California State Assembly Nixes 25% Tax Hike
June 10, 2025The California State Assembly has given reprieve to the state’s struggling cannabis industry, with lawmakers unanimously shooting down a proposed 25% tax hike on cannabis via Assembly Bill AB564. The bill blocks the July 1st implementation of the excise tax hike (from 15% to 19%) citing the declines in California’s cannabis industry in the recent past. The bill, introduced by San Francisco Assemblyman Matt Haney, now heads to the state senate.
Haney’s office cited declining sales data and the potential for higher taxes to increase cannabis prices statewide. Rising prices are a particular concern for California’s cannabis industry, with the state struggling to snuff out the black market that offers consumers lower prices.
The bill comes amid a growing crisis in the California industry, with tax data released early this month showing that Q1 2025 cannabis sales were down 10% year-over-year to just under $1.1 billion.
California operators are facing similar price compression as cannabis businesses in other states like Michigan, but they also face higher regulatory fees and a vast, often unchecked black market. According to data from the state’s Office of Cannabis Control, less than 40% of consumed cannabis in 2024 came from licensed dispensaries.—Shane English
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