California Governor Gavin Newsom’s First Budget Estimates $514 Million in Cannabis Tax Revenue and Includes Millions in Enforcement

On Thursday, Gavin Newsom released his first budget as California’s Governor. The budget – totaled at $209 billion including special funds – estimates California’s cannabis excise tax will generate $514 million in revenues for 2019-20. This estimate is significantly lower than the $630 million anticipated in last year’s budget.

Governor Newsom’s budget includes $200 million for statewide enforcement, licensing and oversight over the industry. During the Q&A session, the Governor said that this budget allocation would support expedited licensing to ensure businesses are able to enter the legal market in a timely manner. In addition, the Governor stated that his Administration would be very engaged in cannabis-related policy, including policies that impact licensing at the local level.

The budget also includes $2.9 million in additional funds for California’s tax collection agency to increase tax compliance within the cannabis industry. This should come as welcomed news for licensed businesses that are struggling to compete against non-licensed and compliant entities.

Although the budget anticipates nearly half a billion in revenues, funding for Proposition 64 related programs is put on hold until the May Revise. The budget also acknowledges that the outstanding loan made by the state to establish California’s enforcement and oversight capabilities would be paid first in addition to funding the various programs required by the proposition.

In the coming weeks, the Legislature will review the Governor’s budget in greater detail.

The release of the Governor’s budget sets in motion the Legislature’s detailed review over the coming months. If you have questions related to the 2019-20 budget, or want to learn more about California’s budget process, please contact

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