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Governor Newsom Releases Proposed 2021-2022 Budget; Would Consolidate Existing Licensing Agencies & Create New Department of Cannabis Control

January 8, 2021

Today, California Governor Gavin Newsom released his proposed 2021-2022 state budget, as well as the summary of his proposed 2021-2022 budget, which include information about the proposed consolidation of the state’s existing cannabis licensing agencies into a new agency, the Department of Cannabis Control.

According to the Governor’s Office, having a single point of contact rather than needing to interact with multiple agencies who may have differing regulations will help with efficiency, transparency, and enforcement. This idea was originally proposed in January 2020, but due to the COVID-19 crisis, action on this was postponed last year.

The Governor’s proposed 2021-2022 budget reveals the following details:

  • California’s cannabis licensing agencies — the Bureau of Cannabis Control, the CalCannabis Licensing Branch of the Department of Food & Agriculture, and the Manufactured Cannabis Safety Branch of the Department of Public Health — would be consolidated into a single “Department of Cannabis Control” which would be housed under the Business, Consumer Services, and Housing Agency. (This is the same agency that oversees the Department of Consumer Affairs, the Department of Alcoholic Beverage Control, the Department of Financial Protection and Innovation, the Department of Fair Employment and Housing, and other state boards and departments.) 
  • If approved by the legislature, consolidation of the cannabis licensing agencies would occur on July 1, 2021. The Governor’s proposed budget contains a Cannabis Control Fund of $153.8 million to cover the costs of consolidation.
  • The Department of Cannabis Control would have 621 positions. 590 of these would be existing positions transferred from other agencies, and 23 of them would be newly-created positions. Most of the new positions would be related to executive management structure, consistent with other state departments. Two new positions would be created to process requests from accountants and financial institutions who work with cannabis businesses and seek license-related information (such as track-and-trace data) from the state, which will help those institutions comply with due diligence reporting requirements and should increase banking access for licensees. 
  • 119 of the positions at the Department of Cannabis Control, as well as $29 million of the funding required for the new department, would be transferred from the Department of Public Health’s existing allocations to support the consolidation of resources into the new department.
  • Statutory changes would be implemented to establish permanent funding authority from the Cannabis Tax Fund for the local equity grant program administered by GO-Biz, thereby providing permanent support so GO-Biz can continue and expand their work facilitating greater equity in cannabis business ownership and employment. Specifically, the amount allocated towards this in the Governor’s 2021-2022 proposed budget is $15.5 million.
  • The Equity-Local Liaison Unit, which currently exists within the Bureau of Cannabis Control but not within the Department of Public Health or the Department of Food & Agriculture, would be expanded to provide services to equity applicants and licensees across license types.
  • The structure of the allocations from the Cannabis Tax Fund would remain unchanged from 2020-2021, though the amount of funds allocated to each purpose (youth education, prevention, early intervention, and treatment; environmental protection; and public safety-related activities) would increase by a total of $146.2 million compared to last year. 
  • Cannabis excise and cultivation tax rates would not be increased or decreased this year.
  • The Cannabis Appellations Program would remain under the control of the Department of Food & Agriculture. The O-Cal Comparable-to-Organic program for cannabis would remain under the authority of the Department of Food & Agriculture and the Department of Public Health. Both programs are expected to roll out this year.

For more information, visit the Governor’s budget website, or check out the detailed Business, Consumer Services, and Housing proposed budget which includes the specific Department of Cannabis Control proposed budget.

This is a developing story; stay tuned to our blog for further updates.

 

This information is provided as a public educational service and is not intended as legal advice. For specific questions regarding cannabis laws and regulations in California, contact the Law Offices of Omar Figueroa at 707-829-0215 or info@omarfigueroa.com.

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