California Gov. Gavin Newsom’s administration on Friday announced plans to simplify the state’s cannabis regulatory and tax systems, which have been blamed for enabling an illicit market to continue to thrive.
The proposed changes, which will be in Newsom’s state budget proposal, come in the wake of recommendations by an independent agency that the state overhaul its cannabis tax regime.
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His administration also proposed changes designed to reduce the tax-collection burden on the cannabis industry and simplify the tax-collection process.Newsom’s plan include consolidating the current three licensing entities – the Bureau of Cannabis Control, the Department of Food and Agriculture, and the Department of Public Health – into a single Department of Cannabis Control by July 2021.
Those changes would include moving the responsibility for the cultivation excise tax from the final distributor to the first and the retail excise tax from the distributor to the retailer.
Newsom’s administration said that, in consultation with the industry and stakeholders, it also will consider changes to the existing cannabis tax rates and the number of taxes.
The United Cannabis Business Association (UCBA) praised the move.
“Since legalization, the California cannabis industry and its consumers have struggled to navigate an increasingly complex regulatory landscape – a situation that contributed to the growth of the illicit market and the current accessibility of untested products, as well as an increased cost of compliance to license holders,” the UCBA said.
“Today’s announcement from the governor marks a turning of the tide, and we are encouraged by the efforts outlined to streamline the industry’s regulatory framework and simplify licensing and taxation.”