CDFA asks Legislature to cover Prop 12 enforcement costs, proposes switching hemp oversight to USDA

Arma Cozena, deputy secretary for finance and administration at the California Department of Food and Agriculture, told the Senate Budget Subcommittee No. 4 that the May Revision includes funding to keep the state’s animal care program operating while legal uncertainty over fee authority persists. “The May revision includes a 1 time transfer of $5,200,000 general fund to the ag fund, and $2,800,000 general fund ongoing to implement the animal care program and comply with Proposition 12,” she said.

Cozena said a portion of the program was intended to be fee‑supported, but CDFA has held off setting fees “given multiple ongoing legal challenges, including from the federal government.” She said the one‑time transfer would repay a loan used to establish the program and sustain operations until a legally durable fee structure can be implemented.

The Legislative Analyst’s Office voiced support for the proposal but urged the Legislature to revisit the funding once federal litigation and any farm‑bill preemption questions are resolved. “Ongoing litigation challenging Prop 12 means that there is still legal uncertainty around the ability of the state to charge fees to fund this program,” LAO analyst Brian Metzger told the committee.

CDFA also proposed ending state oversight of the industrial hemp program and transitioning growers to the U.S. Department of Agriculture’s licensing authority. Cozena said the number of registered hemp growers has fallen from an expected 600–700 to roughly 70, making a state program financially unsustainable. She said the department seeks trailer bill language to end state oversight “beginning 01/01/2028” and requested an $8,300,000 General Fund transfer to the Agricultural Fund to cover start‑up deficits and operating costs during the transition.

LAO analysts recommended approving the transition and accompanying trailer language, noting repaying the Ag Fund reduces litigation risk and that a federal transition would lower state costs. Committee members pressed CDFA on timing and the potential effects of federal action; Cozena said she could not predict when litigation would be resolved and that CDFA will continue to implement Proposition 12 consistent with voter direction while evaluating equitable, legally durable fee options.

The subcommittee held the items open for further work and analysis.