Newsom Revises California's Budget, Expects Millions Less In Cannabis Tax Revenue
Sales across California's legal cannabis market will suffer due to coronavirus pandemic and the subsequent economic downturn.
That's according to Gov. Gavin Newsom, who recently revised his proposed budget to illustrate the effects of Covid-19 on California's marijuana industry.
Back in January, before the number of reported coronavirus had spiked, Newsom projected that the state’s cannabis excise tax would bring in $479 million this year and $590 million in the fiscal year starting July 1.
The revised budget now expects $443 million this year and a decline to $435 million in 2021.
“While similar products like alcohol and tobacco tend to be recession-resistant, the forecast assumes that cannabis businesses will be more negatively impacted by the COVID-19 pandemic,” the budget says. “Cannabis businesses have less access to banking services that could provide liquidity, have a younger consumer base likely to be disproportionately affected by the COVID-19 recession, and still must contend with competition from the black market.”
Some of the measures Newsom put in place to help California’s legal pot industry include deferred license renewal fees and an extension of the deadline for filing first-quarter tax returns.
Californian consumers are also expected to have less disposable income and, as a result, seek cheaper products from the illicit market.
California faces a projected $54.3 billion deficit brought on by the coronavirus pandemic, according to The Sacramento Bee. Newsom’s budget cites $14 billion in cuts — unless Congress sends federal aid money by July 1.
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