Overview

• The law reverses a July 1 increase to 19% that was triggered by a 2022 framework enacted after the cultivation tax was eliminated.
• AB 564 passed with overwhelming support (Assembly 74-0; Senate 39-1) and fixes the retail excise rate at 15% until mid-2028.
• State and news estimates project a $200–$250 million annual shortfall for cannabis tax–funded programs that the general fund would need to cover.
• Officials highlight stepped-up enforcement and expanded local grant eligibility, with the Unified Cannabis Enforcement Taskforce reporting 317 tons seized in nearly 230 operations since 2022.
• Data show declining taxable sales, thousands of inactive or surrendered licenses, and combined state and local taxes that can exceed 35%, underscoring pressure on the regulated market.