We all want lasting public investment in California — especially in environmental restoration, youth programs, and community safety. Since the passage of Proposition 64, cannabis tax dollars have supported exactly that. But here’s the uncomfortable truth: those programs only survive if the legal cannabis market does.
And right now, the state is making that survival even harder.
Unless legislation like AB 564 passes, California’s cannabis excise tax is scheduled to jump from 15% to 19% on July 1. That’s a 26.7% increase in the tax burden on consumers — the very people choosing to buy legally. For someone walking into a dispensary with $40 to spend, that extra tax could mean walking out with less — or not walking in at all.
This isn’t hypothetical. Legal cannabis sales in California dropped 11% in Q1 of 2025 — the steepest quarterly decline in state history — according to recent tax data. That’s not just market fluctuation. It’s a warning sign that the system is cracking.
And yet, some funding recipients are lobbying to raise the tax. Their goal? Maintain the same grant revenue, even if sales drop. But that’s a dangerous miscalculation. You can’t tax a sale that never happens. Raising the rate on a shrinking market doesn’t stabilize funding — it accelerates collapse.
That’s why Assemblymember Matt Haney’s AB 564 is so important. The bill would freeze the excise tax at 15% through 2030, giving the legal market a chance to catch its breath. It’s not just good policy — it’s a survival strategy.
Legal cannabis has become a public good: it creates local jobs, prevents environmental damage, generates tax revenue, and protects consumers. But instead of being treated as a community partner, it’s still regulated like a vice — taxed like tobacco, policed like a crime. Oversight lives under the Department of Cannabis Control, not an agency focused on agriculture, commerce, or sustainability.
That stigma shows up everywhere: in punitive regulations, in tax structures designed to suppress use, and in the way licensed operators — especially small farms — are squeezed for every dollar while unlicensed activity continues with impunity.
And it’s not just happening at the state level. In Humboldt County, cultivators are still burdened by Measure S. This legacy-era local tax charges a flat fee per square foot of canopy — regardless of revenue, market price, or viability. It was passed when wholesale prices were sixfold what they are today. In today’s economy, Measure S doesn’t just feel outdated — it feels like punishment.
The result? Over 7,100 small farms have exited the legal market statewide. Many more are barely hanging on. And as licensed operators disappear, so too do the public benefits their compliance makes possible.
This isn’t just about cannabis businesses. It’s about the funding base for the very programs communities rely on. The Department of Fish and Wildlife’s restoration grants? Youth prevention programs? Public safety investments? All funded by the cannabis excise tax. When legal operators falter, so do those programs.
Supporting the legal cannabis market isn’t about siding with “industry.” It’s about supporting the rule of law, environmental accountability, and community-based land stewardship. These farmers are not Chevron. They are neighbors — many of them multi-generational — who chose compliance over chaos because they care about the land and their future on it.
If the goal is to protect watersheds, restore habitat, and eliminate toxic chemicals from the ecosystem, then licensed cannabis farmers should be seen as natural allies. But allies need more than applause. They need a system that works.
The path forward is clear: stabilize, don’t squeeze. Freeze the excise tax. Repeal regressive local taxes like Measure S. Reduce regulatory burdens across agencies. Expand access to retail in the 60% of jurisdictions that still ban it. And treat legal operators not as liabilities, but as contributors to California’s future.
Because if we keep taxing them like the problem, there soon won’t be anyone left to fund the solution.
PUBLISHED: June 15, 2025 at 6:48 AM PDT