In January, Newsom projected that the state’s cannabis excise tax would generate $479 million in revenue this year and $590 million in the fiscal year starting July 1, the news outlet reported, but according to his revised budget, he is predicting $443 million this year and $435 million next year as the state’s economy faces a recession due to the pandemic.
In an attempt to aid businesses suffering from the coronavirus’s economic fallout, Newsom signed a 90-day sales tax extension into law that gives small business owners until late July to file and pay their first quarter sales taxes. In addition, small businesses may keep up to $50,000 of their sales tax payments for a year, effectively using the cash as a no-interest bridge loan. Although federal economic relief efforts have not been available to the state-legal U.S. cannabis industry, California’s cannabis businesses are eligible for both the sales tax extension and the bridge loan.
In addition, the state’s three cannabis licensing authorities announced last month that businesses with licenses expiring in May and June may request a 60-day deferral of their licensing fee payments in an effort to provide additional financial assistance to cannabis businesses that have been impacted by the pandemic.
Although California has started reopening many aspects of the state’s economy, Newsom’s budget proposal predicts that the cannabis industry will continue to struggle due to its “economically fragile consumer base, a persistent illicit market and the continuing challenge the industry faces in accessing traditional banking liquidity solutions,” Nicole Elliott, Newsom’s senior advisor on cannabis, told the Los Angeles Times.