Assemblymember Haney’ s AB 564 will boost California’s legal cannabis economy, which is in sharp decline and losing ground to other states. The bill will combat the threat of the growing illicit market by preventing an unprecedented 25% tax increase.
- Nate Allbee
- (415) 756-0561
- Nate.Allbee@asm.ca.gov
Sacramento, CA - Today, Assemblymember Matt Haney (D - San Francisco) introduced legislation to protect the legal cannabis industry from the growing threat of the untaxed, illegal cannabis market. Taxes as high as 45% in some areas of California have suffocated California’s infant legal cannabis industry before it had a chance to develop, allowing states like Colorado and Michigan which have more reasonable taxes to still outpace us. AB 564 would prevent a scheduled cannabis tax increase on July 1, 2025 that would devastate California’s legal cannabis industry by forcing many small businesses to close and driving even more consumers toward the illegal market.
California is widely known as the birthplace of cannabis culture in the United States, with an industry boasting hundreds of thousands of employees and generating hundreds of millions in revenue annually. But over the past five years, the licensed cannabis market has been in a sharp decline as evidenced by plummeting sales and tax revenue.
Meanwhile, California is being outpaced in cannabis sales by states like Michigan, which has demonstrated steady growth due to lower taxes and fewer barriers to access the legal industry for both businesses and consumers.
“If we continue to pile on more taxes and fees onto our struggling small cannabis businesses, California’s cannabis culture is under serious threat of extinction,” said Assemblymember Matt Haney. “Instead, we should be looking at how we can support this industry which has barely been given a chance to survive after legalization. If we want to support our cannabis industry that drives millions of visitors to California every year, adding more costs makes absolutely no sense.”
By suspending a planned tax increase of nearly 25%, scheduled to take effect in July, AB 564 will give the cannabis industry a chance to regain its foothold and keep small cannabis businesses across the state from failing.
“Nearly a decade after Californians overwhelmingly approved cannabis legalization, the industry is struggling under the crushing weight of a 15% excise tax. Any increase, particularly a 25% increase, would not only be bad public policy, but devastating to operators already on the brink,” said Caren Woodson, President of the California Cannabis Industry Association. “We are so grateful for Assemblymember Haney’s steadfast leadership on cannabis reform, and his unwavering commitment to ensuring consumers have access to safe, tested and legal cannabis products—just as California voters intended.”
AB 564 is celebrated by several cannabis industry organizations, representing industry leaders from farmers, to retailers, to consumers.
The bill will be heard in both Assembly Revenue & Taxation Committee and Business & Professions Committee in April.
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