January Capitol Corner

Governor’s 2021-22 Proposed Budget


Governor Newsom’s fiscal year 2021-2022 budget proposal released Friday includes a proposal to consolidate the three state licensing authorities into a single Department of Cannabis Control. This proposal was first announced in January 2020 but was delayed due to the impacts of the COVID-19 pandemic. If approved by the Legislature, the new Department will be created on July 1, 2021.

In an effort to improve access to licensing and simplify and centralize regulatory oversight of commercial cannabis activity, the Governor's Budget proposes to consolidate licensing and associated regulatory functions into a single state Department. This proposal seeks to better serve stakeholders including cannabis businesses, local governments, and members of the public by acting as a single point of contact as well as leverage existing funding in a more efficient way by reducing redundancies. Further, it seeks to establish uniform operations and procedures that will streamline processes for applicants and licensees and offer better service and coordination.

The three state licensing authorities have begun to prepare and plan for the consolidation and, most importantly, to ensure continuity of operations.

Highlights of Budget Change Proposal

The budget change proposal establishes the Department of Cannabis Control (DCC) within the Business, Consumer Services and Housing Agency. This proposal creates the infrastructure for the new Department by moving existing positions and funding currently supporting the three state cannabis licensing authorities under DCC. The budget change proposal requests $153,834,000 in funding for fiscal year 2021-2022 and 621 positions.

Key objectives of the proposal include:

· Retention of existing expertise through the transfer of existing positions from the three state cannabis authorities to the new Department

· Encouraging continuity and stability during the transition through continued use of the licensing systems and California Cannabis Track-and-Trace System and through interagency agreements with existing departments for services while the Department is further developed.

· Continued development of an industry and outreach campaign to educate and encourage licensure and increase consumer awareness.

Under the proposal, the California Department of Food and Agriculture (CDFA) will retain the Cannabis Appellations Program. The OCal Programs, which will establish standards for cannabis comparable to the National Organic Program, will also be retained within CDFA and the California Department of Public Health (CDPH).


Legislation


The Legislature returned the first week of December to swear-in new members and begin introducing bills. The following are cannabis-related bills that have been introduced thus far:


AB 45 (Aguiar-Curry D) Industrial hemp products.

Summary: Would require a manufacturer of dietary supplements and food that includes industrial hemp to be able to demonstrate that all parts of the plant used come from a state or country that has an established and approved industrial hemp program, as defined, that inspects or regulates hemp under a food safety program or equivalent criteria to ensure safety for human or animal consumption and that the industrial hemp cultivator or grower is in good standing and compliance with the governing laws of the state or country of origin.

AB 109 (Cooper D) Medicinal and Adult-Use Cannabis Regulation and Safety Act.

Summary: The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), among other things, consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities. Existing law establishes in state government a Cannabis Control Appeals Panel that consists of 5 members, appointed as specified. This bill would make a nonsubstantive change to the provision establishing the Cannabis Control Appeals Panel.

SB 59 (Caballero D) Cannabis licenses.

Summary: MAUCRSA, until January 1, 2022, authorizes a licensing authority, in its sole discretion, to issue a provisional license if the applicant has submitted a completed license application to the licensing authority, including evidence that compliance with the California Environmental Quality Act (CEQA) or local cannabis ordinances is underway, if applicable, as specified. This bill would extend the repeal date of these provisional license provisions to July 1, 2028. By extending provisional licensure, the applications for which are required to be signed under penalty of perjury, the bill would expand the scope of the crime of perjury, and would thereby impose a state-mandated local program.


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