US EditionNewsom Reduces Cannabis Tax in California to Compete with Illegal Market
The rollback to a 15% cannabis excise tax aims to help legal businesses compete with the black market, which accounted for 62% of sales in 2024, officials said.
- Governor Newsom approved AB 564 on Monday, reverts the cannabis excise tax to 15% and stays at that level until at least 2028.
- Driven by the July tax spike, legislators sought to cancel the 19% excise rate after the 25% tax increase, with a bill passing the Assembly but stalling in the Senate until this session.
- Tax data reveal that the cannabis excise tax generated nearly $260 million in the second quarter and pushed first-half 2025 revenue over $500 million, contributing to more than $7.3 billion since 2018.
- Supporters argued the change will benefit small businesses, as Haney said Monday, `It protects California jobs, keeps small businesses open, and ensures that our legal cannabis market can grow and thrive the way voters intended`.
- Despite the rollback, an industry report found the black market still held 62% of California cannabis sales in 2024, while taxable sales fell during the first quarter of 2025.
12 Articles
12 Articles
Newsom reduces cannabis tax in California to compete with illegal market
SAN FRANCISCO (KRON) -- Governor Gavin Newsom signed a bill Monday reducing California's cannabis tax from 19% to 15%, effective until 2028. The tax reduction aims to support the legal cannabis market by making regulated products more competitive against illegal sources. "It's over-regulated and over-taxed. Both of those things lead to higher prices for consumers," said Erich Pearson, CEO of Sparc, which operates seven dispensaries in the Bay Ar…
California cannabis sales generate $259.7 million in tax revenue
Cannabis tax collections total $7.3 billion since 2018 – The California Department of Tax and Fee Administration reported that cannabis sales generated $259.7 million in tax revenue for the second quarter of 2025. The total includes $147.3 million from the cannabis excise tax and $112.4 million from sales tax reported by cannabis businesses. The figures, reported as of Aug. 18, do not include outstanding or unprocessed returns. First-quarter 202…
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