California is investing money in the legal cannabis industry

To prop up the state’s still struggling legal cannabis industry, California lawmakers approved new funding for marijuana companies on Monday.

The $ 100 million package “was proposed by Governor Gavin Newsom as a city and county grant to help cannabis companies transition from temporary to regular licenses,” according to the Los Angeles Times.

Los Angeles “will be the biggest beneficiary of the money,” the newspaper reported, which found the state’s largest city will receive $ 22 million. The grant “would help cities hire experts and staff to help companies complete environmental studies and transition licenses,” according to the Los Angeles Times.

In 2016, California voters approved Proposition 64, which legalized recreational pot consumption for adults 21 and older. But five years later, the regulated cannabis market is still far behind the illegal market, where marijuana is untaxed and often cheaper.

A 2019 report found that the illegal market in California was three times the size of the regulated one. To that end, Newsom offered a number of ideas in its budget proposal last month aimed at strengthening the state’s ailing legal cannabis industry.

The budget included the “$ 153.8 million Cannabis Control Fund to consolidate the functions and positions of the Bureau of Cannabis Control, the Department of Food and Agriculture, and the Department of Public Health into a new independent Department of Cannabis Control within the Business, Consumer Services and Housing Agency ”starting next month.

“This proposal aims to further the goals of legalization and regulation by creating a single point of contact for cannabis licensees, local governments and other stakeholders. With an emphasis on making licensing and compliance easier, more transparent and more efficient, this proposal aims to make it easier to participate in the legal market and to support the successful and safe operation of a cannabis company in accordance with state law, ”it says in the budget proposal.

The budget states that “centralizing the enforcement efforts of licensing programs will lead to more effective enforcement that will better protect public health, safety and the country, and make participation in the illegal cannabis industry more costly and inefficient”.

The $ 100 million grant approved by California lawmakers on Monday would “go to local agencies with the most tentative licenses to cultivate, manufacture, distribute, test and retail,” the Los Angeles Times reported, noting that some of the Fund “can be used by cities that offer equity financing to cannabis companies owned by colored people.”

The Times said the Newsom government is also pushing to give marijuana companies “a six-month extension beyond the 1st to delay promised environmental protection efforts.”

The extension was not included in the budget green by the legislature on Monday, but is still being negotiated. The Newsom administration argues that such an extension is critical to the industry.

“Without this extension, it is possible that a significant number of these licensees will fall out of the legal cannabis system, which will severely limit the state’s efforts to facilitate the transition to a legal and well-regulated market,” says the cited budget proposal from the Los Angeles Times.

A regulated cannabis market grappling with an illegal market is by no means unique to California – or the United States. It was similar in Canada, where recreational marijuana was legalized in 2018. In 2019, 12 months after legalization, sales of legal marijuana in Canada were approximately $ 1 billion, compared with sales of $ 5 to $ 7 billion in the illegal market.