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US: California set to hike up cannabis tax as much as possible in July Rowan Dunne Mugglehead Magazine Saturday 03 May 2025 In a significant blow to an already struggling industry, California Governor Gavin Newsom’s state government will be raising the excise tax on cannabis as high as the law will permit. Representatives from the California Department of Tax and Fee Administration revealed the impending 26 per cent hike during a meeting Thursday. On Jul. 1, the excise tax will increase from 15 per cent to 19 per cent, making it even more difficult for businesses to break even with their sales and compete with a thriving illicit market. When all is said and done, factoring in excise, general sales and other local taxes, distributors will be paying tariffs as high as 40 per cent on cannabis merchandise. Collectively, Golden State cannabis operators currently owe more than US$1.3 billion in unpaid taxes, and life is set to get even more difficult for them. Major weed companies like Gold Flora, Unrivaled Brands, MedMen, and StateHouse have gone out of business trying to keep up while countless smaller ones have failed. Moreover, renowned California delivery service provider Eaze recently filed for bankruptcy after an unsuccessful revival attempt earlier this year. Eaze currently has assets worth only about US$100,000 and millions in liabilities. California representative introduces bill to try and stop it Concerned public servants and industry stakeholders are currently attempting to sway Newsom and his team to put a halt on the tax boost. California politician Matt Haney is working on getting a bill passed that would stop the tax increase. It passed unanimously during the most recent committee vote last month and is currently processing through the California Legislature. “If we continue to pile on more taxes and fees onto our struggling small cannabis businesses, California’s cannabis culture is under serious threat of extinction,” Haney said in late March. Whether the bill he authored will make it into the state Senate for a vote before July is uncertain. The Assembly Revenue and Taxation Committee will be voting on it next. “We’re urging the Legislature and Administration to act quickly and freeze the tax at 15 per cent,” said California Cannabis Operators Association director, Amy O’Gorman Jenkins, in an email sent to SFGATE this week. Golden State public operators will feel the impact The upcoming tax levy will take its toll on popular companies active in California’s industry like Glass House Brands Inc (OTCMKTS: GLASF) (FRA: 4KF0), Cresco Labs Inc (CNSX: CL) (OTCMKTS: CRLBF) (FRA: 6CQ) and Green Thumb Industries Inc (CNSX: GTII) (OTCMKTS: GTBIF). It threatens to make a dire situation even worse and drive cannabis consumers to suppliers in the illicit market for their wallet’s sake. “With the upcoming tax hike, we anticipate a decline in consumer spending,” San Francisco’s Mission Cannabis Club told MJBiz Daily last month, “particularly reflected in a drop in average basket size – a trend consistently observed in previous years following similar tax increases.” California has the largest share of the American cannabis industry by far and the biggest legal market worldwide, largely because of its vast population. It is worth about US$5 billion. However, the impending tax is expected to make the regulated market shrink considerably if Haney is unsuccessful. https://mugglehead.com/california-set-to-hike-up-cannabis-tax-as-much-as-possible-in-july/
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