Los Angeles, November 20, 2025
In a significant policy change, California Governor Gavin Newsom has signed Assembly Bill 564, lowering the state’s cannabis excise tax from 19% to 15%. The reduction, effective October 1, aims to relieve financial pressure on licensed cannabis businesses in Los Angeles, promoting competitiveness against the illicit market. This rollback is expected to enhance the affordability of legal cannabis products, supporting economic growth and stability in the state’s cannabis industry, which has been hindered by high tax rates. The new tax rate will remain until at least June 30, 2028.
Los Angeles, California – Cannabis Tax Hike Reversed Amid Industry Concerns
Los Angeles, California – In a significant policy shift, California Governor Gavin Newsom signed Assembly Bill 564 on September 22, 2025, effectively rolling back the state’s cannabis excise tax from 19% to 15%. This change, effective October 1, 2025, aims to alleviate financial pressures on licensed cannabis businesses and enhance their competitiveness against the illicit market.
Immediate Impact of Tax Reduction
The reduction in the cannabis excise tax rate is expected to provide immediate relief to licensed cannabis retailers in Los Angeles. By lowering the tax burden, the state aims to make legal cannabis products more affordable, thereby encouraging consumers to choose licensed dispensaries over unlicensed operators. This move is anticipated to bolster the legal market and support the growth of compliant businesses.
Background on the Tax Increase and Legislative Response
Initially, the California Department of Tax and Fee Administration (CDTFA) announced a scheduled increase in the cannabis excise tax rate from 15% to 19%, set to take effect on July 1, 2025. This adjustment was part of a biennial tax rate revision mandated by state law. However, recognizing the potential adverse effects on the legal cannabis industry, Assemblymember Matt Haney introduced Assembly Bill 564 in February 2025 to prevent the tax hike. The bill successfully passed through various legislative committees and received bipartisan support, culminating in its signing by Governor Newsom in September 2025.
Implications for Los Angeles Cannabis Industry
Los Angeles, being the largest municipal cannabis market in the United States, stands to benefit significantly from this tax reduction. The city’s licensed cannabis businesses, which have faced challenges due to high tax rates and competition from the illicit market, are expected to experience improved financial stability. The rollback is seen as a strategic move to strengthen the legal market, promote economic development, and ensure public health and safety.
Future Outlook
The tax rate is set to remain at 15% until at least June 30, 2028. This stability provides a more predictable environment for cannabis businesses, allowing for better long-term planning and investment. Stakeholders within the industry have expressed optimism that this policy change will foster growth, reduce illicit market activity, and contribute to the overall success of California’s legal cannabis sector.
Key Features of the Cannabis Tax Reduction
| Feature | Details |
|---|---|
| Tax Rate Change | Reduction from 19% to 15% effective October 1, 2025 |
| Legislative Action | Assembly Bill 564 signed by Governor Gavin Newsom on September 22, 2025 |
| Impact on Los Angeles | Expected relief for licensed cannabis retailers, enhancing competitiveness against the illicit market |
| Duration of Tax Rate | 15% rate to remain in effect until at least June 30, 2028 |
Frequently Asked Questions (FAQ)
What is the current cannabis excise tax rate in California?
The cannabis excise tax rate in California is currently 15%, following the recent rollback from 19% effective October 1, 2025.
When did the cannabis excise tax rate change occur?
The cannabis excise tax rate was reduced from 19% to 15% on October 1, 2025, after Governor Gavin Newsom signed Assembly Bill 564 on September 22, 2025.
How does this tax reduction affect Los Angeles cannabis businesses?
The tax reduction is expected to provide immediate relief to licensed cannabis retailers in Los Angeles, making legal cannabis products more affordable and competitive against the illicit market.
What prompted the tax rate rollback in California?
The rollback was prompted by concerns that the scheduled tax increase would adversely affect the legal cannabis industry, leading to Assembly Bill 564 being introduced and signed into law to prevent the hike.
How long will the 15% cannabis excise tax rate remain in effect?
The 15% cannabis excise tax rate is set to remain in effect until at least June 30, 2028, providing stability for the cannabis industry.
Now Happening on X
- @CeriseRowan (November 19, 2025, 9:19 AM): Residents face rising concerns over assaults, rapes, murders, vandalism, theft, burglary, mob shoplifting, and violent gang activities amid escalating gang rivalries in Los Angeles. View on X
- @MakeLAGreatAgain (November 15, 2025, 7:10 AM): LA City Alert warns of heavy rain, potential debris flows, and flooding as the storm intensifies, urging residents to prepare for impacts. View on X
- @CityStuffLA (November 15, 2025, 4:32 PM): Torrential rains are arriving in Southern California, raising risks of widespread flooding and mudslides in burn-scarred areas around Los Angeles. View on X
- @MayorOfLA (November 14, 2025, 2:19 AM): The National Weather Service forecasts a large storm with moderate to heavy rain starting tonight through Sunday, prompting City of Los Angeles evacuation orders for affected areas. View on X
- @CCNewsLA (November 15, 2025, 1:00 PM): Storm updates indicate a Flood Watch and Evacuation Warnings in effect for Los Angeles as the system strengthens, with warnings of dangerous road conditions, power outages, and debris flows in burn scars. View on X
- @SMMirror (November 15, 2025, 1:00 PM): Los Angeles authorities issue alerts for strengthening storm bringing Flood Watch, Evacuation Warnings, hazardous roads, potential outages, and debris risks in fire-affected zones. View on X
- @LAFDtalk (November 15, 2025, 2:53 AM): Rain is already affecting Los Angeles with expected intensification over the weekend; LAFD shares news updates, press conference details, and weather predictions to keep the community informed and prepared. View on X
- @CeriseRowan (November 19, 2025, 9:05 AM): The ongoing rise in property and violent crime over the past 20 years in Los Angeles is described as a war on residents, with criticism of City Council for influence peddling and lack of safety improvements. View on X
Deeper Dive: News & Info About This Topic
HERE Resources
Los Angeles Times Faces $48 Million Loss Amid IPO Plans
Author: STAFF HERE LOS ANGELES WRITER
The LOS ANGELES STAFF WRITER represents the experienced team at HERELosAngeles.com, your go-to source for actionable local news and information in Los Angeles, Los Angeles County, and beyond, specializing in "news you can use" with coverage of product reviews for personal and business needs, local business directories, politics, real estate trends, neighborhood insights, and state news affecting the area—with deep expertise from years of dedicated reporting and strong community input, including local press releases and business updates, while delivering top reporting on high-value events like the Academy Awards, LA Auto Show, and Los Angeles Marathon, extending coverage to key organizations such as the Los Angeles Area Chamber of Commerce and the Los Angeles Tourism & Convention Board, plus leading businesses in entertainment and technology like Warner Bros. and SpaceX, and as part of the broader HERE network including HEREAnaheim.com , HERECostaMesa.com , HEREHuntingtonBeach.com , and HERESantaAna.com , providing comprehensive, credible insights into Southern California's dynamic landscape. HERE Anaheim HERE Beverly Hills HERE Coronado HERE Costa Mesa HERE Hollywood HERE Huntington Beach HERE Long Beach HERE Los Angeles HERE Mission Viejo HERE San Diego HERE Santa Ana
