Today, cannabis industry leaders met with California legislators, policymakers, and regulators to urge them to freeze the cannabis excise tax at its current 15% rate through a budget trailer bill.
Without action, the excise tax will automatically increase to 19% on July 1, 2025, a more than 25% increase that would “further drive consumers to the dangerous illicit market while actually reducing state tax revenue”, according to a press release from the California Cannabis Operators Association (CaCOA).
“Halting this scheduled tax hike would protect consumers, public health, and the viability of the regulated market voters approved in 2016,” said Alex Freedman, President of CaCOA. “Excise tax increases leave consumers and patients holding the bill at a time when many are struggling with cost-of-living challenges. With more than 60% of cannabis sales already occurring in the illicit market, a 25% tax increase would push even more Californians toward untested, potentially dangerous products. And because those products are also untaxed, the unintended consequence would be even less tax revenue available for the vital community programs they’re currently funding.”
“Cannabis patients and consumers already pay as much as 40% in combined taxes on regulated products,” said Tiffany Devitt, Chief of Regulatory Affairs at Groundwork Holdings. “A parent seeking CBD for their child’s seizures, a senior managing chronic pain, or a veteran with PTSD shouldn’t face an additional tax burden that forces them to choose between unaffordable regulated products or cheaper unregulated alternatives that may contain pesticides, heavy metals, or dangerous additives. The state should be making safe cannabis more accessible, not less.”
The letter cited alarming statistics showing California’s legal cannabis market in steep decline. More than 10,800 cannabis licenses are now inactive or surrendered, exceeding the number of active licenses statewide. From Q2 2021 to Q4 2024, taxable sales were down by 34%, and taxes (excise + sales) were down by 31%. Meanwhile, Michigan, with just one-fourth of California’s population, now outsells the Golden State in licensed cannabis.
“The legislative process is clear: Assembly Bill 564 (Haney), which would freeze the excise tax at 15%, has received overwhelming bipartisan support with no opposition votes in committee,” said Amy O’Gorman Jenkins, Executive Director of CaCOA. “With the July 1 deadline approaching rapidly, incorporating this freeze into the budget process represents the most expedient and responsible path forward. This approach aligns perfectly with the Governor’s enforcement proposals, outlined in his May Revise, by ensuring we don’t simultaneously make the regulated market less competitive.”
In addition to CaCOA, the letter was signed by leaders representing hundreds of licensed cannabis businesses and tens of thousands of workers across California, including the California Cannabis Industry Association, CalNORML, Cannabis Distribution Association, and Good Farmers Great Neighbors.
The California Cannabis Operators Association (CaCOA) is the largest and most influential cannabis industry association in the Golden State. They are proud to represent the backbone of the legal cannabis industry: licensed operators across the supply chain who work to ensure safe, tested, and accessible cannabis for consumers and patients every day.
CaCOA’s unified voice represents 300+ operators across 125 municipalities, with members operating more than 475 licenses throughout the supply chain. Their retail members provide access to legal cannabis in 85%+ of the state’s authorized local markets through 200+ stores, serving 50%+ of California’s total population. Across the supply chain, members operate in 90%+ of the state’s communities where at least one type of cannabis business is allowed. Learn more at cacoa.org.
