Newsom Signs Bill Reversing California Cannabis Tax Increase
The bill officially eliminated a 25% tax increase
California officially eliminated a 25% tax increase on the legal cannabis industry on Monday, with Gov. Gavin Newsom’s signature on Assembly Bill 564.
The bill passed on September 11 with a 39-1 vote in the State Senate, following its passage in the Assembly in June with a 74-0 vote.
AB 564, authored by Assemblymember Matt Haney (D-San Francisco), reverses an increase to the excise tax rate paid by consumers at dispensaries to 19%, and keeps the previous rate of 15% through July 2028. The tax rate was increased in 2022 after the state eliminated a cultivation tax placed on growers, who were getting squeezed as prices of wholesale cannabis dropped while the cultivation tax adjusted upward with inflation.
The added cost made legal cannabis more expensive than that found on the black market, undermining the state’s effort to transition users from illegal sources to the legal cannabis market.
“We’re rolling back this cannabis tax hike so the legal market can continue to grow, consumers can access safe products, and our local communities see the benefits,” said Newsom in a prepared statement.
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