The state of California is about to begin its biggest experiment ever with medical cannabis, spending a whopping $100 million to fund a program that is expected to cover hundreds of thousands of patients. The budget is a significant boost for the state’s medical marijuana industry, which is struggling to meet demand for the drug, despite California’s huge patient count and high-profile support for the drug.
California has invested $100 million into its struggling legal cannabis industry, according to The Sacramento Bee , who has reported on the newly announced state investment in a series of articles since the beginning of the year. In a press release from the Treasurer’s office on February 9th, the state announced that the state’s Department of Finance will invest $100 million in four cannabis start-up companies.
The new measure, proposed by Governor Gavin Newsom, was approved Monday by the California Legislature and is designed to help operators of legal cannabis obtain permanent licenses.
According to Newsom’s office, as of April 2021, about 82 percent of the legal operators in the state still have temporary licenses. These temporary permits expire on 1. January 2022.
Working with the bottleneck
Although adult-use cannabis was legalized in the Golden State in 2016, most growers, retailers and manufacturers have failed to make the transition from a temporary license to a permanent license that must be renewed annually.
That’s because of the high cost of company audits for environmental compliance, according to a Los Ageles Times report.
Los Angeles Mayor Eric Garcetti said the money is needed to support a well-regulated, fair and sustainable cannabis market.
Cannabis companies can use the grants to hire specialists to help them complete the environmental studies needed to move from a temporary to a permanent permit.
But some California businesses say the funds are insufficient to solve the systemic problem they are supposed to solve: the state’s longstanding inability to obtain annual permits for businesses.
Jerred Kiloh, president of the Los Angeles-based United Cannabis Business Association, said he would rather see the Newsom administration focus on reforming the licensing process itself rather than throwing money at an existing problem, reports MJBizDaily.
Kiloh noted that the $100 million will only be given to cities and counties that have already adopted legal cannabis programs, and that it will not change the minds of local governments that have banned marijuana businesses.
The initial funds will be allocated to 17 eligible cities and counties, with Los Angeles receiving 22% of that amount.
In addition, Governor Newsom is pushing for a six-month extension of the temporary permits, from January to June 2022, which has not yet been approved.
Meanwhile, California remains the largest cannabis industry in the world, with nearly $3 billion in sales in 2019 alone.