California Governor Gavin Newsom has signed AB 564, a bill aimed at supporting the state’s legal cannabis industry by reversing a planned 25% tax increase. The legislation, authored by Assemblymember Matt Haney (D–San Francisco), sets the cannabis excise tax rate at 15% until 2028.
“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 Governor Newsom.
Assemblymember Haney added, “California’s cannabis economy can bring enormous benefits to our state, but only if our legal industry is given a fair chance to compete against the untaxed and unregulated illegal market. AB 564 helps level the playing field. It protects California jobs, keeps small businesses open, and ensures that our legal cannabis market can grow and thrive the way voters intended.”
California operates the world’s largest regulated cannabis market. The sector contributes to economic growth while funding programs in education, public health, and environmental protection. By maintaining a lower excise tax rate through AB 564, lawmakers aim to help licensed businesses remain competitive against illegal operators.
The administration has also taken steps to address illegal cannabis activity. Recent measures dedicate cannabis tax revenue toward civil and criminal enforcement actions targeting unlicensed operations. Grant eligibility from the Board of State and Community Corrections (BSCC) has been expanded for local jurisdictions—especially those permitting retail sales—to strengthen enforcement efforts.
The Unified Cannabis Enforcement Taskforce (UCETF), created in 2022 by Governor Newsom, coordinates efforts among state agencies such as the Department of Cannabis Control and Department of Fish and Wildlife. To date, UCETF has seized over 317 tons of illegal cannabis valued at approximately $890 million during nearly 230 multiagency operations.
For more information about California’s legal cannabis regulations and licensing requirements, visit https://cannabis.ca.gov/.
