California’s embattled authorized hashish business is dealing with a big spike in taxation within the coming weeks, however efforts are underway to dam the doubtless ruinous invoice earlier than it’s enforced.
Final week, in an anticipated however no much less painful blow, the California Division of Tax and Payment Administration (CDTFA) confirmed in a particular discover that it ‘will enhance from 15% to 19% of gross receipts from retail gross sales of hashish or hashish merchandise’ on July 01, 2025.
In 2022, the state eliminated the cultivation tax (a tax growers used to pay), and so as to make up for that misplaced income, the excise tax was designed to rise routinely after three years, ought to tax revenues fall beneath a promised threshold.
Following years of stagnation and decline out there, tax revenues have been decrease than anticipated in 2022. Final month, Whitney Economics adjusted its state-by-state projections for hashish gross sales, with California seeing the biggest drop within the US of $606m.
An extra value enhance for Californian customers will exacerbate an already terminal risk for authorized sellers, who’re failing to compete with the thriving illicit market.
In a research commissioned by the Division of Hashish Management (DCC) earlier this 12 months, figures confirmed that the illicit market nonetheless accounted for round 60% of complete consumption within the state.
As a part of a determined effort to stop this enhance, Meeting Invoice 564 was launched by Assemblyman Matt Haney (D-San Francisco), which seeks to droop the rise.
On Could 06, the invoice handed unanimously by way of the Meeting Income and Taxation Committee, following an earlier 14-0 vote within the Enterprise and Professions Committee.
AB 564’s future now rests with the Meeting Appropriations Committee, the place will probably be assessed alongside different budgetary issues on Could 14.
With the deadline quickly approaching, the tempo of AB 564’s progress will probably be welcome to business stakeholders, however the race is effectively and actually on.
“Any enhance, significantly a 25% enhance, wouldn’t solely be dangerous public coverage, however devastating to operators already on the brink,” mentioned Caren Woodson, President of the California Hashish Business Affiliation.
