Governor Newsom’s Latest Budget Proposal Would Eliminate the Cultivation Tax
May 13, 2022
By Lauren Mendelsohn
Today, California Governor Gavin Newsom released his proposed 2022-2023 Revised Budget and gave a press conference discussing his proposals. In terms of cannabis policy, which is addressed in the General Government and Statewide Issues chapter, Governor Newsom is proposing to set the cultivation tax rate at 0% effective July 1, 2022 and shift the point of collection and remittance of the excise tax from distribution to retail effective January 1, 2023.
The structure of the allocations from the Prop. 64 Cannabis Tax Fund would remain unchanged from the current fiscal year. However, the Governor is proposing to set a baseline allocation of $670 million dollars for youth education/intervention/treatment, environmental restoration, and state and local law enforcement programs (“Allocation 3 funding”) for three years, and to give the legislature authority to increase the excise tax rate through 2024-2025 if revenues available for Allocation 3 funding fall below this $670 million baseline.
Additionally, Governor Newsom has proposed a Local Jurisdiction Retail Access Grant Program to help local jurisdictions enact licensing frameworks for cannabis retail establishments to help consumers gain access to the legal market, which will help the regulated industry grow and compete against the unregulated marketplace. Funding, which would come from a one-time $20.5 million General Fund allocation, would go towards eligible jurisdictions based on population size, the number of permits issued, and availability of opportunities for equity businesses.
These changes are not a guarantee — the legislature would still need to adopt one or more laws to enact the Governor’s proposal. For more information, visit the Governor’s Budget website.
Stay tuned to our blog for further updates on the State budget and changes to California cannabis policy.
This information is provided as a public educational service and is not intended, nor should it be construed, as legal advice. For specific questions about California cannabis laws and regulations, contact the Law Offices of Omar Figueroa at info@omarfigueroa.com or 707-829-0215 to schedule a confidential legal consultation.