A bill that would reverse a 25% tax increase on California's legal cannabis is heading to Gov. Gavin Newsom's desk, after being approved by the legislature.
On Wednesday, Assembly Bill 564 by Asm. Matt Haney (D-San Francisco) cleared its final legislative hurdle with a 39-1 vote in the State Senate. The measure passed the Assembly in June with a 74-0 vote.
"If we want to support our cannabis industry that drives millions of visitors to California every year, adding more costs makes absolutely no sense," Haney said.
AB564 would reverse a tax hike enacted in July and keep the previous rate of 15% in effect through July 2028.
Supporters of the measure argue that raising taxes on cannabis, which are as high as 45% in some areas, have weakened the state's legal cannabis industry as it struggles to compete with the black market. Haney said sales in California have fallen behind other states that have legalized cannabis, such as Colorado and Michigan.
"By stopping this misguided tax hike, the Legislature recognized that smart policy grows revenue by keeping the legal market viable," said Amy O'Gorman Jenkins, executive director of the California Cannabis Operators Association, which represents licensed cannabis businesses.
"Today's result is exactly what Proposition 64 promised: patients and consumers accessing tested, regulated products while generating sustainable tax revenue for communities," Jenkins added.
Voters passed Prop. 64 in 2016, which legalized the possession, cultivation and sale of cannabis for recreational use, along with a 15% excise tax.
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