California Cannabis Tax Rollback

photo by: Cristine Armosilla, visible vibez

What You Need to Know:

Good news for California cannabis customers and dispensaries! A new law just signed by Governor Gavin Newsom is aiming to ease financial pressure on the state’s legal cannabis market and it could mean lower prices and a stronger safer industry for everyone!

What Happened?

On Monday, Gov. Newsom signed a bill that reduces the state excise tax on recreational cannabis from 19% back down to 15%, effective immediately and lasting through 2028.

This rollback temporarily reverses a tax hike that went into effect earlier this year. Supporters say the move will help legal dispensaries compete with the illicit market, which still makes up a significant portion of cannabis sales across the state.

“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,” Newsom said.

Why does This Matters?

The excise tax is added before sales tax and has been a major hurdle for legal cannabis businesses operating with tight margins. The higher tax made it harder for these companies to compete with unlicensed sellers who don't follow safety regulations or testing requirements.

With prices dropping and sales slowing, the legal industry has been struggling. taxable sales have dipped from a high of $1.5 billion in 2021 to about $1.2 billion in 2025. licensed sales account for just 40% of total cannabis consumption in California today.

The rollback is designed to give legitimate operators room to breathe and grow.

What’s Next?

The lower tax rate is locked in through January 1, 2028.

it's a win for dispensaries and consumers!

Stay safe, stay informed, and support your local dispensary!