Governor Newsom signs legislation cutting taxes on cannabis, promoting the long-term success of the legal industry

SACRAMENTO - As California's legal cannabis market continues to mature, Governor Gavin Newsom today signed legislation, AB 564 (Haney), that eliminates a 25% tax increase on California's legal cannabis industry, building on the Administration's ongoing work to ensure the long-term success of the legal cannabis market.

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 Gavin Newsom

"California's cannabis economy can bring enormous benefits to our state, but only if our legal industry is given a fair chance to compete against the untaxed and unregulated illegal market," said Assemblymember Matt Haney (D-San Francisco). "AB 564 helps level the playing field. It protects California jobs, keeps small businesses open, and ensures that our legal cannabis market can grow and thrive the way voters intended."

California's regulated cannabis market is the largest in the world, fostering environmental stewardship, compliance-tested products, and fair labor practices, while driving economic growth and funding vital programs in education, public health, and environmental protection. AB 564 reverses a 25% tax increase on California's legal cannabis industry and sets the state's cannabis excise tax rate at 15% until 2028, allowing legal businesses to remain competitive and promoting the industry's long-term growth.

The Administration recently enacted measures to bolster long-term enforcement efforts against illegal operators by dedicating cannabis tax revenue to fund civil and criminal enforcement activities. This will reduce the burden on legal businesses while ensuring sustained actions against illegal operators. In addition, Board of State and Community Corrections (BSCC) grant eligibility has expanded to local jurisdictions, especially those allowing retail access, to further enhance and support local enforcement efforts against illegal cannabis activity.

A unified strategy across California

So far, the Unified Cannabis Enforcement Taskforce (UCETF), which was established in 2022 by Governor Newsom, has seized and destroyed over 317 tons, or over 635,303 pounds, of illegal cannabis worth an estimated retail value of $890 million through nearly 230 multiagency operations.

UCETF has enhanced collaboration and enforcement coordination between state, local, and federal partners. Partners on the task force include the Department of Cannabis Control, the Department of Pesticide Regulation, the Department of Toxic Substances Control, and the Department of Fish and Wildlife, among others.

To learn more about the legal California cannabis market, state licenses, and laws, visit cannabis.ca.gov.