California Rolls Back Cannabis Tax Hike to Support Legal Market Growth
California's legal cannabis industry just got a much-needed boost with the passage of a new law aimed at easing financial pressure on licensed operators. The legislation reverses a recent cannabis tax hike that had been straining the already struggling market. Governor Gavin Newsom signed the measure last week, calling it a crucial step to keep the legal industry competitive against the state's thriving illegal market.
Why the Cannabis Tax Rollback Matters
Earlier this year, the state's cannabis tax rate jumped from 15% to 19%, a move that many business owners said pushed consumers toward cheaper, unregulated products. The increase came at a time when the legal market was already losing ground with the Department of Cannabis Control estimating that only about 40% of total cannabis consumption in California comes from licensed sources.
By rolling back the cannabis tax hike, lawmakers hope to make legal cannabis more affordable and accessible. "We're rolling back this cannabis tax hike so the legal market can continue to grow, consumers can access safe products, and our local communities see the benefits," Governor Newsom said after signing the bill.
Details of the New Cannabis Tax Law
Assembly Bill 564, introduced by Assemblymember Matt Haney (D–San Francisco), freezes the state's cannabis tax at 15% until 2028. The goal is to give the industry stability and breathing room to compete with the illicit market, which faces none of the regulatory costs or cannabis tax burdens that legal businesses shoulder.
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