The California Department of Tax and Fee Administration (CDTFA) today reported tax revenue from cannabis sales for the third quarter of 2025.
As of late November, total tax revenue from cannabis retailers’ third-quarter returns is $283.7 million. This figure includes $176.8 million in cannabis excise tax and $106.9 million in sales tax reported from cannabis businesses. These figures do not include outstanding returns or returns that are still being processed.
Reported revenue for second-quarter 2025 returns has been revised to $261.3 million, up from $259.7 million. This includes $147.8 million in cannabis excise tax and $113.5 million in sales tax. These revisions are a result of amended and late returns, as well as other tax return adjustments.
During the third quarter (July–September 2025), the cannabis excise tax rate temporarily increased to 19 percent. The rate returned to 15 percent on October 1, 2025, as a result of Governor Newsom signing AB 564.
The figures also reflect the state’s vendor compensation program, which allowed eligible cannabis vendors to retain more than $1.99 million in the third quarter. The vendor compensation program allows retailers who have received an equity fee waiver from the Department of Cannabis Control to retain 20 percent of the cannabis excise tax due on their retail sales of cannabis or cannabis products for 12 months. The program, which began January 1, 2023, ends December 31, 2025.
Since January 2018, cannabis sales have generated more than $7.61 billion in tax revenue, including more than $4.05 billion in cannabis excise tax and more than $3.06 billion in sales tax. This also includes $500.6 million in cultivation tax collected through July 1, 2022, when the cultivation tax was eliminated as a result of cannabis tax reform legislation.
Retailers must collect the cannabis excise tax from buyers based on gross receipts from cannabis or cannabis product sales. Sales tax is applied to the price after the cannabis excise tax has been added.
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