California Gov. Gavin Newsom has signed AB 564, a new bill aimed at giving the state’s legal cannabis industry a much-needed boost. The legislation halts a looming 25% tax increase and locks the cannabis excise tax at 15% through 2028, according to the Governor’s Press Office.

“We’re rolling back this cannabis tax hike so the legal market can continue to grow, consumers can access safe products, and our local communities see the benefits,” Newsom said in a statement.

A Lifeline for the Cannabis Industry

The move comes at a time when California’s licensed cannabis businesses are facing mounting challenges. Assemblymember Matt Haney (D–San Francisco), who authored the bill, said the industry has been in steep decline over the past five years—calling it “dying.” Without the rollback, he warned, the tax hike would have pushed many small cannabis businesses to the brink of closure, forcing more consumers toward the illegal market.

“California’s cannabis economy can bring enormous benefits to our state, but only if our legal industry is given a fair chance to compete against the untaxed and unregulated illegal market,” Haney explained.

Cracking Down on the Illegal Market

Alongside easing the tax burden, the state has also ramped up enforcement against unlicensed operators. Since 2022, the Unified Cannabis Enforcement Taskforce (UCETF) has seized and destroyed more than 317 tons—over 635,000 pounds—of illegal cannabis, according to the Governor’s Office.

What This Means Going Forward

By reducing taxes and tightening enforcement, the Newsom administration hopes to stabilize California’s cannabis market, ensure consumer safety, and keep tax revenue flowing into local communities. The decision reflects a broader push to balance industry growth with fair competition against illicit operations.