California Senate Committee Advances Bill to Pause Marijuana Tax Hike

On Wednesday, the Senate Revenue and Taxation Committee voted 5 to 0 to approve Assembly Bill 564, sponsored by Assemblymember Matt Haney (D). The measure would delay implementation of a July 1 increase in the state’s marijuana excise tax rate from 15% to 19%, postponing it until at least October. Haney agreed to a committee amendment that prevents the change from taking effect immediately. “AB 564 will provide tax relief to California’s struggling cannabis industry by reversing an unprecedented 25 percent excise tax increase,” said Haney during the hearing. “The legal cannabis industry needs a lifeline to stabilize.”

Advocates had hoped Haney’s proposal would be added to a budget trailer bill last month, which would have allowed it to take effect upon enactment. While Governor Gavin Newsom and Assembly Speaker Robert Rivas supported the delay, Senate President Pro Tem Mike McGuire blocked the effort, citing budget concerns.

McGuire acknowledged the industry’s tax structure has been a “train wreck,” but warned that delaying the increase would create a shortfall for programs funded by marijuana revenue.