California Marijuana Tax Hike Will Take Effect Next Week After Lawmakers Omit Provisions To Delay It From Budget Bill

A tax hike on marijuana products in California will take effect next week
after lawmakers failed to include provisions to delay its implementation in
key budget legislation on Wednesday.

State officials announced last month that the cannabis excise tax rate
would increase from 15 percent to 19 percent on July 1, and advocates were
holding out hope that the budget legislation would contain language similar
to a standalone proposal from Assemblymember Matt Haney (D) to delay the
change for five years.

That didn’t happen, however. And that’s despite Gov. Gavin Newsom’s (D)
support for including the tax freeze in the budget trailer bill, MJBizDaily
first reported. Assembly Speaker Robert Rivas (D) also backed the delay,
but Senate President Pro Tempore Mike McGuire (D) reportedly blocked it
from the budget legislation.

In a hearing before the Senate Budget and Fiscal Review Committee, Sen.
Christopher Cabaldon (D) said he wished lawmakers “had reached an agreement
on the cannabis tax increase.”

“I’m very concerned that this industry—that we’re going to see less revenue
as a result of the increase than we would have without it, as well as
severely hampering the legal industry and significantly advantaging the
illicit and illegal activities around our state,” he said. “So I hope we
remain committed to solving that issue. I know the tax increase is
scheduled to take effect next week, but that remains a problem.”

Under Haney’s still pending standalone bill, which advanced through the
Assembly earlier this month, the delayed implementation wouldn’t take
effect until the beginning of 2026. Advocates wanted to see it included in
the budget legislation because it would’ve taken effect upon enactment.

The standalone bill would make it so the California Department of Tax and
Fee Administration (CDTFA), working with the Department of Finance, would
be required to “adjust the cannabis excise tax rate upon purchasers of
cannabis or cannabis products” based on the “additional percentage of the
gross receipts of any retail sale by a cannabis retailer that the
department estimates will generate an amount of revenue equivalent to the
amount that would have been collected in the previous fiscal year,” the
text says.

The department would need to “estimate the amount of revenue that would
have been collected in the previous fiscal year pursuant to the
weight-based cultivation tax” and “estimate this amount by projecting the
revenue from weight-based cultivation taxes that would have been collected
in the previous calendar year based on information available to the
department.”

“The specific goal of the cannabis excise tax rate reduction is to provide
immediate tax relief to the cannabis industry,” the measure states. “The
efficacy of this goal may be measured by the Legislature by the amount of
gain or loss in cannabis excise tax revenues resulting from the cannabis
excise tax rate reduction allowed by this act.”

It also mandates that CDTFA, on or before December 1, 2026 and each
subsequent year the California “submit a report to the
Legislature…detailing the amount of gain or loss in cannabis excise tax
revenues resulting from the cannabis excise tax rate reduction allowed by
this act.”


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Meanwhile, California officials are inviting research proposals for a
second round of grants under a program meant to better educate the public
on the state’s marijuana law and help policymakers make informed decisions
on the issue.

Last month, the Governor’s Office of Business and Economic Development
(GO-Biz) announced the recipients of over $52 million in community
reinvestment grants to nonprofits and local health departments, also funded
by marijuana tax revenue.

That marked the seventh round of cannabis-funded California Community
Reinvestment Grants (CalCRG) under the state program.

Legalization in California has created a number of new grant programs aimed
at addressing the consequences of marijuana prohibition and attempting to
nurture a strong, well-regulated legal industry.

California’s Supreme Court separately delivered a victory for the state’s
marijuana program last month, rescinding a lower court ruling in a case
that suggested federal prohibition could be used locally to undermine the
cannabis market.

The state Supreme Court ruling also came just weeks after California
officials unveiled a report on the current status and future of the state’s
marijuana market—with independent analysts hired by regulators concluding
that the federal prohibition on cannabis that prevents interstate commerce
is meaningfully bolstering the illicit market.

The governor did sign a bill in 2022 that would have empowered him to enter
into interstate cannabis commerce agreements with other legal states, but
that power was incumbent upon federal guidance or an assessment from the
state attorney general that sanctioned such activity.

Meanwhile, a California Senate committee recently declined to advance a
bipartisan bill that would have created a psilocybin pilot program for
military veterans and former first responders.

New Michigan Bill Would Legalize Psilocybin For People With PTSD

The post California Marijuana Tax Hike Will Take Effect Next Week After
Lawmakers Omit Provisions To Delay It From Budget Bill appeared first on Marijuana
Moment.