On Monday, Gov. Gavin Newsom signed a major tax cut on Monday, and California cannabis retailers breathe heavily.
California’s marijuana excise tax will be restored to 15% on October 1, under the San Francisco Congress’ approval of the General Assembly Act No. 564 written by Matt Haney.
Effective on July 1, which cancelled nearly 25% to 19%.
15% is excise tax for at least 2028.
“We are revoking this cannabis tax so that the legal market can continue to grow and consumers can use safe products, and our local communities see the benefits,” Newsom said in a statement Monday.
This is a welcome development for the state’s struggled legal industry.
But the combination of illegal market competition, oversupply and high taxes has squeezed operators, who have been begging for more dramatic cuts.
California cannabis tax cuts are after market contraction
In many jurisdictions, the total tax burden of California marijuana remains over 30%.
Even such tax cuts have angered public health advocates skeptical of the cannabis industry’s challenges.
In a statement, Lynn Silver, a physician and director of the Institute of Public Health, resisted a friendly reform of the Sacramento cannabis industry, calling the claims of the industrial struggle “false narrative.”
Silver said the news said: “There is a massive tax on the tax giveaways for marijuana that will permanently cut the benchmarks of legal guarantees for future parenting, youth drug prevention, environmental recovery and annual funding from law enforcement.”
California’s excise tax increased under the provisions of a previous agreement, which has eliminated the state’s farming tax.
The increase in excise tax is intended to offset any loss of income from the farming tax.
However, the overall tax burden is a suspect accusing the decline in legal marijuana sales.
Total legal sales in the first half of the year were $1.94 billion, down from $2.14 billion in the same period in 2024.
California’s marijuana tax remains the highest in the country.
