Where Is CA Cannabis Tax Revenue Going? Nobody Seems To Know Is The Answer

Mercury News reports

In January, Gov. Gavin Newsom’s budget forecast $355 million in revenues for fiscal year 2018-19, climbing to $515 million in 2019-20.

But the latest estimates, contained in the May 1 budget revision, scale back revenues much further: $288 million in 2018-19 and $359 million in 2019-20. This represents hefty cuts of 23 percent and 43 percent, respectively, from January’s forecast.

Where does the money go? Taxpayers say they’re frustrated.

“It’s not clear. There is no transparency,” said Concord’s Greg Kremenliev, 71, a retired insurance salesman and cannabis activist. “I couldn’t tell you how the first nickel gets spent.”

The state responds that its top priority, under the terms of the initiative, is paying the $28 million needed to regulate a long-illicit drug. The cost will soar to $44.5 million next year.

The second tier of funding goes to several promised grants, such as $10 million for cannabis social equity programs and $10 million for university research. But the rollout of those projects has been delayed, with no funds yet distributed.

There’s been nothing left to pay for the discretionary programs — last in line for funds – to prevent youth drug abuse, protect the environment and help law enforcement.

If all goes well, these programs are slated to get $198 million in funding next year.

“This is not the start that treatment people or prevention people wanted. But the market has got to straighten itself out,” said Harris.”Once it does that, and the market matures, there will be a ton of money for kids’ stuff.”

“This gives us time to plan for spending,” he said.

There are many reasons behind the lackluster figures.

Some critics blame the excessive taxes and regulations associated with running a cannabis business, saying it keeps the illegal pot market booming. Prop. 64 was supposed to generate as many as 6,000 cannabis shops in the first few years; so far, only 952 licenses have been issued. That means less tax revenue for both the state, counties and cities.

Many municipalities — such as Contra Costa, San Mateo and Santa Clara counties, along with a multitude of cities — have been reluctant to accept legal cannabis. These governments just levy a regular business tax from approved dispensaries in their cities.

Some permissive counties have delayed implementing a cannabis-specific tax. Alameda County hopes to get a tax on the ballot in 2020. San Francisco voters passed a tax last November, but it won’t start until 2021. A few cities that have approved cannabis sales are still getting their footing, and haven’t reported tax revenues.

 

Read full article at  https://www.mercurynews.com/2019/05/25/where-does-californias-cannabis-tax-money-go/

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Author: Sean Hocking
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