By Robert Schaulis
Times-Standard, Eureka, Calif.
(TNS)
(Sept. 22) — Gov. Gavin Newsom today signed AB 564 into law, a bill that reverses a 25% increase in the cannabis excise tax and freezes that tax at 15% until 2028. The bill will, according to the governor’s office, allow “legal businesses to remain competitive and (promote) the industry’s long-term growth”
“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 press release issued Monday morning.
Board and policy chair Hannah Whyte of the Humboldt County Growers Alliance told the Times-Standard that “AB 564 is definitely a win for producers, the legal market and consumers alike.”
Whyte said that the bill could be “dramatically impactful” for local growers, particularly those that produce higher-quality, higher-price cannabis products.
“It’s a step in the right direction,” Whyte said, noting that burdensome taxation, in many areas of the state, “makes it hard for consumers to go the legal route.”
“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,” Assemblymember Matt Haney (D-San Francisco), the bill’s creator, said in that same press release. “AB 564 helps level the playing field. It protects California jobs, keeps small businesses open, and ensures that our legal cannabis market can grow and thrive the way voters intended.”
State excise tax will come down from its current rate of 19% to 15% beginning Oct. 1. The bill would also, “beginning in the 2028-29 fiscal year and every 2 years thereafter, … require the (Department of Cannabis Control) to adjust the cannabis excise tax rate by a percentage that will generate an amount of revenue that would have been collected pursuant to the cultivation tax imposed prior to its discontinuation, as specified, not to exceed 19%.”
AB 564 can be read in its entirety at https://tinyurl.com/mr37h97t.
The governor’s office also noted that it had “recently enacted measures to bolster long-term enforcement efforts against illegal operators by dedicating cannabis tax revenue to fund civil and criminal enforcement activities.” The Unified Cannabis Enforcement Taskforce (UCETF) has, since its inception in 2022, seized and destroyed more than 635,303 pounds of illegal cannabis valued at $890 million.
Photo credit: SpiritPeaks/iStock
_______
© 2025 Times-Standard, Eureka, Calif. Visit www.times-standard.com. Distributed by Tribune Content Agency LLC.
Thanks for reading CPA Practice Advisor!
Subscribe Already registered? Log In
Need more information? Read the FAQs
