percent) as necessary to make up for cultivation-tax revenue 
  • Allow eligible equity retailers to keep a percentage of the excise tax they collect 
  • Create new tax credits for equity licensees and some cannabis businesses with stronger labor standards    
  • Strengthen labor peace requirements   
  • Protect programs funded by cannabis taxes by allocating $150 million General Fund to backfill potential lost revenue 
  • Make illegal cannabis businesses liable for all unpaid tax and allow bad actors to be held personally liable for tax evasion  

Among many things, this bill invests millions of dollars into equity operators and retailers and expanding retail access, and contains reforms that will help stabilize the cannabis market, provide relief to farmers, incentivize stronger labor standards and crack down on the illegal market. You can access the bill language here.  

This historic budget also provides further economic relief to Californians, expanding healthcare, boosting small businesses, and pouring billions into public schools. 

DCC is grateful to Governor Newsom and the Legislature for their commitment to improve California’s cannabis policies and further support an equitable, safe, and sustainable cannabis industry in California. 
 

Thank you,  
Nicole Elliott
DCC Director