Marijuana cultivation and excise tax collections hit $48 million between April and June, state officials announced Wednesday, a jump from the prior three months but well below the windfall envisioned by the state. Frederic J. Brown/AFP/Getty Images
Marijuana cultivation and excise tax collections hit $48 million between April and June, state officials announced Wednesday, a jump from the prior three months but well below the windfall envisioned by the state. (Frederic J. Brown/AFP/Getty Images)

More Pot Revenues May Start Flowing in California

More Pot Revenues May Start Flowing in California

When voters legalized recreational marijuana in California through Proposition 64, many expected a windfall of tax revenue. That hasn’t quite panned out yet, but some more money could start flowing into the state budget next fiscal year — and the wrangling over how to spend it is already beginning.

The new cannabis law offers some flexibility in how tax revenues can be used. First the state must pay for administering the law. Then the law sets aside money for cannabis research. Of the remaining amount, 60 percent must be designated for programs geared toward "Youth Education, Prevention, Early Intervention and Treatment." That leaves a lot of leeway for the governor and legislature. And that is where the horse-trading will come in.

Erin Gabel with First Five California, an independent state commission that promotes early childhood development, said there are a number of areas that could qualify for that funding.

"Early education, child care investments, prenatal care, and after school programs," she listed.

The state Department of Finance said it's likely funding for such programs will be available next year. And Gabel notes most align with Governor-elect Gavin Newsom’s policy priorities.

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"(Newsom) was very outspoken about the importance of investing in early prevention and investing in our youth," she said. "And based off of his very strong campaign positions on investing early around children and their families, (we anticipate) that we will see an echo of that in what he hopes to do with the Prop 64 fund."

But it’s not yet known how much money there will be to go around. Helen Kerstein is with the non-partisan Legislative Analyst's Office.

"This is a relatively new area of state regulation," Kerstein said. "And so it's unclear what the long term revenues are going to be," she said. "It's a very difficult thing to project into forecast because there isn't that revenue history for this program."

For instance, Kerstein said if revenues continue to grow at their current rate, they could total as much as $410 million for the 2018-2019 fiscal year. But that's still well below the $630 million the state had projected.

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