California State Assembly Approves Bill Pausing Tax Hike on Legal Cannabis Retailers
California State Assembly Approves Bill Pausing Tax Hike on Legal Cannabis Retailers originally appeared on L.A. Mag.
The California State Assembly unanimously voted on Monday to halt a slated 25% tax increase on the cannabis industry from going into effect on July 1.In a 74-0 vote, the Assembly approved AB564 by Asm. Matt Haney (D-San Francisco). The bill would prevent the retail excise tax from increasing to 19% from its current 15%."If we continue to pile on more taxes and fees onto our struggling small cannabis businesses, California's cannabis culture is under serious threat of extinction," Haney said in a statement.According to SFGATE, taxable cannabis sales in California amounted to $1.088 billion in 2025's first quarter, the lowest in five years. The figure also represents an 11% drop compared to the same quarter in 2024, marking the largest decline in legal cannabis sales in state history.Retailers are responsible for paying the tax regardless of consumer sales. Haney attributes the steady growth of cannabis sales in other states, such as Colorado and Michigan, to lower taxes and fewer barriers for businesses and consumers.
"If we want to support our cannabis industry that drives millions of visitors to California every year, adding more costs makes absolutely no sense," said Haney."Nearly a decade after Californians overwhelmingly approved cannabis legalization, the industry is struggling under the crushing weight of a 15% excise tax,' said Caren Woodson, president of the California Cannabis Industry Association. 'Any increase, particularly a 25% increase, would not only be bad public policy, but devastating to operators already on the brink.'In 2016, voters passed Proposition 64 to legalize the possession, cultivation and sale of cannabis for recreational use with an initial retail excise tax of 15%.A 2022 law eliminated California's cultivation tax, making the excise tax adjustable to generate equivalent revenue. The new bill would eliminate the law's requirement to adjust the excise tax rate.AB564 will go to the State Senate for consideration.
This story was originally reported by L.A. Mag on Jun 4, 2025, where it first appeared.
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