This bill is part of the 2024 Cannabis Bills section of our ongoing update on California Cannabis Legislation – see the full California Cannabis Law Legislative Update which includes information on cannabis bills from other years.
SB 917 Budget Act of 2024.
This bill would make appropriations for the support of state government for the 2024–25 fiscal year.
This bill would declare that it is to take effect immediately as a Budget Bill.
(See related Assembly Bill 1812.)
Cannabis and the California Governor’s Proposed 2024-25 State Budget
The California Governor takes the lead in crafting the California state budget by proposing a spending plan for the state each January which is updated and revised in May. This generally guides the budget bill in the California Legislature. Lawmakers must pass the budget bill by June 15, 2024 (that deadline does not apply to budget-related bills).
Governor Gavin Newsom released his proposed 2024-25 California state budget on January 10, 2024. The January California Budget Proposal forecasts a budget shortfall estimated at $37.9 billion.
In the Governor’s May Revision to the Budget Proposal, that estimated budget gap was increased to $44.9 billion.
The Legislature passed an early action budget package in April that reduced the size of the budget shortfall by approximately $17.3 billion (Chapter 9, Statutes of 2024 (AB 106)). The May Revision to the Governor’s Budget proposes a variety of measures to close the remaining budget deficit of over $28 billion. For more on this, see the Initial Comments on the Governor’s May Revision by the California Legislative Analysts Office.
The California Legislative Analyst’s Office projects cannabis tax revenues of $649 million in 2023-24 with revenue allocations similar to the May Revision to the Governor’s Budget. The LAO projects cannabis tax revenues of $727 million for 2024-25.
The cannabis industry continues to be significantly affected by the California Budget. The 2021 Budget Act consolidated state cannabis-regulatory functions into a single Department of Cannabis Control within the Business, Consumer Services, and Housing Agency. The 2022 Budget Act included, among other items, statutory changes to reform cannabis taxes including suspension of the cannabis cultivation tax and moving responsibility for cannabis excise tax remittance from distribution to the point of sale. The 2023 Budget Act included $150 million from the General Fund to backfill an estimated decline in cannabis tax revenues and fund required allocations from the Cannabis Tax Fund.
As noted in the proposed Budget, the state continues to work to strengthen California’s legal cannabis market. Efforts to date include reform and simplification of the tax structure, fee relief to support entry into the legal market, investment in grant programs that foster equity, providing resources to cities and counties to expand pathways for local licensing and regulation of cannabis retailers, and assisting local governments to move licensees from provisional licensure to annual licenses.
The proposed Budget states that moving forward, the state will continue focusing on reforms that support and strengthen enforcement against the illegal market, and reinforce compliance, accountability, and stability within the legal market.
Pursuant to Proposition 64, Cannabis Tax Fund expenditures are prioritized for regulatory and administrative workload, followed by research and activities related to the legalization of cannabis and the past effects of its criminalization. Once these priorities have been met, the remaining funds are directed to youth education, prevention, early intervention, and treatment; environmental protection; and public safety-related activities (Allocation 3 programs).
The proposed Budget estimates $575 million will be available for Allocation 3 programs in 2024-25 including: (1) Education, prevention, and treatment of youth substance use disorders and school retention – 60 percent ($345 million); (2) Clean-up, remediation, and enforcement of environmental impacts created by illegal cannabis cultivation – 20 percent ($115 million); and (3) Public safety-related activities – 20 percent ($115 million).
Read more about California Cannabis Legislation – see the full California Cannabis Law Legislative Update.
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