California governor wont stop July increase in marijuana excise tax

There’s some good news for California’s $4.6 billion marijuana industry in Gov.Gavin Newsom’s updated budget proposal released Wednesday.

However, while some might applaud the proposals for tougher action against illicit operators and no increase in licensing fees, it’s not the tax relief demanded by the beleaguered sector. ADVERTISEMENT Industry operators across California are dreading July 1, when the state excise tax is scheduled to increase from 15% to 19% under a recent tweak in state law.

Many industry observers hoped Newsom would propose delaying the tax increase – or even cutting it entirely.The revision released Wednesday does neither, however; it merely passes to state lawmakers the difficult task of cutting the excise tax in a budget-deficit year.

The tax crunch is not the only problem confronting the California marijuana industry and the state’s Department of Cannabis Control (DCC), however.Like many other government entities, the DCC is staring down a budget deficit.

Newsom’s May budget revision includes shifting marijuana tax money from the Cannabis Control Fund to the Cannabis Tax Fund – a seemingly wonky maneuver that nonetheless avoids any increase in existing marijuana business fees.Moving around the money the DCC uses to crack down on the state’s enormous illicit market means enforcement can continue “without imposing significant fee increases on existing licensees,” according to the budget document released Wednesday.

ADVERTISEMENT The budget proposal also includes some new enforcement powers.Similar to the Operation Padlock to Protect program credited with boosting the legal industry in New York state, the DCC would be granted the power “to seal an unlicensed premises when it is involved in illicit commercial cannabis activities,” according to Newsom’s budget document.

The budget proposal also seeks to encourage mor...