AB 564: Cannabis: excise tax: rate increase suspension: report.

Official summary

Legislative Counsel’s Digest (official, as of the latest version). Written by nonpartisan legislative staff; reproduced verbatim.

Existing law, the Control, Regulate and Tax Adult Use of Marijuana Act (AUMA), an initiative measure, authorizes a person who obtains a state license under AUMA to engage in commercial adult-use cannabis activity pursuant to that license and applicable local ordinances. The Medicinal and Adult-Use Cannabis Regulation and Safety Act (MAUCRSA), among other things, consolidates the licensure and regulation of commercial medicinal and adult-use cannabis activities and establishes the Department of Cannabis Control (DCC) within the Business, Consumer Services, and Housing Agency to administer the act.

Existing law, the Cannabis Tax Law, imposes an excise tax upon purchasers of cannabis or cannabis products sold in this state at the rate of 15% of the gross receipts of any retail sale by a cannabis retailer, and, as enacted by AUMA, imposed a cultivation tax on all harvested cannabis that entered the commercial market, as specified. Chapter 56 of the Statutes of 2022 (AB 195) amended AUMA to, among other things, discontinue the imposition of the cultivation tax on July 1, 2022. AB 195, beginning in the 2025–26 fiscal year and every 2 years thereafter, requires the California Department of Tax and Fee Administration (CDTFA) to adjust the cannabis excise tax rate by a percentage that will generate an amount of revenue that would have been collected pursuant to the cultivation tax imposed prior to its discontinuation, as specified, not to exceed 19% of the gross receipts of retail sale. Pursuant to that law, the department increased the cannabis excise tax rate to 19% for the 2025–26 fiscal year.

This bill would revise the above-described provisions governing the cannabis excise tax rate. Specifically, the bill, for the period from July 1, 2025, to September 30, 2025, inclusive, would retain the existing cannabis excise tax rate of 19%. For the period from October 1, 2025, to June 30, 2028, inclusive, the bill would decrease the excise tax rate to 15%. Beginning in the 2028–29 fiscal year and every 2 years thereafter, the bill would require the department to adjust the cannabis excise tax rate by a percentage that will generate an amount of revenue that would have been collected pursuant to the cultivation tax imposed prior to its discontinuation, as specified, not to exceed 19%. The bill would also require the DCC, in consultation with the CDTFA and the Legislative Analyst’s Office, on or before October 1, 2027, to submit a report to the Legislature that analyzes, among other things, the current and future effect of the Cannabis Tax Law on the regulated cannabis market and recommends options for changes to the Cannabis Tax Law to accomplish the intent of AUMA.

Existing law requires any bill authorizing a new tax expenditure to contain, among other things, specific goals that the tax expenditure will achieve, detailed performance indicators, and data collection requirements.

This bill also would include additional information required for any bill authorizing a new tax expenditure.

This bill would take effect immediately as a tax levy.

Sponsors

Sponsors by party (alphabetical): Democratic 3

“Support” is shown only as formal sponsorship recorded by the legislature. Roll-call votes are available on the official bill page.

Recent official actions

1. September 22, 2025Chaptered by Secretary of State - Chapter 127, Statutes of 2025.
2. September 22, 2025Approved by the Governor.
3. September 17, 2025Enrolled and presented to the Governor at 3:30 p.m.
4. September 11, 2025Senate amendments concurred in. To Engrossing and Enrolling. (Ayes 76. Noes 0. Page 3294.).
5. September 10, 2025In Assembly. Concurrence in Senate amendments pending.
6. September 10, 2025Read third time. Passed. Ordered to the Assembly. (Ayes 39. Noes 1. Page 2809.).
7. September 8, 2025Read second time. Ordered to third reading.
8. September 5, 2025Read third time and amended. Ordered to second reading.
9. September 3, 2025Read second time. Ordered to third reading.
10. September 2, 2025Read second time and amended. Ordered returned to second reading.
11. September 2, 2025From committee: Amend, and do pass as amended. (Ayes 7. Noes 0.) .
12. August 18, 2025In committee: Referred to suspense file.