Cannabis Taxes Officially Increase to 19% in California, 12% in Maryland

(Photo credit: AP Photo/Jenny Kane).

California’s cannabis excise tax has risen from 15% to 19%, triggered automatically under a 2022 law. Despite widespread opposition from industry leaders and bipartisan lawmakers, efforts to prevent the change were unsuccessful prior to the July 1 trigger. Industry advocates warn the higher tax will further strain legal operators already under pressure from high compliance costs and competition from unlicensed sellers. In addition to the 19% excise tax, California marijuana sales are still subject to the state’s base sales tax, which ranges from 7.25% to 10.75%, plus any applicable local cannabis taxes.

Meanwhile, Maryland has implemented the first scheduled increase to its adult-use cannabis tax, raising the rate from 9% to 12%. The law that set the increase was passed in 2023 and allows for additional bumps in the years ahead—up to 13% in 2027 and 15% by 2030. Medical marijuana remains tax-exempt in the state.

In Maryland, marijuana tax revenue is distributed across several state programs. A significant portion supports the Community Reinvestment and Repair Fund, which directs money to areas disproportionately impacted by past marijuana enforcement. Additional funding goes toward public health and education programs, substance use disorder services, and grants for small and minority-owned cannabis businesses.

California allocates its marijuana tax revenue to a mix of public services. This includes funding youth drug education and prevention programs, environmental restoration efforts, and grants to local governments to bolster public safety and enforcement. A share also goes to the University of California for research into the health impacts of marijuana legalization.