California Cannabis Faces Another Tax Hike – Here’s How to Fight Back
California’s legal cannabis industry is already drowning under excessive taxation, and now the state is planning to increase the excise tax from 15% to as much as 19% starting July 1, 2025.
With total taxes reaching up to 38%, legal businesses are struggling to compete against the illicit market, while medical patients are being priced out of access. AB 564, introduced by Assemblymember Matt Haney and sponsored by Cal NORML, aims to block this harmful tax increase—but it needs support.
Cal NORML is leading the charge against over-taxation, organizing a Lobby Day on March 24, 2025, in Sacramento to make lawmakers hear the industry’s concerns. We at Beard Bros Media are grateful to Cal NORML for their tireless advocacy and for allowing us to republish this important article.
Read on to learn how you can take action and help protect California’s cannabis market.
Cal NORML has graciously allowed us to share their article with you below.
A bill sponsored by Cal NORML, AB 564 (Haney) has been introduced to block a pending excise tax increase on cannabis.
California is set to increase its excise tax on cannabis from 15% to as much as 19% starting on July 1, 2025, as part of a budget compromise made when the cannabis cultivation tax was removed via AB 195 (2022), in order to assure adequate funding for programs funded by cannabis taxes.
Cannabis is already heavily over-taxed relative to comparable products like beer, wine, and tobacco in California.
The excise tax on one average, noninfused cannabis pre-roll is $1.24. In contrast, the excise tax on one glass of wine is $.01; a glass of beer $.02, a shot of liquor $.05-.08, and a tobacco cigarette $.14. Adding in state and local taxes, cannabis products are taxed at a rate as high as 38%.
Any tax increase would negatively impact cannabis consumers and businesses in California.
The industry needs a tax decrease, not an increase. The industry is struggling to compete against overtaxation, the illicit market, resistance to local licensing, and the proliferation of hemp-derived products. Medical marijuana patients in particular are unable to meet their needs for cannabis products under current pricing.
Inactive licenses are climbing as California companies struggle to stay in business.
There are currently 7,100 inactive cultivation licenses, over 1,100 inactive distribution licenses, nearly 500 inactive delivery licenses and over 300 inactive retail licenses. According to the California Department of Cannabis Control, as of February 2025, 57% of California cities and counties do not allow any retail cannabis businesses, resulting in California having one of the lowest rates of retail stores per capita in the nation among states that support adult-use sales.
Recipients of Tier 3 cannabis tax funding for youth education and prevention programs have vociferously opposed any proposed tax reduction on cannabis, and have called for the cultivation tax to be reinstated. As of March 2024, Tier 3 programs had a surplus of $607 million ($260 in the law enforcement account, plus $260 million in the childcare account). Full accounting and evaluations of Tier 3 programs have been legislatively mandated, but have not been provided by the agencies receiving the funds.
Meanwhile over 100 signatures have been gathered on a letter to Gov. Newsom asking for medical marijuana patients to be exempted from taxation, something that has long been needed.
Cal NORML is gathering support for heading off a tax increase at our Lobby Day on Monday, March 24, 2025 in Sacramento. Join us and make your voice heard against a cannabis tax increase!
