California Hands Out $28.5 Million In Community Reinvestment Grants From Cannabis Tax Revenue

Gov. Gavin Newsom’s administration announced the grants would go to communities harmed by marijuana enforcement.

California state leaders are making good on a commitment included in the state’s 2016 law legalizing recreational marijuana by investing $28.5 million in cannabis tax revenue to communities most impacted by the War on Drugs.

Gov. Gavin Newsom’s office (D) announced on Sept. 25 that 69 grants had been awarded to local health departments and qualified community-based nonprofit organizations that serve communities disproportionately affected by the War on Drugs.

“We have a moral responsibility to address the War on Drugs’ multi-generational impacts that have marginalized communities throughout our state,” stated Newsom in a press release. “Programs like CalCRG exemplify California’s commitment to this responsibility, and it ensures our cannabis marketplace remains rooted in social justice.”

The California Community Reinvestment Grants Program, or CalCRG Program, was outlined in Proposition 64, the recreational cannabis law approved by California voters on Nov. 8, 2016.

According to Newsom’s office, the organizations awarded the community reinvestment grants have established programs in the following activities:

  • Work placement
  • Treatment for mental health
  • Treatment for substance use disorder
  • System navigation aid
  • Legal services to navigate barriers to reentry
  • Connections to medical care services

Future Funding from California Cannabis Sales

California represents the largest cannabis market in the world. Nicole Elliott, Gov. Newsom’s Senior Advisor on Cannabis, stated that the state intends to make sure that the people who were most negatively impacted by former marijuana laws reap the benefits of legalization.

“Out of decades of misguided drug policies, California is now building a cannabis regulatory framework that literally invests in social justice,” Elliot explained. “As we continue to build our legal cannabis marketplace, one of this Administration’s priorities is ensuring that revenues generated from the legal market are redistributed to those communities that have borne the brunt of being over-policed and under-resourced.”

According to California law, future funding for the grant program is contingent upon the cannabis industry generating enough tax proceeds. California law also states that at least 50 percent of the grant funding will be distributed to qualified community-based nonprofit organizations.

The future funding schedule is:

  • $30 million in fiscal year 2020-21 (July 1, 2020 – June 30, 2021)
  • $40 million in fiscal year 2021-22 (July 1, 2021 – June 30, 2022)
  • $50 million in fiscal year 2022-23 (July 1, 2022 – June 30, 2023) and each year thereafter.

California Marijuana Industry

After voters approved Prop. 64 in Nov. of 2016, California lawmakers took a year to get ready for the official launch of legalized recreational cannabis on the first day of 2018. Early market reports estimated a big launch, but cannabis sales started off slow and fell below expectations. However rocky the start, tax revenue generated from the legal recreational cannabis sales were significant.

An Arcview market data report found that cannabis tax revenue totaled just over $345 million, with $182 million coming from cannabis-specific excise taxes and $36 million from cultivation taxes. Tax revenue from one year of commercial sales ended up being more than three times higher than the state had collected in the 23 years of annual medical marijuana taxes.

The cannabis market is expected to continue to climb in the next several years. California’s legal cannabis market is on track to hit $3.1 billion by the end of 2019.

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