California is moving forward with a new series of economic studies examining marijuana taxation, market conditions and the financial effects of state regulations, including a comprehensive review that could recommend changes to the state’s marijuana tax system.
The California Department of Cannabis Control announced in an October 20 notice that it intends to award a consulting contract to ERA Economics, LLC. The agreement would cover economic impact assessments, annual marijuana market studies, evaluations of proposed legislation and a detailed examination of the state’s tax structure.
Under the solicitation, ERA Economics would conduct approximately 10 to 12 economic impact assessments annually, examining how proposed regulations could affect businesses and consumers. The work could include two to four major regulatory assessments each year involving economic impacts exceeding $50 million, along with evaluations of licensing fees and the costs associated with regulatory compliance.
One of the contract’s most significant components is a comprehensive marijuana tax report required under Assembly Bill 564, which California enacted in September 2025. The legislation reversed an increase in the state’s marijuana excise tax from 15% to 19%, returning the rate to 15% beginning October 1, 2025.
The forthcoming report, due to the Legislature by October 1, 2027, must examine how California’s marijuana tax system affects the competitiveness of licensed businesses against the illicit market. It must also evaluate the system’s ability to generate revenue for environmental restoration, youth prevention and treatment programs, community investment and law enforcement, while recommending potential changes to existing tax laws.
The contractor would prepare the report in consultation with the Department of Cannabis Control, the California Department of Tax and Fee Administration and the Legislative Analyst’s Office.
Separate annual market assessments would examine marijuana supply, consumer demand, economic trends and conditions throughout California’s regulated industry. The solicitation also calls for economic modeling that accounts for both licensed and unlicensed marijuana activity, potentially providing updated estimates of the state’s illicit market.
Additional assignments could include assessments of proposed state and federal legislation, comparisons with other states’ marijuana markets and evaluations of whether licensing and renewal fees accurately reflect the department’s regulatory and enforcement expenses.
ERA Economics has previously worked with the department, including preparing the California Cannabis Market Outlook report released in 2025. The new agreement would establish a broader, multiyear program of economic analysis rather than representing the firm’s first involvement with the agency.
The proposed contract would run from November 2, 2026, or the date of final approval if later, through June 30, 2029, with an option for a one-year extension.
The October 20 announcement is a notice of intent to award rather than a finalized contract. Competing bidders have until October 26 to submit a notice of intent to protest the selection.
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