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California Cuts Cannabis Tax to Combat Black Market

9/24/2025

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Summary

Story summary

California Governor Gavin Newsom signed AB 564, rolling back cannabis excise tax from 19% to 15% until 2028.
It passed 39-1 in Senate and 76-0 in Assembly, with broad support.
Industry says lower taxes help legal businesses compete with a black market accounting for 62% of cannabis sales.
The Unified Cannabis Enforcement Taskforce has seized over $890 million since 2022.

History

Historical Context

California legalized recreational cannabis through Proposition 64 on November 8, 2016, with 57% voter approval. By 2021, the state generated approximately $1 billion in cannabis taxes, yet 62% of sales remained in the black market. Governor Gavin Newsom's recent tax reduction aims to support legal businesses, reflecting ongoing challenges in regulating the cannabis industry and enforcing compliance.

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Story summary

California Governor Gavin Newsom signed AB 564, rolling back cannabis excise tax from 19% to 15% until 2028.
It passed 39-1 in Senate and 76-0 in Assembly, with broad support.
Industry says lower taxes help legal businesses compete with a black market accounting for 62% of cannabis sales.
The Unified Cannabis Enforcement Taskforce has seized over $890 million since 2022.

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