California senators have approved a bill to pause a newly enacted marijuana tax hike for five years. The bill, AB 564, aims to provide tax relief to California's cannabis industry, which is struggling to compete with the illegal market. The tax increase, from 15 percent to 19 percent, officially took effect last week. Governor Gavin Newsom and Assembly Speaker Robert Rivas supported a tax freeze, but Senate President Pro Tempore Mike McGuire reportedly blocked it from the budget legislation due to concerns about budget shortfalls. Haney's bill would require the California Department of Tax and Fee Administration to adjust the cannabis excise tax rate to generate an equivalent amount of revenue as the previous fiscal year. California officials are also inviting research proposals for grants to educate the public on marijuana law and recently announced over $52 million in community reinvestment grants funded by marijuana tax revenue.

California Senate Approves Five-Year Pause on Cannabis Tax Hike

Jul 10, 2025

Source:

Kyle Jaeger

Marijuana Moment

California's legal cannabis market just got a much-needed breath of fresh air. State senators recently greenlit AB 564, a bill designed to halt a scheduled excise tax hike for the next five years. This move directly counters a recent jump from 15% to 19% that officially kicked in last week. While the freeze won't be immediate—it is expected to take effect in October—it represents a major win for advocates who argue the legal industry is being strangled by high costs while the illicit market thrives.

This development is a huge deal for everyday tokers because lower taxes for businesses usually mean more competitive pricing and better accessibility at the dispensary counter. High taxes have long been the "train wreck" of California's system, often pushing consumers back to unregulated sources. By giving legal operators a financial lifeline, the state is finally acknowledging that for the community to stay safe and supported, the legal market actually has to be affordable. It is a solid step toward making sure your favorite local shop can actually keep its doors open.

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