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 reversing an unprecedented 25% tax increase.
- Nate Allbee
- Haney.Press@asm.ca.gov
Sacramento, CA — Assemblymember Matt Haney’s (D–San Francisco) bill to protect California’s legal cannabis industry from the growing illicit market passed the Legislature with overwhelming bipartisan support, with a 38-1 vote in the Senate.
AB 564 reverses a July 2025 cannabis tax hike of nearly 25%, which threatened closure for many small cannabis businesses and a wave of more consumers opting to turn to the illegal market. Taxes as high as 45% in some areas have already weakened California’s licensed industry, allowing states like Michigan and Colorado—with lower taxes—to surpass California in sales.
“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.”
California’s cannabis industry employs hundreds of thousands and generates millions in revenue, but sales and tax receipts have plummeted in recent years. By suspending the tax increase, AB 564 gives the industry a chance to recover and helps keep small businesses afloat.
“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, is not only 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.”
The bill, backed by major cannabis industry organizations, now heads to the Governor’s desk for signature.
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