California Cannabis Excise Tax Freeze Good News for All of Us
As we have seen firsthand and you are probably aware, California's legal cannabis industry is facing significant challenges, including high taxes, regulatory burdens, and competition from the illicit market. Thankfully, in response, the California Assembly has unanimously passed Assembly Bill 564 (AB 564), aiming to freeze the cannabis excise tax at 15% and delay a scheduled increase to 19% until at least 2030.
The Impending Tax Hike
Under existing law, the cannabis excise tax was set to rise from 15% to 19% on July 1, 2025. This increase was intended to compensate for revenue lost from the elimination of the cultivation tax in 2022. However, industry stakeholders warned that the higher tax rate could further strain legal cannabis businesses already struggling to compete with untaxed, unregulated products from the illicit market. Assemblymember Matt Haney, who introduced AB 564, described the proposed tax hike as an "extinction event" for many legal operators.
AB 564: A Lifeline for Legal Cannabis
AB 564 seeks to maintain the current 15% excise tax rate through the 2030–31 fiscal year. The bill passed the Assembly with a unanimous 74-0 vote and now awaits consideration in the Senate. If enacted, it would delay the Department of Tax and Fee Administration's mandate to adjust the tax rate every two years, a process originally scheduled to begin in 2025.
Industry Support and Economic Context
The legal cannabis market in California has experienced a significant downturn, with taxable sales dropping to $1.088 billion in the first quarter of 2025—an 11% decrease from the same period in 2024 and the lowest in five years. Currently, only 38% of cannabis consumed in the state comes from licensed sources. Advocates argue that freezing the excise tax is crucial to prevent further erosion of the legal market and to support small businesses facing mounting pressures.
Looking Ahead
As AB 564 moves to the Senate, its potential enactment offers a reprieve for the legal cannabis industry. By maintaining the current tax rate, the bill aims to stabilize the market, support legal operators, and curb the growth of the illicit sector.The coming weeks will be critical in determining the future landscape of California's cannabis economy. We’re hopeful this trajectory will continue so we’ll be able to continue to offer you great products at terrific prices.
How You Can Help
You can take action HERE, targeted at the full legislature and the governor, asking them not to increase cannabis taxes in 2025. You can also write your own letter. Please feel free to use OUR LETTER to The Honorable John Laird of the California State Assembly and The Honorable Scott Weiner of the California State Senate as inspiration. You can reach out to your local state senator by calling or writing to them using the information below:
Northern California State Senators - Contact Information
Senator Mike McGuire
District 2 – North Coast
Areas Represented: Del Norte, Trinity, Humboldt, Mendocino, Lake, Marin, and Sonoma Counties
Capitol Office: 1021 O Street, Suite 8518, Sacramento, CA 95814
Capitol Phone: (916) 651-4002
District Offices:
- Eureka: (707) 445-6508
- Santa Rosa: (707) 576-2771
- San Rafael: (415) 479-6612
- Ukiah: (707) 468-8914
- Crescent City: (707) 464-1255
Contact Page: https://sd02.senate.ca.gov/contact
Senator Jesse Arreguín
District 7 – East Bay
Areas Represented: Parts of Alameda and Contra Costa Counties, including Berkeley and Oakland
Capitol Office: 1021 O Street, Room 6710, Sacramento, CA 95814
Capitol Phone: (916) 651-4007
District Offices:
- 1515 Clay Street, Suite 2202, Oakland, CA 94612 – (510) 286-1333
Contact Page: https://www.senate.ca.gov/senators
Senator Angelique Ashby
District 8 – Sacramento
Areas Represented: Sacramento region
Capitol Office: 1021 O Street, Suite 6520, Sacramento, CA 95814
Capitol Phone: (916) 651-4008
District Offices:
- 1020 N Street, Suite 570, Sacramento, CA 95814 – (916) 651-4008
Contact Page: https://www.senate.ca.gov/senators
Senator Josh Becker
District 13 – Peninsula
Areas Represented: Most of San Mateo County and part of Santa Clara County
Capitol Office: 1021 O Street, Suite 6520, Sacramento, CA 95814
Capitol Phone: (916) 651-4013
District Offices:
- 3525 Alameda de las Pulgas, Menlo Park, CA 94025 – (650) 233-2724
Contact Page: https://sd13.senate.ca.gov/
Senator John Laird
District 17 – Central Coast
Areas Represented: Santa Cruz, Monterey, San Benito, and parts of San Luis Obispo Counties
Capitol Office: 1021 O Street, Suite 8610, Sacramento, CA 95814
Capitol Phone: (916) 651-4017
District Offices:
- 701 Ocean Street, Room 318A, Santa Cruz, CA 95060 – (831) 425-0401
Contact Page: https://en.wikipedia.org/wiki/John_Laird_(American_politician)
Senator Dave Cortese
District 15 – San Jose
Areas Represented: Central and eastern Santa Clara County, including San Jose
Capitol Office: 1021 O Street, Suite 7530, Sacramento, CA 95814
Capitol Phone: (916) 651-4015
District Offices:
- 2105 S. Bascom Avenue, Suite 154, Campbell, CA 95008 – (408) 558-1295
Contact Page: https://en.wikipedia.org/wiki/California%27s_15th_senatorial_district
Senator Scott Wiener
District 11 – San Francisco
Areas Represented: San Francisco and parts of northern San Mateo County
Capitol Office: 1021 O Street, Suite 8620, Sacramento, CA 95814
Capitol Phone: (916) 651-4011
District Offices:
- 455 Golden Gate Avenue, Suite 14800, San Francisco, CA 94102 – (415) 557-1300
Contact Page: https://sd11.senate.ca.gov/contact