Gov. Brown's Budget Includes $52.2 Million for Marijuana Regulation Under New System

By: Patrick McGreevy

As California prepares for issuing licenses to sell marijuana for recreational use later this year, Gov. Jerry Brown’s budget includes $52.2 million for regulation of cannabis.

Voters approved the recreational use and sale of pot to non-medical customers in November, and Brown’s budget proposes merging that regulatory system with one approved by the Legislature in 2015 for medical marijuana.

“Implementing the current medical and recreational cannabis statutes separately will result in duplicative costs of an additional $25 million for a second track and trace system,” Brown’s budget says. "Additionally, a separate regulatory framework for each would lead to confusion among licensees and regulatory agencies, undermining consumer protection and public safety.”

Because cannabis sales licenses may not be issued until just before the end of this year, the 15% tax on retail sales is not going to be imposed until then, so the state has had to lend some money to the agency drafting regulations. That loan is expected to be paid back next year, Brown said.

One marijuana industry leader said the governor’s budget does not provide enough money.

"While it's positive to see the governor's budget allocate $52 million towards marijuana regulation, there is a lot of work to be done if the state truly intends to transform a multibillion-dollar black market into a highly regulated industry,” saidAaron Herzberg, a partner and general counsel for the firm CalCann Holdings. “It’s going to take a lot more than $52 million to tame California's highly unregulated free-for-all."