California Cannabis Industry Could Be Spared 25% Tax Hike Under New Bill

24 March, 2025

California’s cannabis industry is once again at a crossroads. A significant tax increase, set to take effect July 1, 2025, threatens to deepen the financial strain on an already struggling sector. In response, Assemblymember Matt Haney (D–San Francisco) has introduced AB 564, a bill aimed at halting the scheduled hike before it pushes more licensed operators out of business.

For those of us in California, this is not just a policy debate—it’s a test of whether our state can sustain the industry it helped pioneer. Between a 15% state excise tax, 7.25% sales tax, and additional local levies that often push the total tax burden above 45%, legal cannabis businesses are finding it increasingly difficult to stay afloat. Many are losing ground to illicit sellers and to out-of-state markets with far lower taxes.

Industry insiders argue that California’s tax structure is undermining the legal market and endangering public health by pushing consumers toward unregulated alternatives, and that without action, the coming tax hike could trigger widespread closures, job losses, and reduced tax revenue.

In cities like Redding, recent local tax increases have only compounded the pressure. AB 564 is positioned not just as a financial fix, but as a broader call to recalibrate cannabis policy to better reflect economic realities on the ground. If passed, it could signal a shift toward a more pragmatic, sustainable approach to cannabis taxation—something many in the industry, and across our communities, believe is long overdue.