The California legislators coordinate for the cancellation of the upcoming cannabis consumption tax increase

The California cannabis market has suspended some growing pain – and taxes have played a major role. In 2022, governor Gavin Newsom signed the assembly law 195, which eliminated the state's cultivation tax to help fighting producers. However, the invoice also included a ticking time bomb: a planned increase in cannabis consumption tax from 15% to 19%, which was set for July 1, 2025.

At that time, the legislators agreed that consumption tax would increase automatically to close the gap if cannabist tax revenue did not increase certain goals. Spoiler alarm: The downturn of the industry made this sales quite unlikely.

Why legislators beat the brakes

Fast lead to the present day and California legislator only voted 150: 0 for the cancellation of this upcoming consumption tax increase. Your argument? A higher tax would probably bring more consumers to the illegal market that is already thriving due to lower prices. Licessed companies hardly hang as it is, and adding more financial burdens could exhaust more from the legal market.

Groups such as the California Cannabis Industry Association and the United Food and Commercial Workers Union have thrown their support for the cancellation efforts, which made it clear that survival – not greed – was the driving factor.

What it means for the industry

If Governor Newsom (what likes to appear) signs, cannabis consumption tax remains 15% instead of increasing to 19%. This step could stabilize the legal market somewhat by keeping prices with underground sellers more competitive.

However, experts say that the real solution lies above only taxes. A complete reset – which includes a license reform that encompasses local access and stricter illegal market proposals – is required if California wishes a really flourishing legal cannabis industry.