In a stunning show of bipartisan agreement, the California Assembly voted 74-0 on June 2 to approve legislation that would pause a significant tax increase on the state's legal cannabis industry.
The state's 15% cannabis excise tax is slated to increase July 1. Under a 2022 law that eliminated California's cultivation tax, the excise tax is now adjustable to generate revenue equivalent to what the cultivation tax would have produced. Depending on state calculations, the rate could rise to 19%. This tax is collected at the retail level, and stores are responsible for paying it to the state whether or not they collect it from consumers.
To prevent the hike, Assemblymember Matt Haney (D-San Francisco) introduced AB 564, which would freeze the excise tax at 15% and eliminate the state's authority to adjust it.
The vote comes as licensed cannabis operators face mounting financial pressure. Advocates warn that without intervention, legal businesses could be pushed out of the market entirely, leaving illegal operations to flourish. "If we continue to pile on more taxes and fees onto our struggling small cannabis businesses, California's cannabis culture is under serious threat of extinction," Haney said.
Read more at Independent Voter News