California’s bill, which would put an end to a tax hike recently implemented on marijuana products, is heading to Governor after the final unanimous vote of the Assembly.
The Assembly approved the Senate’s recent changes on Thursday with 57 votes in favor. This means that the bill will be sent to Governor. Gavin Newsom’s (D) Desk.
If the bill is signed into legislation, it would put a five-year halt on tax increases. To date, the governor must take any action he is given this session by October 12.
Haney, speaking on Thursday in the Assembly’s floor, said that “the legislation will provide immediate tax relief for California’s struggling marijuana industry by reverse an unprecedented 25% excise-tax increase.” The bill received overwhelming bipartisan approval in both chambers.
A Senate Committee amendment, now approved by the Assembly would delay the implementation date to October instead of immediately. Last month, the tax increase officially went into effect.
In June, state officials said that cannabis taxes would rise from 15% to 19% on July 1. Advocates hoped that budget legislation would then be modified to reflect Haney’s separate bill. It didn’t work out.
Haney’s bill was passed despite Newsom supporting a tax-freeze in the trailer legislation. Assembly Speaker Robert Rivas (D) also backed the delay, but Senate President Pro Tempore Mike McGuire (D) reportedly blocked it from the budget legislation.
Under Haney’s bill, which first advanced through the Assembly in June, the delayed implementation wouldn’t take effect until October. The advocates wanted it to be included in the budget bill that was recently passed because it would have taken effect immediately.
The legislation would have halted the increase in cannabis taxes until June 30th 2030. This was the case before it reached the Senate Appropriations Committee. The tax rate would be adjusted on a semi-annual basis by regulators, based on the amount that was collected under the cultivation taxes imposed before its discontinuation. This percentage would not exceed 19%, according to an overview.
According to its chair, the Appropriations committee moved “to shorten the time period in which the 15% tax rate will be effective and to add a report requirement.”
Haney’s proposal would make it so the California Department of Tax and Fee Administration (CDTFA), working with the Department of Finance, would be required to “adjust the cannabis excise tax rate upon purchasers of cannabis or cannabis products” based on the “additional percentage of the gross receipts of any retail sale by a cannabis retailer that the department estimates will generate an amount of revenue equivalent to the amount that would have been collected in the previous fiscal year,” the text says.
It is necessary for the department to estimate the amount of tax revenue collected by the weight-based agriculture tax in the fiscal year prior.
The measure states that “the specific goal of the reduction in the cannabis excise taxes is to provide immediate relief for the cannabis industry.” The Legislature may measure whether this is a successful goal by measuring the increase or decrease in cannabis excise revenue resulting as a result of the reduction of tax rates allowed under this Act.
It also mandates that CDTFA, on or before December 1, 2026 and each subsequent year the California “submit a report to the Legislature…detailing the amount of gain or loss in cannabis excise tax revenues resulting from the cannabis excise tax rate reduction allowed by this act.”
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The Senate Appropriations Committee also recently unanimously passed legislation to integrate hemp-derived cannabinoid products into the state’s medical and adult-use marijuana program, while banning synthetically derived cannabinoids. Panel adopted amendments “to delete the excise tax provision, to revise, change and create definitions for topical salves, as well as clarifying and changing requirements and prohibitions pertaining to industrial hemp, hemp-derived cannabinoids and other hemp products,” according to committee chair.
The panel additionally approved a measure to amend the state’s cannabis law to make it so cannabis microbusinesses with a license to ship products directly to patients, with amendments.
Meanwhile, California officials are inviting research proposals for a second round of grants under a program meant to better educate the public on the state’s marijuana law and help policymakers make informed decisions on the issue.
In June, the Governor’s Office of Business and Economic Development (GO-Biz) announced the recipients of over $52 million in community reinvestment grants to nonprofits and local health departments, also funded by marijuana tax revenue.
That marked the seventh round of cannabis-funded California Community Reinvestment Grants (CalCRG) under the state program.
California’s legalization of marijuana has led to the creation of a variety of grant programs that are aimed at combating the effects of prohibition of marijuana and trying to foster a well-regulated, strong industry.
California’s Supreme Court separately delivered a victory for the state’s marijuana program in June, rescinding a lower court ruling in a case that suggested federal prohibition could be used locally to undermine the cannabis market.
The state Supreme Court ruling also came just weeks after California officials unveiled a report on the current status and future of the state’s marijuana market—with independent analysts hired by regulators concluding that the federal prohibition on cannabis that prevents interstate commerce is meaningfully bolstering the illicit market.
The governor did sign a bill in 2022 that would have empowered him to enter into interstate cannabis commerce agreements with other legal states, but that power was incumbent upon federal guidance or an assessment from the state attorney general that sanctioned such activity.
Meanwhile, a California Senate committee recently declined to advance a bipartisan bill that would have created a psilocybin pilot program for military veterans and former first responders.
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