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3h ago

Newsom Signs AB 564 to Reverse Cannabis Tax Hike, Lock Excise at 15% Through 2028

Analysts warn the tax relief could leave roughly $200–$250 million less for programs funded by cannabis revenue.

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Faith Ornelas of Oxnard shops at The Artist Tree cannabis dispensary in Oxnard on July 3.
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Overview

  • The new law cancels July’s increase that pushed the state excise rate to 19% and restores it to 15%, with the change taking effect by Oct. 1, 2025.
  • Lawmakers approved the measure by wide margins, 74–0 in the Assembly and 39–1 in the Senate, with Gov. Gavin Newsom signing it on Sept. 22.
  • The administration highlights stepped-up enforcement against illegal operators, citing UCETF operations that seized more than 317 tons of illicit cannabis valued at about $890 million and expanded local grant eligibility.
  • Supporters say the rollback is meant to help licensed sellers compete with untaxed illegal sales and protect jobs in a market facing declining legal sales and thousands of inactive licenses.
  • Youth and public health advocates criticize the cut, saying reduced cannabis-tax receipts will strain funding for childcare, prevention and environmental programs unless backfilled by the state’s general fund.