California lawmakers have sent a bill to Governor Gavin Newsom's desk that would reverse a 25% tax hike on the cannabis industry, bringing the rate back to 15% until 2028. The tax hike was caused by a previous law that adjusted the tax rate when cannabis revenues fell. California operators face some of the highest cannabis tax rates in the country, and retailers reported an 11% drop in sales in the first quarter of 2025.

California Lawmakers Pass Bill to Undo Cannabis Industry Tax Hike

Sep 12, 2025

Graham Abbott

Ganjapreneur

California lawmakers have sent a bill to reverse a recent 25% tax hike on
the California cannabis industry to Gov. Gavin Newsom’s (D) desk, CBS News
reports.

Proposed by Asm. Matt Haney, a San Francisco Democrat, Assembly Bill 564
would reverse a nearly 25% cannabis industry tax hike that took effect on
July 1. The proposal advanced from the Assembly in June with unanimous
support, and was approved on Wednesday by the state Senate in a 39-1 vote.

The bill would reverse the tax hike and maintain the previous rate of 15%
until 2028.

“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, in a statement

The tax hike itself was caused by a previous law that removed a cannabis
cultivation tax but included automatic adjustments to the industry’s tax
rate if cannabis revenues start to fall, which they have.

California operators face some of the highest cannabis tax rates in the
country, with taxes reaching up to 45% depending on the region.

Meanwhile, California retailers reported a historic 11% drop in cannabis
sales during the first quarter of 2025.