A bill sponsored by Cal NORML, AB 564 (Haney) has been introduced to block a pending excise tax increase on cannabis.
California is set to increase its excise tax on cannabis from 15% to as much as 19% starting on July 1, 2025, as part of a budget compromise made when the cannabis cultivation tax was removed via AB 195 (2022), in order to assure adequate funding for programs funded by cannabis taxes.
Cannabis is already heavily over-taxed relative to comparable products like beer, wine, and tobacco in California.
The excise tax on one average, noninfused cannabis pre-roll is $1.24. In contrast, the excise tax on one glass of wine is $.01; a glass of beer $.02, a shot of liquor $.05-.08, and a tobacco cigarette $.14. Adding in state and local taxes, cannabis products are taxed at a rate as high as 38%.
Any tax increase would negatively impact cannabis consumers and businesses in California.
The industry needs a tax decrease, not an increase. The industry is struggling to compete against overtaxation, the illicit market, resistance to local licensing, and the proliferation of hemp-derived products. Medical marijuana patients in particular are unable to meet their needs for cannabis products under current pricing.
Inactive licenses are climbing as California companies struggle to stay in business.
Recipients of Tier 3 cannabis tax funding for youth education and prevention programs have vociferously opposed any proposed tax reduction on cannabis, and have called for the cultivation tax to be reinstated. As of March 2024, Tier 3 programs had a surplus of $607 million ($260 in the law enforcement account, plus $260 million in the childcare account). Full accounting and evaluations of Tier 3 programs have been legislatively mandated, but have not been provided by the agencies receiving the funds.
Meanwhile over 100 signatures have been gathered on a letter to Gov. Newsom asking for medical marijuana patients to be exempted from taxation, something that has long been needed.
Cal NORML is gathering support for heading off a tax increase at our Lobby Day on Monday, March 24, 2025 in Sacramento. Join us and make your voice heard against a cannabis tax increase!
