Newsom Signs California Cannabis Tax Rollback into Law

SACRAMENTO, Calif. -- Gov. Gavin Newsom on Sept. 22, 2025, signed Assembly Bill 564, authored by Assemblymember Matt Haney, D-San Francisco, freezing the state cannabis excise tax at 15% from Oct. 1, 2025, through June 30, 2028.[1][2][3][4] The law overrides a 4-percentage-point increase to 19% that took effect July 1, 2025, under prior legislation AB 195, which ended the cultivation tax and shifted revenue needs to the excise tax on retail sales.[7][8] Combined state and local levies can reach 45% in some California cities, squeezing licensed dispensaries already battered by illicit competitors.[1] "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 in a statement.[2][3][5] Haney echoed the sentiment: "California’s cannabis economy can bring enormous benefits to our state, but only if our legal industry is given a fair chance to compete against the untaxed and unregulated illegal market."[3][5] The bill sailed through the Legislature with overwhelming support, passing the Assembly 74-0 in June 2025 and the Senate 39-1 in late September.[1] Industry leaders celebrated the signing as a game-changer for California's post-Proposition 64 economy, launched by voters in 2016 to legalize recreational cannabis with the original 15% excise tax.[1] Amy O'Gorman Jenkins, executive director of the California Cannabis Operators Association, said the reversal fulfills Prop. 64's promise of regulated products and sustainable revenue.[1] Brian Camire, chief legal counsel at Weedmaps, called it an "important lifeline" that stabilizes the market and curbs illegal operators.[3] Local jurisdictions retain their own taxes and fees, unchanged by the state rollback.[4]