New California gov earmarks more funds for cannabis regulations, enforcement

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In his first state budget, California Gov. Gavin Newsom recommended a sharp increase in spending for marijuana regulatory programs.

But it’s an open question whether additional funding will be enough to help steady the state’s cannabis economy.

The governor’s budget proposes setting aside more than $200 million for marijuana-related activities in the fiscal year that starts July 1.

That total would be more than a 50% boost from the current budget.

California’s top marijuana regulator, Lori Ajax, has said the state intends to get more businesses licensed and operating in 2019, while cracking down on rogue operators who continue to proliferate statewide.

Up to 80% of California’s cannabis sales remained under the table at the end of 2018, according to some estimates.

Newsom, an advocate for legalized marijuana, said it has long been expected the new market would take five to seven years to settle in.

The issues he intends to look at include the distribution pipeline and claims that local governments are gouging marijuana businesses.

The state will “move expeditiously at licensing more and more dispensaries, making sure we go after the bad actors,” Newsom said.

The budget also projects the state will bank $355 million in marijuana excise taxes by the end of June. That’s roughly half of what was once expected after broad legal sales kicked off last year.

Industry experts say the tax income is proof that most consumers are continuing to purchase marijuana from the black market, where they avoid taxes that are nearly 50% in some communities.

– Associated Press