LAO Report Reviews Governor’s Cannabis Proposals
Governor Newsom has released a number of cannabis related proposals as part of his 2020-21 budget package including changing how cannabis taxes are collected in California and consolidating cannabis licensing functions into a new State Department. Last week, the Legislative Analyst’s Office (LAO) released a brief analysis of these proposals and were generally supportive of both concepts.
Their recommendation included agreeing with the Governor’s proposal to modify California’s cannabis tax structure to simplify how taxes are remitted to the State as well as which entity is responsible for remitting those amounts. The LAO also recommended the Legislature consider broader changes to California’s cannabis tax structure and rates including replacing the state’s existing cannabis taxes (retail excise and cultivation) with a tax designed to reduce harmful cannabis such as a potency tax or a tiered ad valorem tax (set as a percentage of price with different rates based on potency and/or product type).
Furthermore, the LAO agreed that consolidating all three state licensing agencies (currently the Bureau of Cannabis Control, the Department of Food & Agriculture, and the California Department of Public Health) was a reasonable proposal and would allow for a single statewide entity housing both cannabis-related licensing and enforcement functions that could improve the accountability and effectiveness of the State’s cannabis activities. On a final note, the LAO also recommended the Legislature use its oversight role for how Cannabis Tax Fund revenues are generally spent and to delineate clear outcomes for how these funds should be used (such as those allocated to Go-Biz for the Community Reinvestment grant program and the Youth Education Prevention, Early Intervention, and Treatment account programs among others).