California Cannabis Industry Poised for Tax Relief as Bill Heads to governor
SACRAMENTO, CA – A bill to roll back a 25% tax increase on California’s legal cannabis industry is on its way to Governor Gavin Newsom after receiving overwhelming approval from the state legislature. Assembly Bill 564, authored by Assemblymember Matt Haney (D-San Francisco), passed the State Senate Wednesday with a 39-1 vote, following unanimous approval in the Assembly in june.
The legislation would reinstate the previous 15% tax rate through July 2028, reversing a tax hike implemented in July that supporters say has crippled the state’s legal cannabis market.Advocates argue the higher taxes, reaching as high as 45% in some areas, have made it difficult for legal businesses to compete with the illicit market, leading to declining sales compared to othre states with legal cannabis, such as Colorado and Michigan.
“If we want to support our cannabis industry that drives millions of visitors to California every year, adding more costs makes absolutely no sense,” Haney stated.
The bill’s passage is being hailed by industry groups as a crucial step toward stabilizing California’s cannabis sector, which was envisioned to generate enduring tax revenue for communities following the legalization of recreational cannabis with Proposition 64 in 2016.
“By stopping this misguided tax hike, the Legislature recognized that smart policy grows revenue by keeping the legal market viable,” said Amy O’Gorman Jenkins, executive director of the California Cannabis Operators Association. “Today’s result is exactly what Proposition 64 promised: patients and consumers accessing tested,regulated products while generating sustainable tax revenue for communities.”
