Although most states designated the cannabis industry as essential and allowed businesses to keep operating despite the lockdown, the industry as a whole has suffered a variety of setbacks due to the coronavirus pandemic. A number of campaigns to legalize marijuana have been put on hold all over the country due to social distancing measures. In California, lawmakers have been forced to postpone systemic reforms to the California regulatory agencies that oversee the state’s marijuana industry.
When he announced his annual budget plan earlier this year, California Governor Gavin Newsom revealed that he wanted to; merge the trio of regulatory agencies, the Bureau of Cannabis Control, [BCC], the Department of Food and Agriculture and the Department of Public Health into a single Department of Cannabis Control [DCC] and streamline cannabis tax collections by July 2021. The BCC has oversight over retailers, delivery services, micro businesses, distributors, testing labs, cannabis events while the Department of Public Health regulates marijuana manufactures and the Department of Food and Agriculture oversees growers.
Cannabis businesses, especially vertically integrated firms with licenses from more than one agency, had been receiving conflicting messages from state authorities, and a single regulatory agency would mitigate that. The revamped tax collection, on the other hand, would have made tax collection easier for the state. However, due to complications stemming from the coronavirus, the plan will have to be put on hold until next year. According to the newly revised budget summary, Governor Newsom’s plans won’t happen until 2021 at the earliest.
The revised budget summary states that his administration was “in the process of developing a more detailed plan for the transition from three agencies to one. However, the process was interrupted by the COVID-19 pandemic, requiring a delay in the consolidation as planned.” It adds that Gov. Newsom’s administration remains committed to simplifying and improving cannabis tax administration through a proposal for inclusion in the budget next year. According to the summary, a consolidation plan will be included in the 2021-2022 budget.
Additionally, the revised budget summary stipulates that marijuana regulators will receive $143.8 in funding, with the BCC receiving $68.2 million, the Department of Public Health receiving $20.8million and the Department of Food and Agriculture receiving $54.8 million. The money will be used to fund ongoing licensing and enforcement by the three agencies and to “shift sworn investigators from the Department of Consumer Affairs [DCA] to the Bureau of Cannabis Control,” a wing of the DCA.
It isn’t clear what participants in the industry, such as Round Meadow Holdings Corp. and Sugarmade Inc. (OTCQB: SGMD), think about the implications of this delay on the operations of cannabis businesses in California.
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