Inside Governor Gavin Newsom’s budget proposal released January 10 are a few proposals that would affect the cannabis industry’s regulation and taxation structure.

With the aim of simplifying the regulatory burden those who enter the legal cannabis industry in California find themselves under, the Administration plans to consolidate the three licensing entities that are currently housed at — the Bureau of Cannabis Control, the Department of Food and Agriculture, and the Department of Public Health — into a single Department of Cannabis Control by July 2021. The hope is that a standalone department will help build a more successful legal cannabis market.

Proposed changes in Newsom’s budget intend to the move the responsibility for the cultivation excise tax from the final distributor to the first, and for the retail excise tax from the distributor to the retailer. Moving the incidence of this tax to the retailer will eliminate CDTFA’s requirement to estimate product mark-up and set wholesale tax rates. The proposed changes would simplify the tax collection burden. The Administration plans to release more detail later in the year.

Newsom’s Administration, in consultation with the industry and stakeholders, says it will consider other changes to the existing cannabis tax structure, including the number of taxes and tax rates to simplify the system and to support a stronger, safer legal cannabis market.