California cannabis businesses are experiencing another major shift as Governor Gavin Newsom signed Assembly Bill 564, rolling back cannabis taxes beginning October 1. This change reverses the summer hike that raised excise taxes from 15% to 19%, bringing them back down to 15% through 2028. Supporters say the new policy is a lifeline for dispensaries and growers, while critics fear the loss in tax revenue could hurt public programs.
The California cannabis industry has been under pressure for years. High taxes have been blamed for pushing consumers into the unregulated market, where products are not tested or monitored. By reducing taxes, the state hopes to keep more shoppers at licensed dispensaries and protect thousands of jobs tied to California cannabis cultivation and retail. Many brands in the state argue that the cost burden created by high taxes was making it impossible to survive.
Lower taxes mean shops can offer more competitive prices, making legal products more attractive than illicit ones. This shift could strengthen the regulated market, increase safety standards, and keep small businesses afloat. For many owners, this is the relief the California cannabis industry desperately needs.
Yet not everyone is cheering. Critics of the policy warn that cutting taxes on California cannabis will shrink funding for key programs like childcare, education, and community reinvestment. These programs depend heavily on cannabis tax revenue. If the state collects less from California cannabis taxes, officials may have to find money elsewhere—or cut services altogether.
Still, dispensaries and growers see the measure as essential for survival. High taxes have long been cited as one of the biggest challenges in California cannabis. By reducing these taxes, the state may finally bring more businesses into compliance and shrink the black market.
California cannabis remains one of the largest regulated markets in the world, but its long-term success depends on balancing fair taxes with reliable funding for public services. Whether this rollback proves to be a smart move or a costly gamble will become clearer in the coming years. For now, California cannabis companies are welcoming the reduced taxes—and hoping this new chapter helps them thrive in a competitive industry.
