California Legislature Approves Rollback of Marijuana Tax Increase, Bill Heads to Governor

The Senate recently gave approval to the proposal, with the Assembly voting today to concur with Senate changes, sending the legislation to Governor Gavin Newsom, who has pledged to sign it into law. Assemblymember Matt Haney (D), the bill’s sponsor, called the measure critical for keeping California’s marijuana market afloat. “AB 564 will provide tax relief to California’s struggling cannabis industry by reversing an unprecedented 25% excise tax increase,” he said during debate. “The legal cannabis industry needs a lifeline to stabilize.”

Cannabis industry leaders also praised the outcome. Amy O’Gorman Jenkins, executive director of the California Cannabis Operators Association, said the legislation reflects “sound policy” that prioritizes a stable and regulated market over expanding the illicit trade.

“This bill protects consumers from dangerous illicit products while preserving the tax revenue that supports essential programs like childcare and community reinvestment,” Jenkins said.

If signed by Newsom as expected, the excise tax reduction will remain in place through June 30, 2028, providing years of relief to consumers and businesses while continuing to fund state programs.