Partly blamed for strangling the legal industry

California ends cannabis cultivation tax

With Gov. Gavin Newsom’s signing of the $308 billion state budget Thursday evening, California’s beleaguered cannabis industry got long-sought tax relief.

Advocates of the business are hailing as a victory the elimination of the cultivation tax and a cap on the excise tax at 15% for three years. Instead, the burden will shift to the excise tax, which may increase for retailers come July 1, 2025 — the first day of the state’s annual fiscal budget for that year. Growers have felt the pinch over the last year or two of a market in turmoil. The wholesale price of a product in a massive supply has plummeted, while state taxes have gone up, and the illicit market has remained intact.

“I’m celebrating,” said Amy O’Gorman Jenkins, the California Cannabis Industry Association lobbyist who has worked on reform for four years. ”The Legislature seems to have grasped a lot of what’s affecting the cannabis industry. More work needs to be done, but I see this as a big win. To critics, I say this is a significant first step.”

Much of the language of the trailer bill came from a North Coast lawmaker who introduced legislation early this year that shifts the tax growers would pay to the excise tax paid on point-of-sale transactions, along with the local and sales taxes. Senate Bill 1074, by state Sen. Mike McGuire, D-Healdsburg, became “inactive” and morphed into the state budget as part of a reform package lawmakers passed Wednesday night.

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