Overview

• The excise tax increase took effect on July 1 under a 2022 agreement that paused cultivation levies while scheduling higher excise rates
• Assembly Bill 564 passed the Assembly unanimously in May and now awaits Senate consideration to restore the rate to 15% through June 2031
• Governor Gavin Newsom has publicly committed to signing the rollback measure immediately upon its passage in the Senate
• Legal sales fell to $1.09 billion in the first quarter of 2025, a 30% drop from early 2021 and a five-year low, as unlicensed sellers now supply more than 60% of cannabis consumed in California
• State budget analysts estimate the 19% rate could generate about $180 million annually for child care, environmental cleanup and prevention programs and warn that freezing the hike would widen the fiscal gap