Today, Governor Gavin Newsom released his 2021-22 budget two days before the January 10 constitutional deadline. The budget proposes three main items related to the cannabis industry.
1. Cannabis Department Consolidations and Funding
Last year, the Governor’s Budget proposed to consolidate the cannabis-regulatory functions in the Departments of Consumer Affairs (DCA), Food and Agriculture (CDFA), and Department of Public Health (CDPH) into a single Department of Cannabis Control. Click here for a brief review of the proposal.
Due to the COVID pandemic, the Governor shelved the idea for 2020. Barring any significant delays in the legislative review process in 2021, the consolidation of the three agencies into one is likely to be approved. This consolidation will improve the overall efficiency and effectiveness of the state in serving the cannabis industry.
The budget also provides funding to maintain limited-term funding and positions for the three departments as follows:
- $68.2 million for the Department of Consumer Affairs, Bureau of Cannabis Control
- $20.3 million for the Department of Public Health
- $42.4 million for the Department of Food and Agriculture
This funding will allow all three departments to continue licensing and enforcement activities as the Legislature and Administration work through the consolidation proposal in the coming months.
Click here to read the full budget summary (the cannabis section starts on page 111 of the document, page 115 of the PDF).
2. Enforcement and Oversight
The Budget includes $20.8 million ($20.3 million Cannabis Control Fund and $527,000 in reimbursements) in 2020-21 and $20.6 million ($20 million Cannabis Control Fund and $527,000 in reimbursements) in 2021-22 and ongoing to support 87 existing permanent positions and mandated activities of the Medicinal and Adult-Use Cannabis Regulation and Safety Act and to continue the Medical Marijuana Identification Card Program.
3. How the Cannabis Tax Fund Money is Spent in 2021
The Budget also allocates money from the Cannabis Tax Fund, which is used to support regulatory and administrative workload of the various state cannabis departments and programs; research on the effects of cannabis; youth education prevention; drug treatment; environmental protection and; public safety-related activities.
The Budget estimates that approximately $300 million will be available in 2021, including:
- Education, prevention, and treatment of youth substance use disorders and school retention—60 percent ($178.1 million).
- Clean-up, remediation, and enforcement of environmental impacts created by illegal cannabis cultivation—20 percent ($59.4 million).
- Public safety-related activities—20 percent ($59.4 million).
These figures reflect an increase of $86.1 million compared to the 2019-20 allocations.
Budget Timeline
With the Governor’s release, the Legislature will review in detail these proposals during subcommittee hearings most likely beginning in March and early April.
The May Revise, the Governor’s update to his January proposal is expected to be released in mid-May.
The Legislature has until June 15 to pass a budget to the Governor, and the Governor has until June 30 to sign.
The 2021-22 budget goes into effect on July 1, 2021.
If you have any questions about the budget process, please send your questions via email.