California Lawmakers Consider Budget Trailer Bill to Eliminate Cannabis Cultivation Tax
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California Lawmakers Consider Budget Trailer Bill to Eliminate Cannabis Cultivation Tax

The proposal would also shift the 15% excise tax from distributors to retailers.

June 28, 2022

High taxes have long burdened California’s legal cannabis operators, and Gov. Gavin Newsom and state lawmakers are considering legislative relief for the industry through the Democratic governor’s budget proposal, as well as a new budget trailer bill that the Legislature will vote on later this summer.

The budget trailer bill would eliminate the cannabis cultivation tax paid by licensed growers and would shift the 15% excise tax from distributors to retailers, according to The Sacramento Bee.

The excise tax would remain at 15% for at least three years under the proposal, the news outlet reported. At that time, the California Department of Tax and Fee Administration, in collaboration with the Department of Finance and the Department of Cannabis Control, would have the authority to increase the excise tax to “capture revenues equivalent to the cultivation tax,” according to The Sacramento Bee.

The tax cut will not impact the youth services and childcare programs that receive funding from cannabis tax revenue, the news outlet reported. Instead, the proposal establishes a baseline of funding at $670 million and allocates $150 million in general fund dollars to make up for any loss in revenue.

The budget trailer bill also includes “additional enforcement tools against the illicit cannabis market,” as well as worker protections that cover the enforcement of labor peace agreements, according to The Sacramento Bee.