Budget hearing spotlights questions over cannabis licensing, social equity and revenue assumptions

Lawmakers used the Appropriations hearing to press the Department of Revenue for specifics on the administration's adult-use cannabis proposal, focusing on licensing priorities, projected fees and tax structure.

Representative Kinkade asked whether the governor's proposal designates licenses for social-equity applicants or prioritized categories for those from communities disproportionately affected by past drug enforcement. "There's nothing that's actually designated for those folks or no category created to ensure that those folks are actually prioritized," Kinkade said; Secretary Brown replied the administration believes the proposal accommodates equity elements but agreed to confirm "what you're talking about is accommodated."

On fees, members asked about a figure described in testimony as a $25,000,000 transition fee for existing medical operators that choose to convert to adult-use. Secretary Brown said the figure is part of the governor's proposal and was set based on projected business volumes and comparisons to other states. "It's the fact that we're talking about a whole new industry segment, that a $25,000,000 license fee for a dispensary...given the possible business that could come in to a dispensary and what we've seen in other states in terms of volume, it would be a reasonable amount," he said.

Revenue estimates in committee testimony treated the proposal as a 20% wholesale tax (in addition to a 6% retail sales tax) and included projected license fees. Members pressed whether the department can be ready to collect the new taxes and work with the Department of Agriculture (which would oversee aspects of production). Secretary Brown said the department plans to leverage the existing medical-marijuana tax collection platform and will make "every effort" to implement a functioning system if legislation passes in the current budget cycle; he noted the department could expand the medical platform rather than build from scratch.

Several representatives asked for draft statutory language and fiscal back-up; Secretary Brown said draft language is being finalized and will be provided to members when available. Lawmakers also highlighted concerns about banking and federal legal risks for marijuana businesses; the department agreed existing medical program solutions have been made to work but that broader access to financial services would be beneficial.

Next steps: The department will circulate draft language and additional fiscal details to the committee and staff as they become available ahead of budget negotiations.