California Governor Gavin Newsom Signs Legislation to Bring Major Changes to Cannabis Regulations.

California Governor Gavin Newsom Signs Legislation to Bring Major Changes to Cannabis Regulations.

On June 30, Governor Gavin Newsom signed legislation implementing the 2022-23 state budget, including a trailer bill focused on cannabis policy. The legislation, which took effect immediately, brought sweeping changes to California’s marijuana regulations. It will significantly change how cannabis is regulated in California.

Here are some of the changes mentioned that come under this new law:

“Indefinitely suspend the cannabis cultivation tax effective July 1, 2022”: This is a significant win for California cultivators and industry members because the cannabis cultivation tax is no longer in effect. It will help them establish a solid foundation for future regulations allowing more people to participate in the industry without paying hundreds of thousands of dollars in taxes.

“Strengthen labor peace requirements”: This trailer bill focuses on implementing a new bargaining unit for cannabis workers. The bill will require that cannabis workers be employed through a collective bargaining process and paid in accordance with federal minimum wage standards.

“Move cannabis excise-tax collection and remittance to retail in 2023”: The bill, SB-945, moves cannabis excise-tax collection and remittance to retail in 2023. It also establishes one point of collection and remittance, greatly simplifying tax requirements for the entire cannabis supply chain.

“Retain the current 15-per cent excise tax rate until at least 2025”: The new law preserves the current 15-per cent excise tax rate until at least 2025 and thereafter increases the tax rate (no higher than 19 percent) as necessary to make up for cultivation-tax revenue.

“Allow eligible equity retailers to keep a percentage of the excise tax they collect”: Under the old regime, retailers were required to deposit all sales taxes into an escrow account, which is then distributed to the state at the end of each quarter. But, the new bill will allow these “equity licensees” — which can be either medical or adult-use retail stores — to keep a portion of their sales tax receipts as compensation for their efforts in implementing Proposition 64.

“Create new tax credits for equity licensees and some cannabis businesses with stronger labor standards”: The new law will create new tax credits for equity licensees and some cannabis businesses with stronger labor standards. The legislation also includes a number of consumer protections and an employee training requirement for all prospective cannabis business owners.

It is clear that this legislation is designed to help all stakeholders in California’s cannabis industry: consumers, medical patients, and small-time growers. This legislation will help lower the costs for all cannabis verticals, which many deem necessary in order to sustain licensed cannabis businesses, which are often faced with black market competition.